When it comes to dividend yields, bigger may not always be better.
A stock with a double-digit percentage yield might seem like a no-brainer buy, but dividend yields don't usually get that high unless there's a problem with the company. And if it's a big enough problem, the dividend often gets cut with no warning.
But if high dividends are what you're after, there are still quality companies offering yields of between 6% and 8%, with minimal risk to shareholders.
Here's three of the highest-yielding quality dividend stocks you can buy right now.
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1. Rio Tinto (6% yield)
Australian company Rio Tinto (RIO -0.40%) is a $100 billion mining company with operations around the globe. Its primary focus is metals mining, including staples like iron ore, aluminum, and copper, but it also mines rare earth minerals like lithium and scandium, plus a variety of other products including diamonds, salt, and white paint pigment titanium dioxide.
Global metal prices fluctuate constantly, and Rio Tinto's fundamentals tend to rise and fall with them. In 2024, for example, lower iron ore prices caused the company's earnings to slip slightly. That said, the company's net income has been on a lumpy upward trajectory recently. Over the past decade, it's more than doubled to $10.3 billion.
While the business is sound and its yield is high, Rio Tinto has some unusual dividend policies that investors need to be aware of before buying.
First, Rio Tinto only pays out dividends twice a year: a smaller "interim" payment each September followed by a larger "final" payment every April. Second, because of the company's expected earnings swings, it recalculates its payout every year. When metal prices are high, the payout goes up -- like in 2022, when it yielded over 14% -- and when they're low it goes down. Its current 6% is the lowest it's been in years. That might sound scary, but since 2017 it's never dropped below 4% (which is still well above market average).
For dividend investors willing to accept a fluctuating semiannual payout in exchange for a high yield, Rio Tinto is an excellent choice.
2. Alexandria Real Estate Equities (6.3% yield)
One type of high-yielding investment is the real estate investment trust (REIT), which is required to return almost all of its free cash flow to shareholders in the form of dividends. And one of the highest-yielding REITs right now is Alexandria Real Estate Equities (ARE 0.21%), which currently yields 6.3%.
Alexandria specializes in a very particular type of property: life science laboratory space in major U.S. research markets like Boston and Seattle. Its clients include some of the largest pharmaceutical companies in the world, like Eli Lilly (LLY 2.09%) and Bristol Myers-Squibb (BMY -0.10%). About 75% of Alexandria's revenue comes from "mega-campuses": massive purpose-built facilities that can accommodate the equipment, systems, and sanitation needs of an advanced biotech lab. Because it would be so difficult to replicate these facilities, Alexandria's customer churn is minimal. In 2024, it boasted a 99% occupancy rate.
A recent slowdown in biotech start-up funding, coupled with decreased government funding of biomedical research hit Alexandria's shares hard, but the stock price has begun to recover and the company's balance sheet is sound. Now looks like an excellent time to pick up shares at a discount and score a healthy yield in the process.
3. MPLX (7.6% yield)
Besides REITs, the sector that usually offers the highest yields is the midstream energy sector. These owners of oil and gas pipelines, storage terminals, and export facilities often organize as master limited partnerships (MLPs), which gives them preferential tax treatment in exchange for paying out almost all of their operating cash flow as dividends to their shareholders. MPLX (MPLX -0.31%) is one such partnership.
In a sector full of high yields, MPLX's current 7.6% yield is one of the highest. That's not a sign of trouble, but success. The investor-friendly management team has increased the payout by 10% or more for the last three years, and MPLX's distributable cash flow could cover its current payout 1.5 times over, meaning there's minimal danger of a cut.
With more than a dozen expansion projects in the works and a history of growth through acquisition, it would be hard to beat MPLX in terms of a sustainable high dividend yield.
