Maybe a utility or two, like Southern Co (NYSE:SO). Sure, they’re big, they’re safe … but even when they’re down, they’re still wildly crowded trades.
So let’s explore five dividend stocks with bulletproof yields up to 7.1%. Their payouts are high because their stock prices are low – thanks to these firms’ undercover status.
I love “hidden” dividends so much that I’ve dedicated one of my premium services — Hidden Yields — to them. That’s because there’s far more value to be wrung out of lesser-known gems thanks to their lack of analyst cheerlea … ahem, coverage, and relatively small media interest.
However, it’s important to note that many so-called “hidden” dividend stocks can be on the smaller end of the market capitalization spectrum. So even if they’re reliable, stable businesses that just happen to be more niche than, say, providing telecommunications services across the entire U.S., you and I both know there’s a little more risk. Which is why, across all five of today’s picks, I’ve drawn a hard line on their payout ratios.
Remember, a payout ratio is simply the percentage of something – whether it’s earnings, cash flow or even AFFO – that a company pays out as dividends. It speaks to the company’s ability to afford and continue paying a dividend.
Many high-yield dividend stocks stretch too far to make their generous payouts, dishing out 100% or more of earnings as dividends, to the point where they draw from their cash piles or even raise debt to continue making payments. Not good.
Here are five hidden dividend gems that pay dividends up to 7.1% and boast safe, reliable payout ratios of 75% or less!