7 Stable Dividend Stocks to Buy With 5-8% Yields
High-yield dividend stocks can provide investors with an extra cushion in difficult markets. After all, you continue to get paid even if share prices fall. Of course, the higher the yield the greater the risk overall. Many companies that pay above 5% are considered high-yield/high-risk. However, if you simply look for firms that have long histories of paying uninterrupted dividends you’ll be that much safer.
High-Yield Dividend Stocks: Altria (MO)
With a yield of 8.8%, Altria (NYSE:MO) is one of the top high-yield dividend stocks to buy and hold. Like many other tobacco firms, MO is going through a major transition – especially with smoking rates dropping. At Altria, cigarette shipment volumes fell by 8.7% in the second quarter. To deal with the drop-off, Altria is finding ways to replace revenue streams that have suffered as smoking becomes less common. Despite recent negatives for the company, its dividend is still high at 8.8%. Better, that dividend hasn’t been reached since 1970.
British American Tobacco (BTI)
Much like Altria, British American Tobacco’s (NYSE:BTI) dividend yields a similarly high 8.7%. While BTI did reduce its dividend in 2018, its dividend has a lower payout ratio which is advantageous. In addition, unlike Altria, BTI is not seeing a contraction. Instead, in the first half of the year, the company’s revenues were up 4.4%. In addition, the company is doing well in terms of its transition to new product categories which grew by 26.6% during the period. Non-combustible revenues currently account for 16.6% of the firm-wide revenues.
High-Yield Dividend Stocks: Kinder Morgan (KMI)
Another one of the top high-yield dividend stocks to consider is Kinder Morgan (NYSE:KMI), a natural gas and oil pipeline transportation firm. It includes a dividend that hasn’t been reduced since 2016 and currently yields 6.5%.
Some investors might be leery of investing in pipeline shares for the simple reason that 2022 was a boom year and 2023 has been weaker. I wouldn’t be. For one, that’s just part of the nature of investing in oil companies. Commodities rise and fall and are governed by so many factors that accurately predicting their prices becomes nearly impossible. Two, Kinder Morgan has committed to increasing its dividend by 2% this year in any case.
Further, net income remains unchanged through the first half of 2023 even as revenues have fallen significantly. In general, oil companies are focused on rewarding investors through dividend payments as a primary concern. As long as they steadily pay income investors are less concerned with revenue fluctuations that are a natural consequence of the commodity-based business.
ONEOK (OKE)
ONEOK (NYSE:OKE) is another one of the top high-yield dividend stocks and a midstream energy producer. At the moment, it yields 5.85% and hasn’t seen a reduction since 1999. Better, company earnings increased by 13% with EBITDA rising by 10%. Basically, natural gas throughout and processing volumes are growing at a healthy clip. Even better, the company just increased guidance following the results. The firm now expects to see $2.49 billion in income in 2023 at the midpoint, up from $2.41 billion.
The firm has historically shown that it is capable of creating value on a long-term basis. Its capital returns exceed its capital costs. The company is well-run overall and that should give investors confidence in it as an investment.
High-Yield Dividend Stocks: AT&T (T)
AT&T (NYSE:T) shares have provided an annualized return of 1.76%. $10k invested would have grown to be worth $11,906. That’s attractive to just about no one. However, the dividend changes the calculus entirely. It currently yields 7.9%. Theoretically, an investor could have taken those dividends and purchased more T shares thus entitling themselves to even more dividends. Suffice it to say, returns are much higher than 1.76%.
Revenues grew slightly for AT&T in Q2 and cash flows increased substantially. The firm’s shares will continue to benefit from the potential of 5G. That should keep demand stable and if those investments bear significant fruit T shares could actually appreciate.
LyondellBasell Industries (LYB)
I like LyondellBasell Industries (NYSE:LYB) as a stock investment because it provides relatively high yields but from a relatively low-risk sector. Investors get a respectable income source in a predictable sector. The firm produces plastic resins and chemicals and carries a beta of 1.2.
The company looks to have momentum on its side. H1 results showed a contraction in both revenues and income but Q2 saw a rebound as both measures normalized on a year-over-year basis. Investors should anticipate that LYB share prices will remain flat for a while. The company is contending with stagnant demand, volatile input costs, and increased capacity in the U.S. and China.
In other words, expect to hold LYB shares for a few quarters before seeing much price appreciation. That should be fine for income investors in any case. Content yourself with the dividend payouts and the fact that the stock has outperformed its index substantially over the last decade.
International Paper (IP)
International Paper (NYSE:IP) revenues are expected to decline this year and next. International Paper did reduce its dividend in 2022. However, it has been paying 46.3 cents per share quarterly since late 2021. The dividend payment is stable from that perspective. Even when it was reduced it was only by 5 cents. IP shares aren’t the most appealing of those on this list but they’re worth a look.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
