It's hard to beat dividends when investing in the stock market. The market, or any particular stock in it, will fluctuate over time, sometimes significantly. But a healthy, growing company will keep paying out its dividends -- and will increase them over time, too. In this prolonged period of ultra-low interest rates, dividends also offer compelling income streams, with many yields topping interest rates -- and inflation, as well. So, when looking for stocks to buy, consider dividend payers.
Here are three promising companies, each of which recently offered a dividend yield above 5%.
1. HCP (NYSE:HCP)
First up is HCP, recently yielding 5.3%. It's a healthcare-focused real estate investment trust and one with an impressive record of 30 years of uninterrupted dividend payments and annual dividend increases. The properties it focuses on include medical offices, laboratories, senior living and nursing facilities, and hospitals. In its own words, "We acquire, develop, lease, sell, and manage health care real estate, and we are a capital partner to the leading health care providers."
The stock has averaged annual returns of about 15% over the past 25 years and is poised to keep growing in part because of demographics. Simply put, as our population grows and ages, it will need more and more of the kinds of buildings in HCP's geographically diversified portfolio.
One headwind that HCP is likely to face in the coming years is rising interest rates, but that won't derail it. Interest rates have risen and fallen over the decades, and HCP's track record has remained an impressive one. Indeed, over the past few years, the company's gross margins have remained above 80%, while net margins have topped 40%. It's an extremely profitable company, reflecting very able management. HCP is involved in a wide variety of activities, including direct ownership of properties, debt investments, property development, joint ventures, and more. As a REIT, it's required to pay out at least 90% of its income as dividends.
2. Omega Healthcare Investors (NYSE:OHI)
Next up is Omega Healthcare Investors Inc., another healthcare-focused REIT, recently yielding 5.2%. Its portfolio of owned or owned-via-mortgage properties includes 562 skilled nursing facilities, assisted-living facilities, and other specialty hospitals, with approximately 63,532 licensed beds in 37 states. As the company pointed out in a 2014 presentation, it has been ranked No. 1 in 10-year total shareholder return among all publicly traded REITs. Its occupancy rate has been relatively stable over the past few years, topping 80%, and has inched ahead of industry averages, too.
Late last year, Omega announced plans to buy AVIV REIT, which will make it a key player in skilled nursing-care facilities. Over the past 20 years, the stock has averaged annual returns of about 10%, but its performance has improved in recent years, with a 10-year average growth rate close to 22%. Demographics foretell a very promising future for the company, because of its focus on facilities for the elderly.
3. Textainer Group Holdings Limited (NYSE:TGH)
Finally, we have Textainer Group Holdings Limited, recently yielding 5.6%. It's in the shipping industry, but it isn't exactly a shipper. Instead, it owns and leases more than 2 million containers to more than 400 shipping companies. It's the global leader in container leasing, and like the rest of the industry, it's poised to profit from global economic recovery and growth. Its leases tend to be somewhat long term, averaging more than three years, and that contributes to revenue visibility and dividend reliability.
The company's revenue has more than doubled over the past decade, while net income has tripled. Its gross margins top 85%, and net margins have slipped a bit but top 30%. The stock seems fairly valued, with its current and forward-looking P/E ratios near 10, which happens to be its five-year average. Long-term investors are likely to enjoy hefty income from this reliable payer.