AT&T (T -1.16%), W.P. Carey (WPC -2.10%), Sabra Health Care (SBRA 0.01%), Williams Companies (WMB -0.54%), and TFS Financial (TFSL -1.96%) all have dividends with yields above 5% and a solid history of raising their dividends. These stocks are worth looking over as they should provide ample total returns for patient investors.

Blackboard with the word dividends on it, surrounded by various economic symbols.

Image source: Getty Images. 

1. AT&T: High dividends are calling

AT&T is a Dividend Aristocrat that has been a bargain this year, but it may not stay that way for long. The telecommunications giant has lagged the S&P 500 index and is up a little more than 5% over the past 12 months, but up more than 9% in 2021. The company has raised its dividend for 36 consecutive years and currently has a yield of 6.64%.

Revenue was a reported $43.9 billion in the first quarter of 2021, up 2.7% year over year. Net income grew to $7.9 billion, up 60% over the same period in 2020, and the company's free cash flow was listed as $5.9 billion, up 51% year over year. The dividend payout is safe, with a ratio of 63.5%.

All three segments of the company's business have seen growth. In communications, the company had 64.8 million postpaid phone subscribers, up 0.76% sequentially. Revenue was $28.1 billion, up 5.2% year over year. The WarnerMedia segment had revenue of $8.5 billion, up 9.8% year over year. The company's Latin America segment had $1.3 billion in revenue compared to $1.28 billion in the same quarter of 2020.

The biggest concern about AT&T is its debt. It has $160.6 billion in long-term debt, up 4% sequentially. Its annualized net debt-to-adjusted EBITDA is 3.13, compared to 2.63 last year. On the first-quarter earnings call, CFO Pascal Desroches said that the company plans to focus on paying down that debt this year.

2. W.P. Carey: A raise every quarter

W.P. Carey has seen its stock rise more than 24% over the past 12 months and more than 7% this year. The company's dividend offers a yield of 5.6%, with a twist: The company has raised its dividend for 79 consecutive quarters, including a bump from $1.046 to $1.048 per share in March. The diversified real estate investment trust (REIT) has 1,274 properties across 25 countries, including industrial, warehouse, retail, office, and self-storage properties.

The company has seen growth in adjusted funds from operations (AFFO) the past three quarters, though its fourth-quarter AFFO of $212.6 million is down 4% year over year. Its AFFO in 2020 was $4.74 per diluted share, down 5.2% from 2019. The company was pretty much unfazed by the pandemic -- its low came when it received 96% of contractual rent in May, but in the fourth quarter, that number was back up to 99%, followed by 98% in January.

It has not only raised its quarterly dividend for 23 consecutive years, but its AFFO payout ratio (trailing 12 months) is 88.19, conservative for a REIT.

WPC Dividend Chart
Data by YCharts.

3. Sabra Healthcare: A growing trend that's hard to ignore

Sabra Healthcare, a REIT that specializes in medical facilities, cut its dividend last year from $0.45 to $0.30, and has yet to raise it again. But even with that trim, the yield on the company's dividend it 6.6%. The pandemic made for a challenging year for REITs that focus on nursing homes, and Sabra -- which owns nursing homes, senior living facilities, and specialty hospitals -- is continuing to deal with the headwinds. Many people are still reluctant to live in nursing homes, and in the fourth quarter, total occupancy dropped to 80.2%, down 8.6% year over year.

Other discouraging numbers: The company's AFFO per share for the year was $1.74, down from $2.08 the year before. And for the fourth quarter, the company issued bleak guidance of $0.38-$0.39 of AFFO per share, compared to $0.42 in the fourth quarter of 2020.

So why is Sabra worth watching? I think the paltry 4% rise in the company's stock this year presents an opportunity because the company's fundamentals are still strong. Sabra collected 99% of its rents from the beginning of the pandemic through February of 2021. As for the dividend, it is well covered with a payout ratio of 73% of normalized AFFO per share. The company also did a good job of lowering its debt, knocking down its net debt-to-adjusted EBITDA ratio from 5.7 to 4.9.

The long-term prognosis for nursing homes is still a growth trend, as our population continues to age. The pandemic reversed the growth of occupancy for nursing homes, but not forever. In the meantime, the company's dividend is a nice reward for waiting for a turnaround.

4. Williams Companies: A boon to investors

Williams Companies' stock is up more than 31% over the past 12 months, and more than 21% this year. The company's dividend, which offers a current yield of 6.73% is enticing. The company has raised its dividend the past five years.

The company delivers 30% of the country's natural gas through its more than 30,000 miles of pipelines. Last year was a difficult one for oil and gas companies, with oil and natural gas prices down, but Williams Companies still improved its numbers over 2019 by reducing capital expenditures. Its adjusted EBITDA of $5.1 million was up 2% year over year, while its adjusted funds from operations of $3.6 million were up 1% year over year. The company's cash dividend payout ratio, while still precariously high at 87.39%, is down from where it was in 2019.

The company raised its quarterly dividend 5.3% last year to $0.40 per share, and has already raised it 2.5% this year to $0.41 per share.

5: TFS Financial: Dividends you can bank on

TFS Financial, based in Cleveland, is a holding company whose subsidiaries make most of their money from offering mortgage loans, though they also have savings and checking accounts. The company's shares are up more than 10% this year and more than 37% over the past 12 months. Its dividend yields 5.73% with a cash dividend payout ratio (TTM) of 45.9%.

In 2020, TFS Financial reported annual revenue of $509 million, up only 1.9% year over year, but marking the sixth consecutive year it grew revenue. It also reported annual net income last year of $83 million, up 3.8% over 2019.

The company has stressed its commitment to its dividend, which has climbed 300% over the past 10 years. 

Making the best of a good situation

All five of these stocks are worth watching because of their dividend growth and high yields. However, of the quintet, W.P. Carey seems the most solid choice if you look at the company's track record of raising its dividend every quarter, the diversity of its real estate holdings, and the consistency of its cash situation.