President Donald Trump ran on a ticket of making America great again. While the consensus on that point is very much split, what’s not deniable is the markets’ response. Trump’s pro-business agenda was credited with sparking an impressive rally. With enthusiasm overshooting rationality, however, high-dividend stocks have become very attractive to investors.
At first glance, nothing seems out of the ordinary. All major blue-chip indices are up a year-to-date basis. There has been, however, several bouts of uncharacteristic volatility for shell-shocked investors to deal with in 2018. Although the actual magnitude of the declines has been minor relative to the overall rally, the red ink suggests that a much-feared correction could be around the corner.
After all, no rally lasts forever. But it’s not just the market’s gravitational laws that have discerning investors spooked. Throughout President Trump’s administration, the U.S. dollar index has veritably tanked, losing roughly 5% since his inauguration. This implies that inflation, not fundamentals, contributed significantly to recent economic gains. That has several people turning to high-paying dividend stocks to buy.
Another powerful indicator is gold. Commonly considered a “fear indicator,” gold enjoyed a quiet rally in 2017, gaining nearly 14%. But much of those profits came in the second half, and since the beginning of 2018, the metal is down nearly 10%.
The resultant inflation exerts pressure on American consumers, which could hurt overall economic enthusiasm. In addition, raging debates on how the U.S. Federal Reserve will handle these challenges create substantial uncertainties. This circumstance only bolsters the case for these high-dividend stocks.
Trying to time and predict the markets’ every twist and turn is a virtually impossible endeavor. A smarter, less stressful strategy is to buy dividend stocks, which provide a payout despite the noise.
Here are the 10 best high-dividend stocks to buy when the market is blue.
[Editor’s note: This article was originally published Feb. 2, 2018. It has been republished to reflect changes in dividend yield.]
High-Dividend Stocks to Buy: AT&T Inc. (T)
Dividend Yield: 6.3%
I’m not going to win any points for originality by picking AT&T Inc. (NYSE:T). Probably nine out of ten articles about dividend stocks to buy feature AT&T. Although incredibly boring, this is the attribute you want heading into a potentially volatile market cycle. If I’m not sure about the markets’ intentions, I’m going to go with T stock.
Of course, most people love T because it has a rich, resilient history and it yields over 5%. But in addition, the iconic company is in the process of rebuilding from volatility late in 2017. Its most recent earnings report, in which T stock earnings per share beat analysts’ estimates, will help in that endeavor.
Most importantly, AT&T CEO Randall Stephenson affirmed confidence that the Time Warner Inc (NYSE:TWX) deal will go through. And Wall Street also loved that its core businesses were showing results. For instance, AT&T reported 329,000 net phone subscribers added, demonstrating the company’s marketing effectiveness.
In other words, T stock isn’t just a high-yielding dividend play; it also has upside potential.
High-Dividend Stocks to Buy: Verizon (VZ)
Dividend Yield: 4.6%
I’ll be frank: as an outright long opportunity, Verizon Communications Inc. (NYSE:VZ) doesn’t strike me as special. I’m not saying that it’s a bad investment, but VZ stock has suffered significant choppiness in recent years. For those that prefer to view Verizon as a pure dividends play, the chop was distracting.
However, now may be an ideal time to reconsider VZ stock. For starters, the company has a healthy 4.3% dividend yield. In addition, shares have been working through the ugliness that impacted the telecom industry in the latter half of 2017. Moreover, the fall out from the proposed Sprint Corp (NYSE:S) and T-Mobile US Inc (NASDAQ:TMUS) deal has been a plus for VZ due to the competitive pressure suddenly easing.
But the biggest tailwind for VZ stock is net neutrality. Under net neutrality, Verizon and other internet providers had to treat all websites the same, irrespective of bandwidth use. With this law’s pending repeal, Verizon can offer competitive packages for consumers who don’t visit bandwidth-intensive sites.
VZ should get more customers, thus making it one of the best dividend stocks to buy.
High-Dividend Stocks to Buy: Dominion Energy Inc (D)
Dividend Yield: 4.7%
I once heard that if people go to turn on the lights and the lights don’t come on, they’ll go insane; hence, you should buy gold. I agree with the initial statement, but not with the response. If you want to benefit from the utilities industry, you should buy Dominion Energy Inc (NYSE:D) instead.
