It’s no surprise that more and more investors are turning to dividend stocks and looking for the best high-yielding dividend stocks to buy. But the reality is that these stocks work best when you hold them for the long term. Whether or not there is fear of inflation; whether or not analysts are predicting a bubble, dividend-paying stocks can provide consistent income year after year.
Indeed, dividend-paying stocks are a great way for investors to generate ongoing income. However, there are the risks associated with them, such as unsustainable returns that become dividend traps. But if you’re aware of the risks and aren’t looking for excessively high returns, dividend-paying stocks can be a great addition to any portfolio.
If you’re looking for high-quality stocks that will consistently deliver strong returns, consider these options:
- Magellan Midstream Partners LP (NYSE: MMP)
- Arbor Real Estate Trust (NYSE: ABR)
- Starwood Property Trust (NYSE:STWD)
- Alliance Bernstein Holding LP (NYSE: AB)
- Lumen Technologies Inc. (NYSE: LUMN)
Best High Yielding Dividend Stocks to Buy
Let’s take a closer look at each of these high yielding dividend stocks to buy now.
No. 5 Magellan Midstream Partners LP
Dividend yield: 8.63%
Magellan Midstream is a Tusla, Oklahoma-based partnership that owns pipeline systems that transport fuels such as ammonia and petroleum. The pipelines it owns are in the Midcontinent region, which covers Oklahoma, Texas, Kansas, Louisiana and parts of Arkansas. His wallet includes 83 petroleum products terminals and 9,000 miles of refined products pipeline.
MMP has a market cap of over $10 billion. And for investors, it looks like an interesting addition to your portfolio. It pays a high dividend and its income statement looks solid. For example, in the fourth quarter of 2021, its revenue was $809 million, up 38% year-over-year (YOY). Moreover, his profit margin was 30%. However, while some analyzes suggest a constant dividend yield, others say it is unsustainable.
Arbor Estate Trust No. 4
Dividend yield: 8.44%
Arbor Realty Trust is a REITs and direct lenders which provides loans and services for multi-family homes, healthcare and other types of commercial real estate. The company recently closed nine deals under its FreddieMac lending platform. These funds were used to fund 1,925 units in five states.
As a business, Arbor Realty (ABR) is worth over $2.5 billion. The New York-based company pays a dividend of around 8.44%, most recently paying a quarterly dividend of $0.36 per share. Although its profit margin was down somewhat year-over-year, ABR’s net margin for the third quarter of 2021 was still an impressive 49.87%. And although its payout ratio is relatively high, it maintains a sustainable payout ratio.
Starwood Property Trust #3
Dividend yield: 7.91%
Starwood Property Trust is a real estate investment trust (REIT) that deals in commercial real estate, infrastructure loans, residential loans and real estate. The company primarily engaged in the origination, acquisition, financing and servicing of prime commercial mortgages and other types of mortgages. The company is based in Greenwich, Connecticut, and was founded in 2009.
Starwood Property Trust (STWD) has a market cap of over $7.75 billion. Although its revenue was a little lower than the others on this list, at $187 million for the third quarter of 2021, its net profit margin was 68% for the same quarter. Nonetheless, for the amount he earns, his dividend payout ratio was quite high, as was a payout ratio of 120% for the last 12 months. Therefore, investors should treat it with an increased level of skepticism before investing their money.
Keep reading to learn more about which high-yielding dividend stocks to buy.
No. 2 AllianceBernstein Holding LP
Dividend yield: 7.24%
AllianceBernstein is a wealth management and investment company which provides services to institutional, high net worth and retail investors. It also provides investment management services to U.S. public and private employee retirement funds, retirement plans, banks and more. The company is based in New York and was founded in 2000.
AllianceBernstein (AB) has a market cap of over $4.75 billion. It pays a dividend of around 7.24%, most recently paying $1.29 per share. Its revenue in the third quarter of 2021 was $96 million, up 30% year-on-year. It also had a healthy profit margin of 92%. However, its dividend payout ratio is also 92% currently, which investors should keep in mind.
No. 1 High Yield Dividend Stock Lumen Technologies Inc.
Dividend yield: 9.91%
Lumen Technologies is a telecommunications company providing cloud solutions, network services, security, voice and managed services. Lumen is a Fortune 500 company and is based in Monroe, Louisiana. Although it was founded in 1968, today the company is at the forefront of technology. It offers services such as edge computing and hybrid cloud.
In terms of market capitalization, Lumen Technologies is very similar in size to Magellan, with a market capitalization of around $10 billion. Its earnings report generally looks good, posting a net margin of around 10% for each of the past four quarters. Its revenue has fallen slightly, although it brings in around $5 billion every three months. The company has historically paid a dividend of $0.25 per share, which equates to about 10%.
Now for the bad: Its dividend payout ratio is currently negative as it has posted negative earnings over the past twelve months. While a high payout ratio can be cause for concern, a negative payout ratio can be an even bigger red flag, especially when considering negative earnings. Therefore, it may be best to leave this stock on your watch list for now.
Bob Haegele is a personal finance writer specializing in investing and retirement planning. His heavy student loan burden inspired him to repay his loans, and now he’s helping others get their finances in order. When he’s not writing, he enjoys traveling and live music.