High dividend stocks appeal to many investors in retirement because they provide substantial passive income. And unlike the fixed interest paid from bonds, dividends can grow each year to help combat inflation.
But not all of the highest dividend stocks are safe. From aggressive payout ratios to risky debt loads and businesses in secular decline, stocks with high dividends require extra research to avoid investing in yield traps.
We reviewed the universe of high dividend stocks to identify companies capable of paying safe dividends. These businesses maintain prudent dividend policies, strong balance sheets, and operations that generate predictable cash flow.
The top 25 high dividend stocks analyzed below possess these traits and have:
The high-yield dividend stocks below are ordered by how many consecutive years they have maintained or increased their dividends, starting with the shortest streaks.
High Dividend Stock #25: W.P. Carey
Sector: Real Estate – Diversified REITs Dividend Yield: 6.2% Dividend Safety Score: Safe Uninterrupted Dividend Streak: 0 years
Named after its founder and formed in 1973, W.P. Carey (WPC) owns over 1,300 single-tenant properties primarily spanning industrial, warehouse, retail, and self-storage markets.
Despite having paid higher dividends every year since going public in 1998, the REIT surprised investors in September by announcing plans to exit all its office properties (15% of rent) and lower its dividend to account for the lost cash flow.
We provided more analysis on this event and believe the remaining business continues to look attractive for income and long-term capital preservation.
The REIT's diverse portfolio is leased to more than 320 tenants operating in over 20 industries across the U.S. and Europe. No tenant exceeds around 4% of sales, and W.P. Carey is not overly dependent on any single market.
Source: W.P. Carey
W.P. Carey's risk profile is strengthened by the firm's focus on buildings that serve critical functions for tenants. Examples include key distribution facilities, profitable manufacturing plants, and top-performing retail stores.
These operationally essential properties are also occupied mostly by larger companies, such as U-Haul and ExtraSpace Storage, which are better equipped to weather economic downturns.
Coupled with an average lease duration in excess of 11 years, W.P. Carey has historically maintained strong occupancy rates near 100% and collected nearly all of its rent through the pandemic of 2020.
Further backed by a BBB+ credit rating and healthy payout ratio targeted around 75%, W.P. Carey is an appealing high-yield dividend stock that should be able to once more build another long streak of paying higher dividends.
Source: Simply Safe Dividends
High Dividend Stock #24: AT&T
Sector: Communications – Wireless and Internet Services
AT&T (T) has frustrated investors for years. From overpaying for acquisitions to overextending the company's balance sheet and cutting the dividend in 2021, management has found no shortage of ways to destroy shareholder value.
But the future looks brighter. After shedding DirecTV and its media business, wireless and internet services now drive the bulk of AT&T's profits.
Source: AT&T
These businesses enjoy high barriers to entry due to their capital intensity, and they generate predictable cash flow over an economic cycle thanks to the essential needs they serve.
With increased focus from management on the core business, AT&T has potential to deliver more reliable growth in wireless services and broadband revenue while also improving margins.
Coupled with a healthier payout ratio near 50% and consistent free cash flow generation to strengthen its BBB rated balance sheet, AT&T's high dividend looks better supported.
However, recent allegations about the company's ties to toxic lead-sheathed cables could hinder the firm's debt reduction efforts. We are monitoring this development to assess whether it could materially impact AT&T's balance sheet.
That aside, as the company continues returning to its communication roots and no longer focuses on empire-building, contrarian investors interested in the highest paying dividend stocks may consider giving AT&T another look.
Source: Simply Safe Dividends
High Dividend Stock #23: Dominion Energy
Sector: Utilities – Electric Utilities Dividend Yield: 5.4% Dividend Safety Score: Safe Uninterrupted Dividend Streak: 2 years
Dominion Energy (D) and its predecessors have delivered diversified forms of energy since 1898. However, in 2024, the company simplified into a pure-play electric utility primarily serving Virginia and the Carolinas.
Dominion Energy has been out of favor with investors in recent years, more so than other utility operators stung by higher interest rates and a preference for growth stocks, as the company embarked on a lengthy strategic review of the business following a surprise dividend cut in 2020.
However, with the review concluded and resulting in the divestiture of its natural gas businesses (the proceeds of which will be used to reduce debt), Dominion will move forward with a more predictable income stream as a pure-play electric utility.
Despite the improved income stability achieved through divesting its natural gas assets, the firm's payout ratio will be stretched. Even so, management intends to keep the dividend intact – but the payout will be frozen for up to five years until dividend coverage improves.
That said, now could be an interesting time to lock in a solid dividend yield for patient investors who will be rewarded once the dividend starts growing again at what could be one of the faster rates in the sector.
