The current bear market has been brutal for investors of all kinds. Even shares of well-established businesses that are components of the S&P 500 index haven't escaped the beatings. The benchmark index is down around 17% from the peak it reached more than a year ago.
The market's dismal performance since the end of 2021 has been discouraging. At times like this, it's important to remember that every bear market in history has been wiped away by subsequent market recoveries.
The next bull market may already be underway or it might not get started for another year. One way or another, investors who put shares of these high-yield dividend stocks in their portfolio now have a good chance of realizing market-beating gains over the long run.
Medical Properties Trust
Medical Properties Trust (MPW 0.36%) is a real estate investment trust (REIT) that owns 444 hospitals and other acute care facilities spread throughout the U.S. and nine other countries. The stock price has fallen around 58% from its peak last year and now offers a huge 11.5% dividend yield.
NYSE: MPW
Key Data Points
Instead of running its hospitals, Medical Properties Trust just collects rent from dozens of operators that sign long-term leases. Around 94% of the total base rent and interest payments operators have committed to won't be realized until 2032 or later.
This REIT's cash flows are hyper-reliable because it employs net leases that transfer all the variable costs of building ownership, such as taxes and maintenance, to tenants. Unfortunately, issues with one of its largest tenants led to some big write-downs in the fourth quarter of 2022.
People won't stop needing this REIT's underperforming hospitals just because their present operators can't make ends meet. Medical Properties Trust has transitioned properties from failing operators to new ones that can pay their bills with relative ease. While there's a chance it will need to lower its payout in 2023, investors who buy at recent prices have a good chance to realize market-beating gains from this stock over the long run.
Ally Financial
Ally Financial (ALLY 4.66%) is a modern, all-digital bank with roots that go back over a century. It began as the financial arm of General Motors, and automobile loans are still a large part of its business.
NYSE: ALLY
Key Data Points
Ally Financial stock offers a big 4.1% dividend yield right now. Investors who like to see their dividends grow will be glad to know the company has raised its payout a stunning 131% over the past five years.
Ally's retail customers added $3.8 billion worth of deposits in the fourth quarter, bringing its total to $138 billion. The company paid an average rate of 2.45% on retail deposits in the fourth quarter. That was a 1.84% rise year over year -- but don't worry, rates the company will receive from new auto loans rose 2.6% over the same time frame to 9.57%.
A wider net interest margin between rates paid to depositors and rates received from borrowers could allow Ally to make some big dividend payout bumps in the years ahead.
AbbVie
AbbVie (ABBV 0.88%) is another dividend grower that was spun off from a much larger business. At recent prices, the stock offers a 3.9% yield.
NYSE: ABBV
Key Data Points
AbbVie began as the pharmaceutical segment of Abbott Laboratories but the conglomerate spun AbbVie off into a separate entity in 2013. The goal was to isolate Abbott from the rise and eventual fall of Humira, a top-selling anti-inflammatory drug that treats arthritis, psoriasis, and a handful of related conditions.
U.S. Humira sales reached a whopping $18.6 billion in 2022, but this figure will fall dramatically in 2023. Lower-cost biosimilar versions of the injection finally launched this January, and they will hammer sales of AbbVie's branded version 30% to 40% lower in 2023, depending on who you ask.
In recent years, AbbVie has launched new blockbuster drugs that can more than offset impending Humira losses. Skyrizi for psoriasis and Rinvoq for arthritis both launched in 2019 and already generated $7.7 billion in combined revenue last year.
In 2025, management expects sales of Rinvoq and Skyrizi to exceed $17.5 billion. With new blockbusters to offset Humira losses, buying some shares of AbbVie now and holding them over the long run looks like a smart move.
