Looking for high-yield stocks when the stock market is near all-time highs is no easy task. You need to be selective. Luckily, however, there are still some great income opportunities if you take your time and examine the dividend track records that companies like Federal Realty (FRT -0.32%), Bank of Nova Scotia (BNS 0.63%), and even -- with some context -- W.P. Carey (WPC 0.23%) offer up. If you have $500 or $5,000 to invest, here's what you will want to know to get started.
Federal Realty is the king of REITs
Federal Realty's dividend yield is about 4.4%. That compares favorably to the S&P 500 index's scant 1.3% and the average real estate investment trust's (REIT's) 4.1% or so. But the big story is the retail-focused REIT's dividend track record.
Federal Realty is the only REIT to have earned Dividend King status, increased its dividend annually for more than 50 consecutive years. Backing that incredible track record is a company that has focused on quality over quantity, owning a concentrated collection of 100 or so strip malls and mixed-use developments that tend to be among the most desirable in the regions they serve.
Management focuses its efforts on redevelopment and development, as it buys and sells assets over time. The goal is to constantly improve the portfolio's rent-generating capacity. Clearly, that's worked out well for investors, given the industry-leading dividend track record. A $500 investment will leave you with about five shares of Federal Realty stock.
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Bank of Nova Scotia is reliable on the dividend front
Bank of Nova Scotia, usually just called Scotiabank, isn't on the Dividend Kings list. But it has paid dividends every single year since it started paying them in 1833 (no, that's not a typo). The real standout moment for the Canadian bank came during the 2007 to 2009 financial crisis, when many U.S. banks cut their dividends.
Canadian regulators, which are much more conservative than U.S. regulators, barred large Canadian banks from increasing their dividends during the Great Recession. So Scotiabank just held the dividend steady until regulators gave it the green light to start increasing it again. That said, the dividend didn't get increased in 2024 because the company was overhauling its business.
The process of focusing on its best growth opportunities and increasing its exposure to the U.S. market, where it hasn't focused much in the past, has gone well. And the dividend was increased again this year. With a hefty dividend yield of about 5.8%, $500 will get you about nine shares of the stock.
REIT turnaround story W.P. Carey is better than it seems
The last high-yield stock here is W.P. Carey, which has a yield of nearly 5.8%. The big problem here is that this net lease REIT cut its dividend at the end of 2023, right before it would have reached the 25-year mark for annual dividend increases. That decision was actually a good one for the company and will likely lead to decades of dividend growth in the future.
Essentially, W.P. Carey made the decision to exit the office sector as vacancy rates remained stubbornly high after the pandemic and the shift to remote work. It was a large part of the business so there was little option but to reset the dividend to a lower level. Now the REIT largely owns warehouses, industrial assets, and retail properties, all of which are better positioned for long term growth. And the dividend has been increased every quarter since the cut, the same cadence that existed before the reset.
The dividend cut was a tough pill to swallow for investors, but W.P. Carey is a much better company than it was before the reduction. Notably, the office exit left the REIT with cash to invest in new properties that are only now starting to add materially to the rent roll. If you don't mind a low-risk turnaround story, W.P. Carey could be perfect for your portfolio as it builds back its dividend bonafides one quarter at a time. If you invest $500 you will end up with roughly seven shares.
There are dividend opportunities despite the lofty level of the S&P 500
The stock market looks expensive right now, but the market is made up of lots of different individual companies. So there's always some opportunity to find appealing investments, including high yielders like Federal Realty, Scotiabank, and W.P. Carey. They probably won't all appeal to the same type of dividend investor, but if you dig in it is likely that one will be worth adding to your portfolio today.