Dominion's footprint in Virginia (~70% of earnings) looks particularly interesting. The state's cheap land, low-cost energy, proximity to east coast cities, and low natural disaster risk have made it the largest data center market in the world.
Data centers require tons of electricity to power servers and cooling systems. Artificial intelligence, cloud computing, and the continued adoption of digital technologies could cause long-term power demand to come in stronger than that market expects, giving Dominion a long runway to invest in needed infrastructure.
Coupled with a BBB+ credit rating, high mix of regulated earnings, and an industry-leading yield, Dominion could be attractive to defensive income investors willing to forgo a few years of dividend growth.
Source: Simply Safe Dividends
High Dividend Stock #22: Kinder Morgan
Sector: Energy – Oil and Gas Storage and Transportation
Dividend Yield: 6.1% Dividend Safety Score: Safe
Uninterrupted Dividend Streak: 7 years
Kinder Morgan (KMI) has grown since its formation in 1997 to become of the largest midstream infrastructure companies in North America. The firm makes most of its money from natural gas pipelines, with remainder balanced between refined products and oil pipelines, storage, and sales of carbon dioxide used in oil production.
Kinder Morgan's pipelines, storage facilities, and terminals are integrated into almost all parts of the U.S. energy industry, including every major gas and oil shale formation and export markets along the Gulf Coast.
Source: Kinder Morgan
Despite generating stable cash flow from its essential infrastructure assets, Kinder Morgan burned high-yield investors in 2015 by slashing its dividend by 75%. (The firm had a Very UnsafeDividend Safety Score™ prior to its cut announcement.)
The payout reduction was caused by the company's high leverage and dependence on issuing equity to fund large expansion projects.
Management prioritized growth spending and preserving Kinder Morgan's investment-grade credit rating over the dividend when oil prices crashed in 2015 and caused investors to sour on the midstream industry, cutting off access to equity financing.
Kinder Morgan has since de-risked its business profile by implementing a self-funding business model (no need to issue equity), scaling down its growth ambitions, reducing its debt, and improving its credit rating by one notch to BBB.
Coupled with a conservative payout ratio near 50% and a durable cash flow stream backed primarily by long-term contracts and fee-based, take-or-pay contracts, Kinder Morgan should be one of the more reliable stocks with high dividends going forward.
Source: Simply Safe Dividends
High Dividend Stock #21: Crown Castle
Sector: Real Estate – Wireless Infrastructure REIT
Founded in 1994, Crown Castle (CCI) is the largest provider of shared wireless infrastructure in the country with thousands of towers, small cell nodes, and miles of fiber supporting communications networks in every major U.S. market.
Source: Crown Castle
T-Mobile, AT&T, and Verizon account for around 70% of Crown Castle's revenue. These carriers deploy communications equipment on the REIT's towers to transmit signals between the tower and nearby mobile devices.
Crown Castle's small cell antennas and the fiber cables connecting them are typically attached to utility poles and street lights in denser areas to augment the network capacity provided by towers.
Carriers have no substitutes for wireless infrastructure, which is mission-critical for their businesses to operate. Leasing space on towers is also more cost-effective than owning them since Crown Castle colocates equipment from multiple customers on a single piece of infrastructure.
The end result is a recurring revenue stream backed by long-term leases with renewal rates near 100%. With wireless data demand continuing to grow, carriers need to deploy more spectrum and densify their networks as well, providing more business for Crown Castle over time.
Backed by a BBB credit rating as well, Crown Castle is a high-yield REIT offering attractive income and growth over time.
Source: Simply Safe Dividends
LyondellBasell's (LYB) history traces back to the 1950s when breakthrough discoveries were made in synthesizing petrochemicals. Today, the company is one of the largest chemical suppliers and refiners in the world.
Source: LyondellBasell
LyondellBasell converts fossil fuels into plastic resins and other petrochemicals. Downstream manufacturers turn these materials into food packaging, home furnishings, clothing, tires, fertilizers, and many other products. Petrochemicals are everywhere in modern society.
Despite the essential nature of commodity chemicals, stiff competition and little differentiation in quality between producers limit LyondellBasell's pricing power. Demand is highly sensitive to the economy as well.
Despite these challenges, which result in cyclical profits for LyondellBasell, the company has paid higher dividends every year since 2012.
This reflect's the firm's scale, feedstock flexibility (including cost-advantaged natural gas in the U.S.), solid balance sheet (BBB credit rating), and ability to reduce capital spending and costs during downturns.
As one of the best operators in its industry, LyondellBasell and its high dividend may appeal to income investors who are comfortable owning cyclical stocks.
