Research shows that investing in high-yield dividend stocks and reinvesting those payments is a surefire way to secure a safe retirement. So to begin this process, it makes sense to point out some of the highest-yield dividend stocks on the market today.
|Company Name||Dividend Yield||Market Capitalization|
|The Blackstone Group (NYSE:BX)||7.1%||$29.0 Billion|
|Las Vegas Sands (NYSE:LVS)||4.9%||$46.7 Billion|
|Philip Morris International (NYSE:PM)||4.3%||$150 Billion|
However, looking at payout only skims the surface. Let's look more closely at a few of the names above to see what makes them compelling dividend stocks for investors to buy today.
The Blackstone Group: A leading asset manager with a high yield
Despite CEO Stephen Schwarzman's repeated case for a higher share price, shares of global alternative-investment powerhouse The Blackstone Group (NYSE:BX) today hover around a still-respectable $25. With that said, Schwarzman's arguably aggressive assessment of his company by no means derails the generally favorable outlook for this high-yield stock.
Blackstone generates its profits through a series of different fees and other payments from its four core business segments: private equity, real estate, credit, and hedge fund solutions. Thanks to its long-standing tradition of excellence in investing, Blackstone enjoys a tremendous capacity to attract new funds over the long term. It's for this reason that the average of 16 sell-side analysts covering the company rate Blackstone stock as a buy. According to estimates, though its top-line revenue generation can prove volatile from year to year, the company is forecast to grow its earnings per share at an average annual rate of 26.2% over the next five years. This implies that the overall direction of the company is largely positive despite some lumpiness that might materialize in any given quarter.
It also bears noting that Blackstone's current high yield might not prove as alluring as it does at first glance. Though the company's quarterly dividend currently yields roughly 7% on an annualized basis, Blackstone generates its quarterly payments based on the fees it collects from its investments, which, as mentioned above, can ebb and flow. Due to this, investors looking for consistency as a core trait in a dividend stock, such as people currently in retirement, might wish to look elsewhere for their high-yielding stocks, though the long-term outlook for this pre-eminent asset manager appears largely positive.
Las Vegas Sands: A high-yield casino powerhouse
Shares of casino operator Las Vegas Sands (NYSE:LVS) have had something of a spring in their step of late, rising over 15% in the month of September alone, and for good reason. After suffering from a prolonged slump, gambling revenue in Macau -- China's lone casino destination -- rose in both August and September. Naturally, this lead to speculation that Macau's fortunes have finally shifted back into growth mode after a 26-month slump in gaming revenue -- rendering such a judgment from two months' worth of data admittedly seems slightly pre-emptive.
In the long term, Las Vegas Sands certainly finds itself in arguably the most formidable competitive position in the entire gaming industry. As noted by my talented Foolish colleague Andres Cardenal, Las Vegas Sands will control roughly 45% of all four- and five-star hotel rooms in Macau now that its Parisian Macau has opened. In a market driven disproportionately by high rollers, being able to accommodate these visitors will allow Las Vegas Sands to continually attract rainmakers from across the region.
As far as Las Vegas Sands' dividends are concerned, the impressive 5% dividend yield makes the company a compelling option. What's more, Las Vegas Sands has demonstrated a noteworthy commitment to growing its already-high yield. Though the company only began paying its dividend in 2012, it has nearly tripled its quarterly cash dividend in the past five years. Like Blackstone, Las Vegas Sands stands as a fantastic option for investors looking to invest in high-yielding stocks.
Philip Morris International
The former international arm of U.S. tobacco giant Altria, Philip Morris International (NYSE:PM) is a fascinating high yield stock for a number of reasons. Philip Morris' international focus shields them to some degree from the shrinking domestic market. Although smoking rates globally continue to fall, smoking rates in the U.S. are lower than the global average according to World Bank data . The company currently controls a 28.5% share of the international cigarette market minus the U.S. and crucially China -- a heavy smoking country whose cigarette industry is currently controlled by a powerful state sponsored monopoly . If Philip Morris can find a way to capture a more meaningful share of the Chinese cigarette market, where its current presence is negligible, it could ignite significant new growth for Philip Morris and its investors.
However, Philip Morris' results in recent quarters have been hamstrung to an incredible degree by macroeconomic changes, particularly the overwhelming strength of the U.S. dollar. As a U.S.-based company whose results are completely international in nature, foreign exchange rate fluctuations can have a disproportionate effect on Philip Morris' top line. The rising U.S. dollar has significantly impacted the company, as CEO André Calantzopoulos commented in Philip Morris' Q4 and full-year 2015 earnings call:
The strengthening of the U.S. dollar against virtually all of our key operating currencies was an unprecedented headwind for our business in 2015 and resulted in a full year adverse currency impact of $1.20 on our adjusted diluted EPS [of $4.42].
Currency headwinds obscure what has otherwise been a largely positive performance from the international tobacco giant.
No one knows definitely when the U.S. dollar's multi-year rally against other currencies will abate, but it certainly cannot continue indefinitely. This means high yield investors looking at Philip Morris' stock could see a number of challenging quarters ahead. However, the company's above 4% dividend yield should help compensate shareholders in the meantime. To be sure, near-term risk factors could hamper this high yield stock, but its long-term income producing outlook still remains highly favorable.