Income investors have taken it on the chin this year. The COVID-19 outbreak pummeled the global economy, forcing companies to slash spending to preserve cash. As a result, many cut or suspended their dividends.
However, quite a few attractive dividend stocks remain, with several offering yields above 4% -- double that of the average stock in the S&P 500. Here are four that look like compelling buys for income-seekers right now.
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Clearway Energy: 4.3% dividend yield
While most companies were slashing or suspending their dividends this year, Clearway Energy (CWEN 0.61%) (CWEN.A 0.35%) was increasing its payout. The renewable energy producer boosted its dividend three times, increasing it by 59% overall. Powering the surge in its income stream was the emergence of a key customer from bankruptcy and a string of new investments.
The company's recent deals and increasingly visible investment pipeline lead it to believe it can grow its dividend by 5% to 8% per year for the foreseeable future. It anticipates delivering higher-end growth in 2021. Add that upside to its already appealing yield, and Clearway should have the power to produce attractive total returns in the coming years. That's especially true as the global economy continues to pivot toward cleaner energy options.
Kimco Realty: 4.1% dividend yield
Kimco Realty (KIM 0.21%) was one of the many companies that suspended its payout earlier this year as the COVID-19 outbreak impacted its shopping centers. However, the real estate investment trust (REIT) reinstated a dividend in September, which it increased in November due to improving rental collection rates from its retail tenants. At the current level, the REIT's dividend yields more than 4%.
That payout seems likely to rise further in 2021. In declaring its fourth-quarter payout, Kimco stated that it "expects to establish a more normalized and well-covered dividend level based on our adjusted funds from operations and REIT taxable income in 2021." Given the recent positive data on vaccines, the retail sector should be much stronger next year, giving retailers more cash to pay rent and Kimco the funds to pay a higher dividend.
TC Energy: 5.4% dividend yield
Canadian energy infrastructure giant TC Energy (TRP 0.14%) bucked the dividend reduction trend in the energy sector this year by declaring its 20th consecutive annual dividend increase. It boosted the payout by another 8%, slightly above its 7% average over the past decade. The company had the confidence to continue that upward trend thanks to its strong financial profile and its pipeline and power operations' overall stability.
TC Energy sees more growth ahead for its payout. The company anticipates increasing its dividend by another 8% to 10% next year. Meanwhile, it sees the payout growing at a 5% to 7% annual rate after that. Fueling that forecast is its multibillion-dollar expansion project backlog, including a mix of new pipelines and power and storage projects.
W.P. Carey: 5.8% dividend yield
Diversified REIT W.P. Carey (WPC) also has a long history of increasing its dividend at least once each year, with its current streak dating back to 1998. The company has already given its investors a raise each quarter this year, despite the real estate sector's turmoil. That's due to its portfolio's overall strength, as evidenced by its rental collection rate, which averaged 98% during the third quarter.
Meanwhile, the REIT has been an active acquirer this year, investing roughly $700 million through early November on new additions to its portfolio. W.P. Carey expects to end the year strong, with it likely investing toward the top end of its $750 million-$1 billion target range. That momentum should continue into 2021 in the company's view, enabling it to keep growing its high-yielding dividend.
High yields now with even bigger paydays ahead
Clearway, Kimco, TC Energy, and W.P. Carey stand out as enticing income stocks. They not only offer above-average current payouts of more than 4%, but each also expects to increase its dividends in the coming year. That combination of growth and income could give these dividend payers the fuel to produce market-beating total returns, making them ideal stocks to consider buying these days.