3 Stocks to Buy With Dividends Yielding More Than 6%

Thanks to the ultra-low interest rates of the past few years, banks and bonds don't offer much in terms of income these days. That's forcing yield-thirsty investors to turn to stocks to satiate their need for income. While stocks offering high yields are often a sign of trouble, there are a handful of stocks with yields north of 6% worth buying today. Topping the high-yield list, in my opinion, are Medical Properties Trust (MPW -1.51%), ONEOK Partners (OKS), and StoneMor Partners (STON).

Heal your portfolio with this 6.25% yield

More often than not a yield over 6% is an unhealthy sign, with it sometimes signaling that the payout is unsustainable. That said, hospital-focused real estate investment trust Medical Properties Trust's dividend is very healthy for two reasons. First, the company recently achieved its bold deleveraging goal ahead of schedule, which has improved its leverage ratio so that the company is now in the top third of all REITs. Furthermore, the company currently only pays out 75% to 80% of its adjusted funds from operations, which is not only well within its target range, but among the best payout ratios in the sector.

Not only is Medical Properties Trust's current dividend very healthy, but it's poised to keep growing. Since 2014 the company has increased its payout by 15%, including last month's 5% raise. Additional payout increases are likely given that the company already has $190 million of investments lined up through 2017. Furthermore, the company has been actively acquiring hospital properties both in the U.S. and in Europe, and while its portfolio has ballooned from $200 million to $6 billion over the past decade, it has only scratched the surface of this massive market opportunity.

Pipe an 8.25% yield into your portfolio

After some initial struggles early on in the energy market downturn, ONEOK Partners has addressed those concerns, and has shored up its ability to maintain its generous shareholder distribution. That improvement is most evident in the company's distribution coverage ratio, which went from a very concerning 0.60 times in the first quarter of last year to a solid 1.06 times in this year's first quarter.

One of the important changes the company made was to restructure customer contracts to reduce its direct commodity price exposure by signing new fee-based contracts. As a result, 85% of ONEOK Partners earnings in 2016 will come from fee-based contracts, up from 66% in 2014. This focus on fees has enabled ONEOK Partners to maintain a strong, investment-grade balance sheet, which provides it with ample liquidity and financial flexibility. Bottom line: This payout looks to be on solid ground even if the energy markets take another tumble.

Revive your portfolio with this 10.9% yield

Structured as an MLP, cemetery and funeral home operator StoneMor Partners pays such a generous distribution that it is almost guaranteed to revive an income-starved portfolio. Furthermore, while a yield of nearly 11% might seem scary, it's backed by the company's strong and predictable cash flows as well as a cash-rich balance sheet. In fact, over the past year the company has easily covered its $81 million distribution by generating $86 million in distributable available cash. Furthermore, it has enough money currently sitting in its merchandise trust to not only fully satisfy its merchandise liability, but also retire its entire outstanding debt and still have more than $125 million to spare.

Having said that, the company's structure does make it a bit more difficult for investors to grasp. That is one reason why the yield is so high, because this structure and the industry aren't for everyone. However, for investors that don't mind getting their hands dirty by really digging in to understand how StoneMor makes its money, the reward of the higher distribution payments can be well worth it.

Investor takeaway

High yields that won't disappear at the first sign of danger are tough to come by these days. That's what makes these three stocks all the more appealing, with all three offering very lucrative payouts that should stand the test of time.