Source: Simply Safe Dividends
With a history tracing back to 1897, Dow (DOW) is one of the oldest and largest chemical companies in the world with over 3,500 product families that touch thousands of customers in more than 150 countries.
Source: Dow
About half of the conglomerate's cash flow comes from producing plastics and chemical building blocks used primarily in packaging, as well as in other products such as artificial turf, pipe, and power transmission cables.
Intermediate chemicals and performance materials used in paints, personal care products, insulation, furniture, and many other applications account for the rest of the business.
While many parts of the economy could not function without Dow's chemicals, the industry is also cyclical with profits driven by oil and gas prices and global supply-demand balances across different products.
Dow has little pricing power to mitigate these uncontrollable risk factors. Instead, the firm relies on its scale, low-cost feedstock position (U.S. natural gas is a major input), diversified portfolio, and vertical integration to generate cost advantages over smaller rivals.
This has helped the company generate cash flow throughout various economic cycles and pay reliable dividends since 1912 outside of a 2009 cut driven by plunging chemicals demand, high leverage, and an ill-timed transformative acquisition.
Dow has since strengthened its balance sheet considerably to earn a BBB credit rating. While profits generated from commodity chemicals will remain volatile over a full cycle, Dow seems more likely than not to defend its dividend.
Investors interested in the high-yield stock just need a strong stomach for price swings whenever the economic outlook sours.
Source: Simply Safe Dividends
High Dividend Stock #18: Ares Capital
Sector: Financials – Business Development Companies
Ares Capital (ARCC) formed in 2004 when alternative investment manager Ares created the firm to engage in corporate lending activities. Today, Ares Capital is the largest business development company (BDC) in America.
Source: Ares Capital
As a BDC, Ares Capital provides high-yield loans to relatively small, highly levered companies that can't access traditional financing from banks.
This is a risky, cyclical industry. But Ares Capital represents one of the best high dividend stocks in the space thanks in part to its size.
As the biggest BDC, Ares Capital's vast capital base enables the company to serve businesses of all sizes and provide financing over a firm's entire life cycle, creating longer-term relationships.
Ares Capital's large size also makes it easier to maintain a well-diversified portfolio. The BDC's investments span more than 400 companies, none greater than 2% of the portfolio. This reduces the firm's dependence on any single investment.
Management targets less cyclical businesses as well, focusing on service-oriented companies that generate steady cash flow, such as software and health care.
The portfolio's risk is further reduced by Ares Capital's focus on first-lien secured loans, which account for around half of the BDC's investments and get paid first when a borrower defaults. This reduces the chance of major loan losses during downturns.
Ares Capital also uses less leverage than is allowed by regulators, earning the firm a BBB- credit rating.
These qualities have helped Ares Capital pay steady dividends since its founding in 2004, with the only blemish being a 17% dividend cut in 2009 when management opted to strengthen the balance sheet in the face of uncertain credit market conditions.
Ares Capital is bigger today with access to a wider variety of capital sources, providing more support for the dividend in future downturns. For investors seeking the highest paying dividend stocks, Ares Capital is a well-run BDC to consider, though it is not immune from the industry's cyclicality.
Source: Simply Safe Dividends
High Dividend Stock #17: Prudential Financial
Sector: Financials – Life and Health Insurance Dividend Yield: 4.7% Dividend Safety Score: Safe Uninterrupted Dividend Streak: 15 years
Prudential Financial (PRU) was founded in 1875 amid the Panic of 1873, which devastated the railroad industry and led to widespread bank failures and the collapse of many life insurers. Founder John F. Dryden aimed to serve the working class, a market largely ignored at the time, by offering affordable burial insurance.
Since its inception, Prudential has evolved into a major life insurer in the U.S. and Japan, also offering annuities, mutual funds, and investment management. The company's conservative business approach has enabled it to maintain a strong balance sheet and exceed regulatory capital requirements, helping it navigate financial crises and maintain its industry leadership.
Prudential's business is naturally sensitive to capital market fluctuations. Life insurers and annuity providers must make assumptions about future market returns and interest rates, with adverse deviations potentially forcing them into riskier investments or increased leverage. During the 2007-09 financial crisis, Prudential cut its dividend to preserve its investment-grade credit rating due to losses in mortgage-backed securities.
Recently, Prudential has worked to decrease its market sensitivity by modifying annuity products and focusing on simpler life insurance policies. This strategy aims to stabilize earnings and sustain its history of uninterrupted dividends. The firm is also expanding its less rate-sensitive investment management business and growing its presence in high-growth markets in Asia and Latin America.
Prudential's robust financial foundation and strategic adjustments position it well to continue as an industry leader, adapting effectively to industry cycles and expanding its global footprint.