For a sure thing, you don’t have too many better options than D stock. Dominion Energy has a dominant presence in the mid-Atlantic market. In addition, the firm has a natural gas distribution channel covering several western states due to its Questar Corp. acquisition. Best of all, the company pays out a dividend yield of over 4%.
As our own Jeff Reeves points out, Dominion plays by a different set of rules compared to the competition. The utility firm went out of its way to secure a renewable energy contract with a Facebook Inc (NASDAQ:FB) data center located in Virginia.
That kind of hustle should warm investors to D stock, which trades in an otherwise boring industry.
High-Dividend Stocks to Buy: General Electric Company (GE)
Dividend Yield: 3.65%
For several months, I’ve criticized General Electric Company (NYSE:GE). I used to be a believer in this jack-of-all-trades organization. Under the assumption that it could positively lever its vast resources, I thought GE stock could bounce back. Unfortunately, General Electric as an investment became too complicated and confusing.
On Sept. 13, 2017, I wrote that GE stock was spiraling out of control. Since the time of publication, General Electric has lost a startling 32% in the markets. I’m not entirely convinced that the volatility is over. So why on earth am I suggesting GE as one of the best dividend stocks to buy?
I’ll address the low-hanging fruit. A possibility exists that the bears have exhausted themselves, which makes GE a shrewd capital growth story. But the biggest draw for me is that General Electric could get kicked out of the Dow Jones index.
Companies that get the boot have a history of performing better. Look at HP Inc (NYSE:HPQ) and Bank of America Corp (NYSE:BAC), who came up short in September 2013. Both stocks have since soared.
Will the same thing happen to GE stock? This actually might be a very smart bet.
High-Dividend Stocks to Buy: Exxon Mobil Corporation (XOM)
Dividend Yield: 4.1%
With gasoline prices suddenly on the rise, big oil companies like Exxon Mobil Corporation (NYSE:XOM) aren’t popular with the public. But similar to utility firms, that same public would riot if they couldn’t fill their cars up. Thus, XOM stock is a no-brainer for any dividend stocks gallery.
The great thing about Exxon Mobil is that investors don’t just have to rely on the oil company’s secular industry. First, the oil markets have demonstrated strong momentum over the trailing half-year period. Both the international benchmark Brent Crude, and the domestic index West Texas Intermediate are at multi-year highs. Obviously, higher oil prices are beneficial for XOM stock.
Second, and most importantly, current oil companies enjoy the “survivor effect.” Whoever is remaining after the sudden collapse in the energy markets that started in 2014 are leaner and meaner. If they can survive an outright deflationary cycle, an inflationary cycle should do them very well.
As XOM stock is among the apex predators in the oil business, you can count on their payouts.
High-Dividend Stocks to Buy: Medical Properties Trust, Inc. (MPW)
Dividend Yield: 7%
Whenever you’re on the hunt for high-yielding dividend stocks, choosing secular industries is always a great start. These sectors have consistent demand year in and year out and aren’t prone to cyclical fluctuations. A top industry to consider is healthcare, and for passive-income seekers, look no further than Medical Properties Trust, Inc. (NYSE:MPW).
As its name suggests, Medical Properties Trust is a real-estate investment trust that specializes in net-leased healthcare facilities in the U.S. and abroad. What draws people to MPW stock, aside from the underlying lucrative business, is the dividend yield. At 7.3%, MPW dwarfs many of the high-yield companies on this list.
Naturally, investors want to know about the sustainability of those yields. Unlike questionable REITs that advertise extreme passive income, strong fundamentals back MPW stock. For instance, management has worked hard to expand the business, as rising revenues prove. Moreover, MPW has a history of consistently raising the payout rate.
MPW isn’t a here-today, gone-tomorrow entity; management genuinely wants to dominate its sector, and they’ll be glad to have you along for the ride.
