Investing in high-quality dividend stocks is one of the world's most effective ways to generate wealth over the long term. But not all dividend stocks are created equal, and it can be difficult to determine whether the payouts with particularly high yields are sustainable.

So to help get you started, we asked three top Motley Fool investors to each pick a stock with an annual dividend yield of at least 5%. Read on to learn why they like Oaktree Capital (NYSE:OAK), Ford Motor (NYSE:F), and Cedar Fair (NYSE:FUN).

Four stacks of successively taller coins, with a hand adding another coin on the largest stack.


Going against the grain

Steve Symington (Oaktree Capital): It's no mystery that strategically going against the grain can yield superior investment returns. But as an industry leader in alternative investment management, including distressed debt, convertible securities, and high-yield bonds, to name a few, that's why I think Oaktree Capital is poised to do just that.

But Oaktree has also struggled to reassure skittish investors that its strategy is still viable in turbulent markets that haven't exactly played to its strengths in recent quarters. As it stands, shares are down around 18% from their 52-week high set last summer. But with a quarterly dividend yielding more than 8% annually as of this writing, patient long-term investors can afford to wait while it strengthens its financial position in anticipation for when those markets inevitably take a turn for the better.

One more note: Investors should be aware that Oaktree Capital is a publicly traded partnership, which means they'll need to file a K-1 form with their taxes. So, and because K-1 forms can trigger tax payments in retirement accounts, consider owning Oaktree outside of your retirement accounts.

A dirt-cheap automaker

Jeremy Bowman (Ford Motor): High-yielding dividend stocks aren't easy to find in today's market as inflated stock valuations have a way of bringing down yields, but one big payer that investors might want to take a closer look at is Ford.

The automaker appears to be oversold as shares have steadily fallen in recent years despite solid profits and a reliable dividend payout that now yields 5.2%. It now trades at a P/E ratio of just 6.3. Like its peer General Motors, Ford seems to be getting punished by the market because investors fear that it will be lost in the shuffle as autonomous vehicles begin to penetrate the auto market. According to the conventional wisdom, car sales will tumble once AV's go mainstream as consumers will just rely on a network of self-driving cars provided by a company like Uber, instead of purchasing their own.

But Ford has a horse in the AV race as the company has said that it will have a fully autonomous vehicle in production by 2021, partnering with four different tech companies and doubling its staff in Silicon Valley to do so. Furthermore, the transition to AV's will likely be slower than many think, especially in more rural areas of the country, and Ford has the No. 1-selling vehicle in the U.S., the Ford F-series pickup truck, which contractors, ranchers other tradesmen are likely to continue buy even when AV's go mainstream.

Analysts expect a slight decline in Ford's EPS this year and next, but the company has beaten earnings estimates in three of the last four quarters, meaning it will likely exceed those estimates. With a yield of 5.2% and a P/E near 6, the stock is simply too cheap to ignore at this point.   

Keep hands and feet inside the coaster at all times

Demitri Kalogeropoulos (Cedar Fair): There were good reasons for investors to greet Cedar Fair's latest earnings report with a dose of skepticism. Sure, sales soared by 13%, but this period accounts for a tiny portion of the theme park specialist's annual results. Meanwhile, a shift in the timing of the Easter holiday this year likely lifted sales during the period -- at the expense of sales in the second quarter. 

Still, the business has a good shot at setting another annual attendance record in 2018 with help from the buzz around four major new roller-coaster rides. Cedar Fair is in a good position to make the most of that extra traffic thanks to recent efforts to increase hotel capacity and expand its food and merchandising sales. Longer term, executives have big projects in mind for the 14,000 acres of undeveloped land Cedar Fair owns that sit adjacent to its main parks.

Altogether, sales should rise at about the 4% pace that management had targeted in late 2017. The dividend, which today yields about 5.4%, will track that revenue growth pace and so it should keep climbing steadily as the theme park industry continues booming. 

The bottom line

Even with their juicy dividends, we can't guarantee that these three promising stocks will go on to beat the broader market from here. But as Oaktree positions itself for the future in alternative investments, Ford recovers from its unusually beaten-down state, and Cedar Fair gears up for a potentially stellar year, we think the chances are high that they'll prove exceptional businesses for long-term shareholders.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.