Source: Simply Safe Dividends
High Dividend Stock #16: Philip Morris International
Sector: Consumer Staples – Tobacco
Dividend Yield: 5.7% Dividend Safety Score: Safe
Uninterrupted Dividend Streak: 15 years
Philip Morris International (PM) formed in 2008 when Altria spun off the international rights to its most famous cigarette brands, including Marlboro. Today, Philip Morris serves more than 150 million customers in over 180 countries, with a strong focus on emerging markets.
The tobacco market has served income investors well for decades. Warren Buffett described the business best when he once remarked, "It costs a penny to make. Sell it for a dollar. It’s addictive. And there’s fantastic brand loyalty."
Thanks to these qualities and its portfolio of premium brands that have pricing power to offset volume declines, Philip Morris has raised its dividend annually since separating from Altria in 2008. Altria has increased its dividend for more than 50 straight years, too.
However, the tobacco world is headed toward a smoke-free future in the long term. Compared to its rivals, Philip Morris has a lead in transitioning its portfolio from combustible cigarettes to so-called reduced-risk products.
Since 2008 the firm has invested over $8 billion in R&D, with the majority of that spending focused on smoke-free offerings spanning heated tobacco (pictured below) and vapor products. These products grew from 0.2% of net revenues in 2015 to nearly 30% in 2021.
Source: Philip Morris
It is hard to say which types of products (vaping, heat-not-burn tobacco, etc.) will see the greatest adoption worldwide.
But Philip Morris's technology investments, global distribution network, geographic diversification, A- credit rating, and recession-resistant cash flow should keep the company a reliable high dividend stock.
Source: Simply Safe Dividends
High Dividend Stock #15: Main Street Capital
Sector: Financials – Business Development Companies Dividend Yield: 6.1% Dividend Safety Score: Safe Uninterrupted Dividend Streak: 16 years
Main Street Capital (MAIN), founded in Texas in 1997, is one of the oldest and largest business development companies (BDCs) in the industry. The stock is also the only monthly dividend payer on our list.
As a BDC, Main Street provides debt and equity capital to relatively small, highly leveraged companies that can't tap traditional financing from banks.
This is a cyclical business since loan defaults spike during economic downturns. Paired with the high leverage and aggressive payout ratios maintained by most BDCs, few firms have shown an ability to defend their dividends when the tide goes out.
Main Street is an exception. The firm has never reduced its regular dividend since making its first payout in 2007, a stretch that includes two recessions.
To keep its high dividend safe, Main Street maintains a well-diversified loan portfolio with around 150 companies represented.
No investment tops 5% of the portfolio's income, and industry exposures are kept beneath 10% of the portfolio's value. This provides protection from distress at any single company or sector.
Source: Main Street
Main Street focuses on first-lien secured loans as well. This debt is paid back first in the even of a default, reducing the potential for major loan losses during recessions.
Management also runs the business with much less debt than regulators allow, helping the firm earn a BBB- credit rating.
That said, investors considering Main Street for its high dividend need a strong stomach for volatility given the risks associated with its investments in subprime debt securities. But Main Street is arguably the most conservative high dividend stock in the industry.
Source: Simply Safe Dividends
Founded in 1978 in North Carolina, Highwoods Properties (HIW) owns over 100 offices primarily in Sun Belt markets, which have enjoyed above-average economic growth. Properties in Raleigh, Nashville, Atlanta, Charlotte, and Tampa generate over 80% of the REIT's rent.
Source: Highwoods Properties
Since going public in 1994, the office landlord has only cut its dividend once. In 2003, a payout reduction was necessary after occupancy fell from 93% in 2001 to 82%. Driven partly by tenants WorldCom and U.S. Airways going bankrupt, this pushed Highwoods' payout ratio above 100%.
Highwoods' high dividend appears more reliable today despite uncertainties created by remote and hybrid work.
The REIT has a well-diversified portfolio with no tenant in excess of 4% of rent. Only around 10% of leases expire annually over the next few years as well, providing some protection for cash flow while office fundamentals stabilize.
Coupled with a moderate payout ratio near 85%, a BBB credit rating, and a focus on Class A properties more likely to remain in demand, Highwoods represents a high-yield dividend stock for contrarian investors who believe offices will remain a staple of work.
Source: Simply Safe Dividends
High Dividend Stock #13 Best Buy
Sector: Consumer Discretionary – Computer and Electronics Retail
Founded in 1966 as a small electronics shop focused on stereos, Best Buy (BBY) now has more than 1,000 stores selling computers, mobile phones, digital cameras, home theater systems, appliances, and more.
