High-yield dividend stocks are always popular, especially among retirees, since they can provide steady income streams. But they look especially attractive when the market is down since the companies behind them are typically established and secure, and shareholders can usually count on the payments even when stock prices are tanking.
The stocks with the highest dividend yields don't necessarily make for the best assets to own, however, since those yields may reflect risks attached to their businesses, payouts, and share prices. But there are many excellent, safe stocks with high yields -- among them, Prudential Financial (PRU 0.45%), Realty Income (O 0.64%), and Kimberly Clark (KMB 0.14%).
1. Prudential
Prudential is a financial powerhouse with insurance, investing, and retirement segments. It has more than $1.7 trillion in assets under management and over 50 million customers in 40 countries, although its U.S. business provides almost half of its total earnings.
NYSE: PRU
Key Data Points
Although current macroeconomic conditions have negatively impacted it -- as most financial (and other) companies have been -- it still posted $60 billion in revenue and $6.8 billion in earnings across its last four reported quarters.
In the first quarter -- its most recently reported period -- Prudential's after-tax adjusted operating earnings per share (EPS) came in at $3.17, falling from $3.99 last year. However, it uses that metric as a stand-in for EPS since it excludes realized investment gains and losses, which management views as being outside of the normal company operations.
The company is in the process of restructuring that's intended to increase its efficiency, and it recently completed a sale of some of its units. It also acquired a small stake in a South African financial services firm to promote its emerging markets strategy. And it's working on cutting costs and becoming more agile -- common goals for companies of this size and age that aren't demonstrating high growth.
In the near future, management expects its business to face continued pressure due to rising interest rates. But it raised its payout this year, and its dividend yields nearly 5% at the current share price. Prudential is a high-yielding dividend stock you can count on.
2. Realty Income
Realty Income calls itself "the monthly dividend company," and for anyone looking for reliable, frequent, and high-yielding payouts, this REIT can't be beaten. It's a Dividend Aristocrat with at least 25 consecutive annual payout hikes. In Realty's case, it has raised its dividend in 28 straight years and for 99 consecutive quarters.
NYSE: O
Key Data Points
Like most REITs, Realty Income owns and leases properties. But REITs also are legally obligated to pay out 90% of their taxable income as dividends, which is why many investors like to own them as part of a well-diversified stock portfolio. Realty Income is a great one to pick due to its reliability and high yield. After its merger with peer VEREIT last year, it owns more than 11,000 properties worldwide, making it one of the largest REITs globally. It has 78% of its properties leased to large "essentials" companies that provide "non-discretionary, low price point and/or service-oriented retail," giving it tremendous stability. At the same time, it has more than 1,000 tenants in over 70 industries, providing it with diversification.
Despite its size, it still sees plenty of opportunity for growth, with a total addressable market of $4 trillion in the U.S. and $8 trillion in Europe. In the U.S., public net lease REITs control only 4% of the total addressable market; in Europe, it's an even smaller percentage.
At the current share price, Realty Income's dividend yields 4.3%, which is around where it usually falls. This is a top pick for a stable, high-yielding REIT to mix into your portfolio.
3. Kimberly Clark
Famed investor Peter Lynch advises people to buy what they know, and Kimberly Clark is a company that manufactures many household products that you likely know quite well. Some of its most popular brands include Huggies diapers, Kleenex tissues, and Scott paper towels. These cash cow brands pad the company's coffers and give it the flexibility to bring new brands to market, improve existing products, and pay a generous dividend.
NASDAQ: KMB
Key Data Points
Even after 2020 -- when customers hoarded essentials (remember empty toilet paper aisles?) -- persistent strong demand in 2021 allowed Kimberly Clark to post a 2% sales increase. Sales have continued to pick up steam in 2022, and management raised the full-year outlook after a strong first quarter that featured a 7% year-over-year sales increase. It now expects 4% to 6% sales growth in 2022, up from its initial guidance for 3% to 4% growth.
EPS declined from $1.72 in Q1 2021 to $1.55 in Q1 2022 due to supply chain pressures and inflation, but Kimberly Clark has, so far, successfully countered some of that with careful price increases. It's expecting full-year EPS to increase from $5.35 to about $5.80. The company is also in the process of a global restructuring program to increase efficiency and cut costs.
The company raised its dividend in April for the 50th consecutive year, elevating it to the elite status of Dividend King. The payout yields 3.5% at the current share price, and shareholders should expect years of steady and strong dividends to come.
