Thousands of stocks pay dividends. For many, however, the yield isn't high enough to get investors excited. That's not the case for AT&T Inc. (NYSE:T), ONEOK Partners, L.P. (NYSE:OKS), and Seagate Technology plc (NASDAQ:STX).
All three of these stocks claim mouth-watering dividend yields of greater than 4%. Investors have more to like about each of these stocks as well. Here's why AT&T, ONEOK Partners, and Seagate are three dividend stocks you can buy now and receive dividend payments for years to come.
Let's first look at AT&T's impressive dividend. Its yield currently stands at 5.05%. The telecommunications giant boasts a strong track record in paying out dividends, with dividend increases for 32 consecutive years. That's enough to land AT&T a spot in the elite group of stocks known as Dividend Aristocrats.
Can AT&T keep its streak of dividend hikes going? Probably so. The company currently uses 95% of earnings to fund its dividend program. That's higher than you'd like to see with a dividend stock, but AT&T's strong cash flow should enable it to keep those dividend checks flowing.
The company's earnings should also grow in the years to come. AT&T is in the process of acquiring Time Warner. This deal is expected to boost earnings and cash flow for the company. More importantly, it will position AT&T as an even bigger leader as the boundaries between the telecommunications and media industries become increasingly blurred.
ONEOK Partners might not make the Dividend Aristocrats list like AT&T does, but the master limited partnership's dividend yield of 6.52% is sure to capture the attention of investors. ONEOK Partners, which specializes in processing, storing, and transporting natural gas, has paid a dividend every year since 1994.
At first glance, the MLP's dividend might seem to be on somewhat shaky ground. ONEOK Partners' payout ratio stands at 137%, which means the company is spending a good bit more on paying dividends than it's making in profit. There's also the planned merger between ONEOK Partners and its general partner, ONEOK, Inc. (NYSE:OKE), which already owns more than 41% of the MLP. A shareholder vote is scheduled for June 30.
What will happen with the dividend? ONEOK, Inc. is in good shape after a solid first quarter and should be in even better position if the merger goes through as planned. Its dividend currently yields 4.99%. Assuming the merger with ONEOK Partners closes as expected, the company intends to increase its dividend payout by 21% for 2017. The deal should also enable dividend hikes of 9% to 11% annually through 2021.
Seagate Technology claims a nice dividend yield of 5.99%. The hard-drive maker has increased its dividend annually in each of the last six years.
The company's payout ratio of nearly 104% could make investors a little nervous. However, Seagate's cash flow should be more than enough to keep the dividends coming. Also, that payout ratio is only a snapshot and doesn't reflect Seagate's earnings growth prospects.
Despite missing earnings expectations in the most recent quarter, Seagate's earnings prospects appear to be pretty good over the long run. Wall Street analysts project that Seagate will grow earnings by nearly 18% annually over the next five years. My colleague Rich Smith sees Seagate Technology as a dividend stock that's "perfect for retirement." With a great yield and solid prospects, I'd agree with Rich's assessment.
Keith Speights has no position in any stocks mentioned. The Motley Fool owns shares of and recommends ONEOK. The Motley Fool recommends ONEOK Partners and Time Warner. The Motley Fool has a disclosure policy.