Source: Best Buy
Best Buy enjoys a leadership position as America's last remaining national brick-and-mortar electronics retailer. Although the convenience and price competitiveness of online shopping have put many retailers out of business, many customers still prefer an in-store experience.
Knowledgeable employees can help shoppers make better-informed buying decisions, especially for pricey, experiential purchases like home theater systems. And for some consumers, there's added comfort in buying electronics from a trusted source with tech-support options.
Additionally, Best Buy's price match guarantee, online presence (e-commerce now accounts for 40% of U.S. sales), and fast shipping options (over 70% of Americans live within 10 miles of a Best Buy store) have narrowed its online peers' competitive advantages.
Along with the firm's BBB+ credit rating and solid free cash flow generation with few new big-box stores being opened, Best Buy should remain a reliable stock paying high dividends.
Source: Simply Safe Dividends
High Dividend Stock #12: Enterprise Products Partners
Sector: Energy – Oil and Gas Storage and Transportation
Dividend Yield: 7.1% Dividend Safety Score: Safe
Uninterrupted Dividend Streak: 25 years
Enterprise Products Partners (EPD) began in 1968 as a wholesale marketer of natural gas liquids and has expanded over the decades to become one of the largest master limited partnerships (MLPs) in America.
Energy producers depend on the partnership's network of pipelines, processing plants, storage facilities, and terminals to get raw fossil fuels from their wellheads to end consumers in a ready-to-use state.
Source: Enterprise Product Partners
With hard-to-replicate assets connected to nearly every major U.S. shale basin, Enterprise enables many energy producers to enter a single relationship to move their products to downstream buyers.
These essential services, backed by long-term, fixed-fee contracts with minimum volume guarantees, have insulated Enterprise's cash flow from volatile oil and gas prices over the years.
Coupled with a A- credit rating, self-funded business model, and diversified base of customers working with a variety of commodities, Enterprise has paid higher distributions every year since going public in 1998.
As long as fossil fuels remain an important component of the world's energy mix, Enterprise's high yield should continue to be a good bet for investors who are comfortable with investing in MLPs and receiving the K-1 forms they send at tax time.
Source: Simply Safe Dividends
High Dividend Stock #11: Pembina Pipeline
Sector: Energy – Oil and Gas Storage and Transportation
Dividend Yield: 5.7% Dividend Safety Score: Safe
Uninterrupted Dividend Streak: 27 years
Founded in Alberta's Pembina oilfield in 1954, Pembina Pipeline (PBA) provides midstream services throughout western Canada. The company's infrastructure consists primarily of oil and gas pipelines, storage facilities, and processing plants.
Source: Pembina
Pembina's network of assets acts as a one-stop shop for energy producers to help move their oil, gas, and natural gas liquids from Canada to the highest value markets worldwide.
This essential business generates stable revenue from fee-based activities backed by long-term contracts with minimum volume protections, insulating cash flow from volatile energy prices.
Management runs the company conservatively as well, with Pembina earning a BBB credit rating and maintaining a self-funded business model that requires no equity issuances to fund growth.
In addition to its well-supported payout, Pembina appeals to income investors thanks to the firm's unblemished track record of no dividend cuts since going public in 1997.
Investors considering the stock should note that as a Canadian company, dividends paid by Pembina to U.S. investors are subject to a 15% withholding tax unless shares are held in retirement accounts.
However, with an additional form at tax time, U.S. investors can generally claim a foreign tax credit to offset withholding taxes.
Source: Simply Safe Dividends
High Dividend Stock #10: Pinnacle West
Sector: Utilities – Electric Utilities
Dividend Yield: 4.8% Dividend Safety Score: Safe
Uninterrupted Dividend Streak: 30 years
Pinnacle West's (PNW) roots trace back to 1884 when a small municipal utility formed to provide electricity and heating to the people of Phoenix. Today, the regulated utility is the largest electricity provider in Arizona, serving over 25% of the state's households.
Source: Pinnacle West
Regulated utilities have several qualities that can make them appealing high dividend stocks.
Most are essentially government-sanctioned monopolies with locked-in customer bases, exclusive operating rights within their service areas, and guaranteed returns on capital set by regulators to incentivize continued investment into their asset base.
This results in a predictable earnings stream which has enabled Pinnacle to pay stable or higher dividends every year since 1994.
However, Pinnacle's high dividend yield reflects the recent deterioration in the firm's relationship with the Arizona Corporation Commission (ACC), the state utility regulator.
A ruling in 2021 by the ACC significantly reduced Pinnacle's allowed return on equity. This atypical profit reduction sent the utility's payout ratio towards 80% and resulted in a credit rating downgrade to BBB+.
