There are plenty of high-yield dividend stocks that I wouldn't touch with a 10-foot pole. Their business models are shaky. The dividend is in jeopardy of being slashed. Many high-yield dividend stocks simply aren't good picks for long-term investors.
But there are also quite a few stocks with high dividend yields that are attractive. Three such stocks that I'd buy right now are AbbVie (ABBV 0.22%), Brookfield Infrastructure Partners (BIP 0.23%), and Innovative Industrial Partners (IIPR -0.36%). Here's what makes these three stocks stand out.
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1. AbbVie
AbbVie's dividend currently yields a mouthwatering 5.3%. The company claims an impressive track record of dividend hikes, recently increasing its dividend payout for the 47th consecutive year (including the time it was part of Abbott Labs).
The drugmaker does have some challenges. Sales for its best-selling drug, Humira, are under pressure as it loses market share in Europe to biosimilar rivals. That pressure will intensify in just a few years when biosimilars hit the U.S. market.
However, I think that AbbVie has a pretty good strategy to handle Humira's inevitable decline. The company's blockbuster cancer drugs Imbruvica and Venclexta continue to perform very well. AbbVie launched two new immunology drugs last year, Rinvoq and Skyrizi, that should be huge winners.
The company also is nearing closure of its pending acquisition of Allergan. This deal will bring massively successful Botox and fast-rising star Vraylar plus several other drugs into AbbVie's lineup. Acquiring Allergan will help reduce AbbVie's dependence on Humira but shouldn't impact its dividend. I already own AbbVie stock and continue to see it as a great pick for dividend-seeking investors.
2. Brookfield Infrastructure Partners
Brookfield Infrastructure Partners' dividend yield stands at 4% right now. Although the company doesn't have the long history of dividend hikes that AbbVie does, it has boosted its dividend by 42% over the last five years, which isn't shabby at all.
Think of a kind of infrastructure asset, and there's a good chance Brookfield owns it. Cell towers, data centers, electricity transmission systems, natural gas pipelines, ports, railroads, toll roads, and more are among the company's portfolio of assets. The great thing is that they provide steady revenue streams regardless of what's going on with the economy.
Although it's a utility stock, Brookfield delivers a level of growth that's rare for utilities. It has increased funds from operations (FFO) per unit by 17% annually over the last couple of years and is on track to boost that growth to 25% heading into 2020. Brookfield expects to increase cash flow by 9% next year.
The key for Brookfield's solid growth is its strategy to continually evaluate its assets, selling the lower-performing ones and reinvesting to buy assets with higher potential for growth. For example, Brookfield made deals to sell off five assets in 2019 for $1.1 billion and is buying telecom company Cincinnati Bell plus some communications towers in India. I think Brookfield's dealmaking and its array of solid assets should keep the dividends flowing for a long time to come, and I recently scooped up shares of the company.
3. Innovative Industrial Properties
Last, but not least, is Innovative Industrial Properties (IIP). The real estate investment trust (REIT) currently pays a dividend that yields north of 5.4%. And its dividend growth is sizzling hot, with IIP more than doubling its dividend payout since the beginning of 2019.
IIP ranks as the leading REIT that focuses exclusively on the cannabis industry. The company invests in properties then leases them to medical cannabis operators, usually in a leaseback transaction where the medical cannabis operator sells its property to IIP.
Unlike most marijuana stocks, IIP has been consistently profitable for a while. Its revenue and earnings continue to soar as the company gobbles up more properties to lease out.
Future growth shouldn't be a problem, either. IIP currently owns 46 properties in 14 U.S. states. The cannabis markets in several of those states are still in their early stages. There are also another 19 states with legal medical cannabis markets -- and more could be on the way.