High-Dividend Stocks to Buy: Iron Mountain Incorporated (IRM)
Dividend Yield: 6.6%
Aside from secular industries, a profitable idea for dividend stocks is to look for businesses that serve blue-chip companies. That’s exactly the opportunity for Iron Mountain Incorporated (Delaware) REIT (NYSE:IRM), the renowned information-storage firm. If you ever worked for a major establishment, you’ll likely be familiar with their multi-varied services.
What some folks may not know is that IRM provides significant passive income. With a dividend yield of 6.7%, you might mistake IRM for a highly speculative organization. Those fears are quickly allayed, though, when you consider Iron Mountain’s strong revenue growth in recent years. Furthermore, IRM has consistently positive free cash flow.
But the most important tailwind for IRM stock is its underlying business. The biggest companies in the world trust Iron Mountain with their information storage needs. As the Equifax Inc. (NYSE:EFX) data breach demonstrated, digital technology is both a blessing and a curse. At the end of the day, nothing replaces the peace of mind found in physical document storage.
That’s why the best trust Iron Mountain, and is also the reason why you can trust IRM stock.
High-Dividend Stocks to Buy: Public Storage (PSA)
Dividend Yield: 3.8%
When we think about storage facilities, popular TV programs such as “Storage Wars” come immediately to mind. But what many don’t consider is that this industry represents a solid investment strategy. As cities become more densely populated, personal storage needs will increase. That’s why I listed Public Storage (NYSE:PSA) as one of the best dividend stocks to buy.
As “Storage Wars” demonstrates, many people would rather leave their belongings behind than deal with the hassle of moving them. This dynamic is great for the show and also for shareholders of PSA stock. Several customers probably have their personal property in storage longer than they originally intended, which boosts revenues. Moreover, “evicting” property is easier than evicting tenants.
Because of the company’s secular industry, you shouldn’t experience too many surprises investing in PSA stock. Public Storage provides a robust 4% dividend yield, which also should remain stable and consistent. Fundamentally, PSA has reliable revenue growth, and very positive free cash flow.
Considering the uncertainties in the broader markets, you’d be crazy to pass up PSA stock!
High-Dividend Stocks to Buy: Altria Group Inc (MO)
Dividend Yield: 4.8%
Whenever you’re looking for a relatively secure dividend-paying investment, so-called “vice stocks” are your best bet. These are the companies whose customer base are more or less addicted to the products sold. Because of this virtually guaranteed revenue stream, industries such as “Big Tobacco” make great dividend stocks.
If you’re going to go this route, you might as well go big with Altria Group Inc (NYSE:MO). Altria, of course, owns the Marlboro brand, which has a market share “greater than the next 10 largest brands combined!” Since smoking is a declining trend, it really pays to go with the alpha dog, which is MO stock.
But don’t let American consumer trends detract you from a dividend-paying opportunity. Altria has invested heavily in smokeless tobacco technology, which is designed to compete with e-cigarettes. Moreover, tobacco firms lever massive scale. Should legislation not favor smaller e-cigarette companies, Altria will smash the competition; that’s why I like MO stock.
If that doesn’t convince you, its 3.75% dividend yield, and its long payout history will.
High-Dividend Stocks to Buy: Rexford Industrial Realty Inc (REXR)
Dividend Yield: 2.1%
If you’ve done any shopping over the past ten years, you’ll know that Amazon.com, Inc. (NASDAQ:AMZN) and e-commerce have changed the entire retail landscape. That’s why I’m not too thrilled about buying retail REITs. They’re simply outdated for the current consumer market. Industrial and warehousing real estate, though, is a different matter.
Buying Amazon right now is simply prohibitive for many investors. But if you want to capitalize on the e-commerce craze, consider Rexford Industrial Realty Inc (NYSE:REXR). Buying REXR stock exposes you to industrial properties, which is where the actions is, and will continue to be. Gone is the concept of the traditional storefront. Today’s businesses increasingly occur on the internet.
Therefore, the industrial and warehousing space is exclusively for manufacturing and storing products, prior to direct customer shipment. Centered in Southern California, budding e-commerce companies have pushed REXR stock sky-high in recent years. Judging from all available data points, this trend won’t end anytime soon.
Although REXR doesn’t have the biggest payout in the world, it has an enticing mix of capital growth potential and a steady passive income stream.
As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.