Despite this setback, Pinnacle expects to achieve 5% to 7% annual EPS growth through 2026 and return its payout ratio to its target range between 65% and 75%. Investors should expect low single-digit dividend increases during this time.
While regulatory battles can cause challenges, they are likely to be smoothed out in the long run since a utility's services are essential to keeping families safe and economies running.
Pinnacle also has one of the strongest underlying growth profiles in the sector thanks to Arizona's solid population growth rate and influx of data centers, which require a lot of electric power to run.
Coupled with the essential nature of utility services and a hopefully more constructive relationship with the ACC in future years, Pinnacle represents one of the highest dividend stocks in the utilities sector with a payout that seems likely to be sustained.
Source: Simply Safe Dividends
High Dividend Stock #9: NNN REIT
Sector: Real Estate – Retail REITs
Dividend Yield: 5.6% Dividend Safety Score: Safe
Uninterrupted Dividend Streak: 36 years
NNN REIT (NNN), formerly known as National Retail, began in 1984 when restaurant chain Golden Corral formed a REIT to acquire its properties and lease them back. Today, NNN owns over 3,000 single-tenant, freestanding properties across America, leased to more than 350 tenants in over 30 industries.
Source: NNN
The retail REIT has delivered predictable results for decades, thanks in part to its triple-net leases that require tenants to pay for insurance, maintenance, utilities, and property taxes. NNN thus serves purely as a landlord, collecting a recurring stream of high-margin rent.
The REIT's cash flow stream is further protected by a well-diversified portfolio. No industry exceeds 20% of rent, no tenant tops 5% of rent, and the portfolio is spread across the U.S. with no major geographic concentration.
Management has also prioritized avoiding retail categories that are most susceptible to the threat posed by e-commerce, such as departments and malls.
Experiential or service businesses such as convenience stores, automotive service, restaurants, gyms, and entertainment centers are the REIT's largest exposures and drive around 60% of rent.
These traits have helped NNN maintain high occupancy rates and stable cash flow over time, enabling shareholders to enjoy higher dividends each year since 1990.
With a diversified property portfolio, BBB+ credit rating, and conservative payout ratio policy, the company's high dividend seems likely to remain safe and growing for years to come.
Source: Simply Safe Dividends
High Dividend Stock #8: Verizon
Sector: Communications – Wireless and Internet Services
Verizon (VZ) formed in 2000 when Bell Atlantic and GTE merged, creating America's largest wireless company. Wireless services continue to generate nearly all of Verizon's profits today.
Source: Verizon
This capital-intensive business has high barriers to entry. Verizon, AT&T, and T-Mobile dominate the industry with massive subscriber bases, which provide the cash flow necessary to maintain their nationwide networks.
Verizon historically maintained superior network reliability, speed, and performance, allowing the telecom giant to charge premium rates and enjoy lower churn.
But there is now far more network coverage parity between the major telecoms. Coupled with a saturated smartphone market and more aggressive promotions from AT&T and T-Mobile, this has made for a challenging competitive environment.
Verizon's high yield reflects the company's more muted subscriber growth in the recent years. The firm has also had to invest heavily in next-generation network technologies such as 5G, resulting in higher debt and uncertain returns as growth opportunities such as 5G home internet and higher plan rates remain fuzzy.
That said, Verizon and its predecessors have paid uninterrupted dividends since 1984, a streak that seems likely to continue.
The BBB+ rated company maintains a healthy payout ratio near 50% and will retain more free cash flow in the years ahead as 5G network spending peaked in 2022.
This will enable deleveraging and support Verizon's high dividend for investors who believe in the firm's recession-resistant services and staying power.
Source: Simply Safe Dividends
High Dividend Stock #7: Public Storage
Sector: Real Estate – Self-Storage REITs Dividend Yield: 4.6% Dividend Safety Score: Very Safe Uninterrupted Dividend Streak: 43 years
Public Storage (PSA) was founded in 1972 by two California businessmen who initially invested $50,000 in a single storage unit to generate temporary income. The company has since become one of the largest self-storage REITs in the world, with around 3,000 rental properties.
The storage industry has been among the fastest-growing segments of the commercial real estate industry since the early 1970s, driven by increased population density and an aging population.
Public Storage is a durable business for several reasons. It has nearly two million customers and locates many of its facilities close to each other, allowing it to leverage costs across the company for better profitability. The firm focuses on regions with favorable demographics, generating most of its revenues in the top 20 metropolitan areas. This ensures a steady flow of demand and makes the firm's buildings effective billboards for brand recognition.
