Rising interest rates have led to better-paying government bonds. For investors, that means a higher return for your investment. It's not uncommon to find bonds now yielding around 4% Consider the 10-year Treasury Note, which today yields 3.96%.
Now while that may be tempting, you could find a still-higher yield with certain stocks. Healthpeak Properties (PEAK +1.71%), Enbridge (ENB +0.23%), and International Business Machines (IBM +0.98%) all pay over 5% and are safe stocks to buy with the potential to deliver gains on top of their already strong yields.
If you have $5,000 to invest, these three stocks could help you make the most of it.
1. Healthpeak Properties
Healthpeak is a real estate investment trust (REIT) that yields 5.1% today, which is better than the S&P 500, which averages a yield of 1.8%. The company's portfolio focuses on healthcare facilities, which in turn depend on the fortunes of the healthcare industry. As a result, this should make for a fairly stable investment to hold, especially now that COVID cases aren't soaring and causing huge disruptions for hospitals anymore.
NYSE: PEAK
Key Data Points
Although Healthpeak's shares have fallen 35% year to date, much of that has to do with softness in the market as the S&P 500 is down 23% over the same stretch. Investors may also be concerned about the debt that REITs such as Healthpeak often carry. Healthpeak's debt totals $6.7 billion right now, but its interest expense totaled $41.9 million for the period ended June 30, which was just 8% of revenue ($517.9 million).
The REIT's strong financials leave plenty of a buffer for it to absorb more increases as Healthpeak's net income this past quarter was still over $68 million, or 13% of revenue. In terms of funds from operations, or FFO, the company's profit was $0.44 per share -- easily enough to cover its quarterly dividend payment of $0.30.
Investors could be making a mistake in selling off what's still an attractive dividend stock. Between its high yield and the opportunity to rally from where it is now, near its 52-week low, Healthpeak is a solid stock to buy right now.
2. Enbridge
Enbridge's dividend yield is up to 7% right now, and it is the best payout on this list. What's more impressive is this oil and gas company has been raising its dividend payments for 27 straight years, the most recent hike being announced last December.
NYSE: ENB
Key Data Points
The stock has done fairly well given how shaky the markets have been; year to date, its shares are down a modest 5%. However, this is a stock that has the potential to attract both dividend and growth investors. When it released its second-quarter results in July (for the period ended June 30), it announced that it had secured 3.6 billion Canadian dollars worth of new projects. In total, it has added CA$4.5 billion in new projects this year alone.
Investing in Enbridge is a safer play than buying shares of an oil and gas producer, because as a pipeline company, Enbridge isn't as volatile with respect to commodity prices. It posted strong profits during a tumultuous 2020, when the price of oil briefly went negative. Enbridge is a stable stock that investors can buy and hold for years.
3. International Business Machines
Another top-yielding stock to buy is International Business Machines (IBM). The tech company pays a dividend yield of 5.4%, and it can also be a safe long-term buy for investors. Down around 9% year to date, it has outperformed the market, and it's easy to see why since the business is still doing well.
NYSE: IBM
Key Data Points
For the three-month period ended June 30, its revenue totaled $15.5 billion and rose 9% year over year. All of its segments generated growth, including software, consulting, infrastructure, and its cloud business. The company is still a top name in tech and well-positioned to benefit from more businesses doing work in the cloud and becoming more digitized and automated.
CEO Arvind Krishna credited the recent results due to "balanced growth across our geographies, driven by client demand for our hybrid cloud and AI offerings." Over the long term and once inflation becomes more manageable, there could be more growth ahead for IBM as companies get back to spending more on upgrading their IT infrastructure. But even now, IBM is proving to be a resilient, safe stock to own.
