It isn't easy to find low-risk investment income in a market near all-time highs.
In many instances, stocks with high dividend yields, especially when you're talking about yields of 5% or higher, tend to come with enough risk to make you uneasy about holding them.
However, there are exceptions in stable, mature industries, like real estate and tobacco, where top companies tend to enjoy steady profit streams that translate into outsized dividends. These three dividend stocks yield at least 5%, while carrying low betas, meaning they aren't typically very volatile.
Consider buying and holding them for their dividend income and peace of mind.
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This leading REIT pays monthly
Realty Income (O +0.35%) is one of the largest real estate investment trusts (REITs), a company that acquires and leases real estate and distributes its income to shareholders as nonqualified dividends. Realty Income has become known for its dependable monthly dividend. A monthly dividend schedule is somewhat uncommon, so it's a big win for any investors looking for steady income from their portfolio.
NYSE: O
Key Data Points
The company has proven remarkably consistent. It built its business on a tenant base primarily of consumer-facing businesses and net leases, which generate steady rental income. That has enabled management to raise the dividend for 112 consecutive quarters, an impressive track record of growth that really adds up over time, especially if investors reinvest the stock's dividends.
Realty Income's dividend growth streak has survived recessions and the COVID-19 pandemic, so it has faced its fair share of adversity and endured. The stock yields 5.7% at its current share price, so investors are also getting a bit of income from the jump. Lastly, the stock's beta is 0.77, so the share price tends to be less volatile than the broader stock market.
Another rock-solid REIT to hold and sleep well at night
NNN REIT (NNN 0.48%) is a peer of Realty Income, another net-lease REIT focused on consumer-facing tenants. The company's portfolio holds nearly 3,700 properties across the United States, rented to over 400 tenants across 37 lines of trade, including stores, automotive service centers, restaurants, entertainment venues, gyms, theaters, and more.
NYSE: NNN
Key Data Points
The company pays a more traditional quarterly dividend, but has increased the payout for 36 consecutive years. The dividend and business grow at a low-single-digit annualized pace, so you're not going to get explosive growth out of NNN REIT. That said, the starting dividend yield is up there at 5.8%, which can snowball into significant income when you reinvest the dividends over a decade or two.
NNN REIT's beta is slightly higher at 0.94, but the stock is still less volatile than the broader market. The company's leases have an average of 10 years remaining, and the company's credit is investment-grade. Therefore, investors can likely count on the stock's generous dividend for the foreseeable future, making NNN REIT a strong choice for any income-focused investor.
Piling up dividends with this dependable tobacco giant
British American Tobacco (BTI +1.11%) is one of the world's largest tobacco companies. This global behemoth sells cigarettes and smoke-free nicotine products worldwide through a portfolio of various brands. Its product and market mix gives it a smooth runway to transition from cigarettes to increasingly popular smoke-free alternatives, like vaping and oral nicotine salt pouches.
NYSE: BTI
Key Data Points
Tobacco stocks are famous for huge dividends, and British American Tobacco doesn't disappoint. The stock offers a robust starting yield of nearly 5.5%, and British American Tobacco's earnings more than cover the dividend obligation, so investors should not need to worry about the company's ability to pay.
Cigarettes are a slowly dying business, but British American Tobacco has steadily raised prices to help offset that. Over time, the company's vaping and other smoke-free product offerings should grow and contribute more to the total business. The stock's low beta of just 0.38 reflects its slow-and-steady nature, meaning investors can own it and sleep well at night while waiting for their next dividend.