The self-storage model requires low operating costs and minimal staffing, thanks to features like online reservations and security cameras. High switching costs also mean that consumers are reluctant to move their stored items to save a small amount monthly, allowing Public Storage to grow rental fees without losing customers.
Even during economic downturns, such as the 2007-09 financial crisis, the self-storage industry's free cash flow per share fell by less than 5%. Public Storage's A credit rating and history of uninterrupted dividends since 1981 underscore its financial stability.
As long as people continue accumulating personal belongings and experiencing major life events, Public Storage should remain a reliable source of dividends, affirming its status as a cash cow in the REIT sector.
Source: Simply Safe Dividends
Founded in 1909 as a single print shop in Texas, Ennis (EBF) is the largest provider of business forms, labels, tags, envelopes, and presentation folders to independent distributors in the U.S.
Source: Ennis
Many print-based products have been in decline for decades as cost-effective electronic distribution of documents and other customer communications have driven an increasingly paperless business environment.
Ennis has navigated these challenges in part by acquiring smaller rivals to ensure it maintains the widest variety of products and capabilities in the industry.
The company has also carved out a niche in products that are tailor-made to a customer's specifications for size, color, number of parts, and quantities. These custom and semi-custom products account for over 90% of the business.
With leading scale and geographic reach, and as the industry's only major wholesale left, Ennis enjoys sticky relationships with customers such as print distributors, commercial printers, direct mail companies, and ad agencies.
While the broader industry may continue to gradually contract, Ennis sees growth opportunities as major direct manufacturers abandon older product lines as they redefine their business models.
The company's largest distributors have also had more success capturing business from Fortune 500 companies, who previously were only willing to buy from direct manufacturers such as Staples before the pandemic disrupted supply chains.
With consistent free cash flow generation and a debt-free balance sheet, Ennis remains well positioned to continue consolidating the industry with acquisitions to offset industry revenue declines, too.
Ennis may not have an attractive growth profile, but the firm has paid reliable dividends every year since 1973. The high-yielding stock may appeal to income investors who are comfortable owning a relatively small company that has historically delivered safe payouts with little excitement.
Source: Simply Safe Dividends
High Dividend Stock #5: United Parcel Service
Sector: Industrials – Air Freight and Logistics Dividend Yield: 4.6% Dividend Safety Score: Safe Uninterrupted Dividend Streak: 55 years
Founded in 1907 by two teenagers making retail deliveries, United Parcel Service (UPS) is now the world’s largest package delivery company, serving over 200 countries and territories.
As a logistics company, UPS derives its economic moat from being a world-class operator with extremely efficient business processes and a dense distribution network that it has improved and expanded for over a century.
With the industry's largest integrated distribution network (over 130,000 vehicles and more than 550 aircraft), UPS's scale results in higher profit margins than its peers and provides customers with convenient and cost-effective shipping options. This model, plus tailwinds from e-commerce, has attracted more business over time, with UPS's package deliveries rising from 3.9 billion in 2007 to 5.7 billion in 2023.
Dividend growth may be slow in the next couple of years as the global economy cools, but we're optimistic that UPS's hard-to-replicate distribution network will keep the company playing an essential role in moving products around the world as package shipment demand continues to rise over the long run.
The A rated company is well-positioned to remain an industry leader for the long haul.
Source: Simply Safe Dividends
High Dividend Stock #4: Realty Income
Sector: Real Estate – Retail REITs Dividend Yield: 5.8% Dividend Safety Score: Safe Uninterrupted Dividend Streak: 55 years
Realty Income (O) got its start in 1969 with a single investment in a Taco Bell and has paid uninterrupted dividends since its founding.
Today, the REIT owns thousands of retail properties across the U.S. that are leased to hundreds of tenants operating in dozens of industries.
Realty Income generates predictable cash flow thanks to the structure of its leases, which span long durations and shift property operating expenses (maintenance, utilities, taxes, etc) to tenants.
Coupled with a focus on quality locations, a key success factor in retail, Realty Income's occupancy rate has never fallen below 96%, even during the financial crisis and pandemic.
The A- rated company's results are further insulated by its diversified lineup of tenants. No single tenant exceeds 5% of rent, and no industry tops 12% of rent. Realty Income focuses on more durable tenants that have a service, non-discretionary, or low price point element to their business as well.
Source: Realty Income
While Realty Income's growth will never be fast, the highly fragmented single-tenant retail property market provides a long runway for expansion opportunities. This should keep the REIT's monthly dividend safety and growing.
That said, higher interest rates have weighed on Realty Income's valuation and could slow the REIT's growth. See our analysis here for more information.
Source: Simply Safe Dividends
With roots tracing back to 1911, Whirlpool (WHR) has grown from a maker of simple electric motor-driven wringer washers to the world's largest appliance manufacturer with around $20 billion in annual sales.
