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3 Dividend Stocks That Yield More Than 4% Annually

By David Jagielski – Feb 11, 2020 at 7:00AM

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They can also bring some diversity to your portfolio.

For income investors, yield is always going to be a key factor when selecting dividend stocks -- though it shouldn't be the only consideration.

If you're looking for equities that yield more than the 1.85% average of the S&P 500, consider Healthpeak Properties (PEAK 0.51%)TC Energy (TRP 2.45%), or Vodafone Group (VOD 1.85%) -- all good investments on their own that yield more than 4% today.

Dividends written on a blackboard along with other images.

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1. Healthpeak Properties

This real estate investment trust (REIT) focuses on the healthcare sector, renting to drug and medical device manufacturers, medical practices, and senior housing and assisted-living communities. As of November, the REIT had 740 properties across the U.S. in states including Florida, Texas, and California.

The company has generated revenue of at least $1.7 billion in each of the past three years, and over the last 12 months, its revenues were over $1.8 billion. It brought in $844 million in free cash flow over the past 12 months, which was more than enough to cover its $711 million in dividend payments during the period. That's what dividend investors like to see -- when free cash flow can cover a dividend, it suggests the payout is secure.

Currently, Healthpeak pays its shareholders $0.37 every quarter. At today's prices, that's an annual yield of about 4.1%. The company hasn't increased its payouts in recent years, and investors probably shouldn't expect that it will in the near future. But it nonetheless could prove to be a good buy. In 2019, the stock rose 23%, which was a little less than the S&P 500's returns of 30%. But over the two-year span of 2018 and 2019, its 32% return beat the S&P's 21% rise.

2. TC Energy

This company offers investors a relatively safe way to invest in the oil-and-gas sector while also adding another high yield to their portfolios. TC Energy performed well last year, rising more than 49%  and vastly outperforming the S&P 500. But over the past two years, it was only up about 10%.

The Calgary-based company has earned profits of more than 3 billion Canadian dollars in each of the past two years, and over the trailing 12 months, it accumulated around CA$4 billion. The stock is a stable buy, and with a dividend yield of around 4.1%, it offers a similar payout to Healthpeak. But it has increased its quarterly payouts by 56% over the past five years, from CA$0.48 to CA$0.75. Indeed, it has boosted payouts annually for 19 consecutive years, and looks likely to continue doing so for the foreseeable future.

3. Vodafone

This U.K.-based telecom operator offers good exposure to the European market with revenue of at least 43 billion euros in each of the past four years. And its strong free cash flow of 6.5 billion euros over the past 12 months was well in excess of the 2.4 billion euros that it paid out in dividends during that time.

Vodafone's position got a lot stronger after it slashed its dividend last year by 40% to just 0.09 euros per share. The payout is more manageable and sustainable today, and the stock still yields more than 5%. While a dividend increase may not happen soon given both the recent cut and Vodafone's commitment of significant resources toward the development of its 5G network, it still offers the highest yield on this list. Based on the amount of free cash that it's generating, investors shouldn't be too concerned about another payout cut happening anytime soon.

Bring some diversity to your investments

Investors who add this trio of dividend stocks to their portfolios would gain some diversification to go with those attractive payouts. Not only do they operate in different industries but they're all based in different countries. With plenty of features that make them attractive from a risk-management point of view, all would be good long-term holdings.

David Jagielski has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Vodafone Group Plc Stock Quote
Vodafone Group Plc
VOD
$12.08 (1.85%) $0.22
TC Energy Corporation Stock Quote
TC Energy Corporation
TRP
$43.45 (2.45%) $1.04
HCP, Inc. Stock Quote
HCP, Inc.
PEAK
$23.88 (0.51%) $0.12

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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