If you've got $1,000 that you can afford to invest in the stock market, there are some excellent high-yielding stocks that you can load up on today. While the average S&P 500 stock yields just 1.2%, there are plenty of stocks that pay much more than that.
You might think you have to take on a lot of risk to invest in high-yielding stocks, but that's not always true. Three stocks which pay more than 5% and which can be great income investments to buy today are Realty Income (O 1.01%), Enbridge (ENB 0.21%), and Verizon Communications (VZ -0.41%).
Here's why these can be some of the smartest dividend stocks to buy right now.
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1. Realty Income
One of the best dividend stocks to put $1,000 into today is undoubtedly Realty Income. Not only does it offer a high yield of 5.5%, but it makes payments on a monthly basis. It's one of the few safe dividend stocks that you'll find that can consistently be counted on for recurring monthly payments; many dividend stocks pay every quarter.
The company has been paying a dividend for more than 660 consecutive months, and it has increased the payout 132 times since it went public in 1994. While you may be concerned about Realty Income's high dividend, the real estate investment trust (REIT) has strong fundamentals to support its payout. Over the past six months, its funds from operations (FFO) per share totaled $2.11, which is higher than the $2.01 it reported a year ago. That puts it at an annual run rate of $4.22, which would be higher than the rate of its current annual dividend -- $3.234. There's a good buffer there for the REIT to continue making payments for the foreseeable future.
The stock's strength and stability come from the diversity of its portfolio. In addition to the U.S., it has tenants in multiple European countries. Realty Income has approximately 1,600 clients spanning 91 industries, all while enjoying an occupancy rate of nearly 99%. The stock is up 10% this year, and with terrific fundamentals, it's the type of solid income investment you can buy and hold for the long haul.
2. Enbridge
You can collect an even higher-yielding stock from Canadian-based pipeline giant Enbridge. At around 5.8%, this can be an even safer investment to put your money into. The company has increased its dividend for 30 consecutive years, growing it by an average of 9% per year. Enbridge's business depends on stable, long-term contracts, making it safer than most other oil and gas stocks.
A great example of that is its impressive track record of meeting its guidance. This year, the company says it's on track to meet its guidance for a 20th consecutive year. Meanwhile, its current backlog sits at $32 billion Canadian dollars ($22.8 billion) as it continues to invest in growing its capacity.
The company uses distributable cash flow (DCF) to determine how safe its dividend is. For the period ended June 30, its DCF totaled CA$2.9 billion ($2.07 billion), which is comfortably above the CA$2.2 billion ($1.57 billion) it pays out in dividends per quarter. For dividend investors, Enbridge is a smart stock to own as its payout is much safer than it might appear to be at first glance.
3. Verizon Communications
The highest-yielding dividend stock on this list belongs to Verizon. The telecom company's yield is currently 6.9%. But that's largely due to the stock's sinking value over the years. In the past five years, Verizon's stock has fallen by 33%, pushing its yield up in the process. The company isn't overly concerned, however, as it raised its dividend last month, and in doing so, extended its dividend growth streak to 19 consecutive years.
That doesn't mean that shareholders are happy with the way things are going. Recently, the company replaced CEO Hans Vestberg with ex-PayPal CEO Dan Schulman. Verizon's board of directors is looking to get back to growing its business, presumably by more than just single digits, and it sees Schulman as a key part of the solution.
Verizon's stock has fallen even further amid this uncertainty in management, and with it trading near its 52-week low, it may be an underrated buy. Although its yield is high, the payout ratio is manageable at just 63%. As a result, this can be one of the smarter dividend stocks you can buy today.