The company's product portfolio includes washers and dryers, refrigerators and freezers, ovens, cooktops, and dishwashers. These appliances are sold under leading brand names such as Whirlpool, KitchenAid, and Maytag.
Source: Whirlpool
The home appliance market is mature in developed countries, where Whirlpool earns most of its sales because population growth rates there are very low.
As a result, we estimate Whirlpool earns at least half of its revenue from replacement sales as consumers often replace worn out appliances with the same brand in order to match the other appliances in their house.
Coupled with Whirlpool's large installed base, the company has historically remained profitable even when discretionary purchases of new appliances and housing construction have slowed.
Whirlpool's consistent cash flow and prudent use of debt, including a BBB credit rating, have enabled the firm to pay consistent annual dividends since going public in 1955.
While shares of Whirlpool can get hit hard during recessions, the high-yield stock seems likely to remain a reliable dividend payer for income investors.
Source: Simply Safe Dividends
High Dividend Stock #2: Enbridge
Sector: Energy – Oil and Gas Storage and Transportation
Established in 1949, Enbridge (ENB) is the largest midstream company in North America with a network of pipelines, terminals, storage facilities, and processing plants connecting the continent's most vital energy-producing regions.
Source: Enbridge
The economy could not function without Enbridge's energy infrastructure. For example, the firm moves around 30% of the crude oil produced in North America and transports almost 20% of the natural gas consumed in the U.S.
In addition to the essential nature of its services, Enbridge generates nearly all of its revenue from long-term contracts with fixed fee provisions and often minimum volume commitments, resulting in minimal direct exposure to commodity prices.
This annuity-like business model results in a steady cash flow stream that has helped Enbridge pay stable or higher dividends every year since 1953.
The company's impressive dividend track record also reflects management's conservative approach to running the business. Enbridge maintains a BBB+ credit rating, has a self-funded business model which requires no equity issuances to fund growth, and does not depend on any single supply basin.
As one of the best-run midstream companies, Enbridge may appeal to high-yield investors who believe in the staying power of fossil fuels and the infrastructure necessary to help move them from energy producers to downstream consumers.
Enbridge's decision in September 2023 to acquire Dominion's gas utilities for $14 billion doesn't meaningfully change the firm's long-term outlook or dividend growth profile.
Source: Simply Safe Dividends
Note that as a Canadian company, dividends paid by Enbridge to U.S. investors are subject to a 15% withholding tax. Investors can avoid this tax by holding Enbridge in retirement accounts. Otherwise, with some additional paperwork, investors can generally claim a tax credit with the IRS to offset the withholding tax.
UGI (UGI) became America's first public utility holding company when it was founded back in 1882 in eastern Pennsylvania.
Today, the company is an international distributor and marketer of energy products and services, including natural gas, propane, electricity, and renewable solutions.
Unique amongst its peers, UGI generates around 40% of profits from non-regulated (but generally stable) propane distribution businesses.
The remainder of the company's profits come from regulated gas utilities serving nearly one million customers throughout Pennsylvania and West Virginia, plus gas-focused midstream services located in low-cost shale formations.
Source: UGI Investor Presentation
UGI's businesses have proved solid cash flow generators over the years, thanks to the essential nature of their services. Even during the financial crisis of 2007-09 and the pandemic of 2020, cash flow from operations held steady and grew.
As such, UGI has paid a dividend without interruption since 1885. The firm has even increased its dividend every year since 1988.
In addition to reliable cash flows, UGI has an investment-grade credit rating from Fitch, a healthy balance sheet, and a conservative payout ratio policy to handle periodic volatility in the propane business.
These qualities should help UGI defend its impressive dividend streak and remain a reliable high-yield stock for income investors.
Investors should note that UGI has initiated a strategic review for its propane businesses, which management would like to exit. This would result in a higher-quality earnings stream and stronger balance sheet.
We analyzed this development here and believe UGI has the ability and desire to keep its dividend streak alive.
Source: Simply Safe Dividends
Closing Thoughts on High Dividend Stocks
The highest-paying dividend stocks appeal to investors seeking current income, but many sky-high yields end up being too good to be true.
Maintaining a well-diversified portfolio and focusing on high-quality companies with strong financial health can help avoid the potential pitfalls of this strategy.
By the way, many of the investors interested in high dividend stocks are retirees looking to generate dependable income from dividend stocks.
If that sounds like you, you might enjoy trying our online product, which lets you track your portfolio's income, dividend safety, and more.
You can learn more about our suite of portfolio tools and research for dividend investors by clicking here. Thanks for reading!
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