There's no official definition of a high-yield dividend stock. However, most investors would classify it as one with a dividend yield higher than a common benchmark such as the S&P 500 index or a 10-year U.S. Treasury note. In mid-2023, the dividend yield on the S&P 500 averaged about 1.6%, while the 10-year note was around 3.7%. Many investors would consider any dividend above those levels as high-yield.
That baseline measurement aside, investors shouldn't buy a stock because of its dividend yield alone. They need to make sure that the dividend payments are sustainable. It should be a high-quality company with durable cash flow, a strong balance sheet, and visible growth potential. With that caveat in mind, here are 20 high-yield dividend stocks to consider buying for dividend income.
Twenty high-yield dividend stocks to watch
Twenty high-yield dividend stocks to watch
|High-yield dividend stock||Ticker||Annual dividend amount||Dividend yield|
|Enterprise Products Partners||(NYSE:EPD)||$1.96||7.5%|
|Extra Space Storage||(NYSE:EXR)||$6.48||4.4%|
|Walgreens Boots Alliance||(NASDAQ:WBA)||$1.92||6.1%|
Here's a brief look at what makes each of these high-yield dividend stocks look like attractive buys in 2023.
Dividend Stocks 1-5
Drugmaker AbbVie has had an excellent dividend track record since its spinoff from Abbott Labs (ABT -0.94%) in 2013. From its inception through early 2023, AbbVie has increased its payout by a whopping 270%. AbbVie has carried on the dividend growth legacy inherited from Abbott by boosting its payout every year.
Although AbbVie will lose its patent-protected exclusivity for the top-selling drug Humira in 2023, newer products like Rinvoq and Skyrizi should help cushion the blow. Because of that, it's in excellent shape to keep the dividend income flowing and growing.
2. AvalonBay Communities
As one of the largest apartment owners in the country, AvalonBay benefits from collecting steady rental income to support its high-yielding payout. The real estate investment trust (REIT) also boasts a top-tier financial profile. The company's financial strength allows it to expand its apartment portfolio by developing and acquiring new communities.
While the company hasn't increased its payout every year, AvalonBay has grown its dividend at a 5% annual rate since its 1994 initial public offering (IPO), including by 3.8% in early 2023. With demand for apartments continuing to grow, the REIT should be able to keep increasing its dividend in the coming years.
3. Brookfield Infrastructure
Brookfield Infrastructure operates a diversified portfolio of infrastructure businesses focused on utilities, transportation, energy midstream, and data. The businesses generate relatively stable cash flow to support its growing dividend. The infrastructure stock delivered its 14th straight year of increasing its payout in early 2023.
Brookfield envisions increasing its dividend at a 5% to 9% annual rate over the long term, powered by the organic growth of its existing businesses and acquisitions. The company's organic growth drivers of inflation-linked rate increases, volume growth as the global economy expands, and expansion projects should grow its funds from operations (FFO) by 6% to 9% per share over the long term. Meanwhile, future acquisitions will further pad its bottom line. The company acquired a European data center platform and a global container leasing company in 2023.
4. Brookfield Renewable
Brookfield Renewable is a sibling company of Brookfield Infrastructure. Brookfield Corporation (BN 0.54%) controls both companies. This Brookfield entity focuses on renewable energy, including hydroelectric, wind, solar, and energy storage facilities. The assets generate steady cash flow backed by long-term power purchase agreements with utilities and other end users, supporting Brookfield's high-yield dividend.
The company also expects to increase its payout at a 5% to 9% annual pace over the long term. Powering that forecast is its organic growth drivers — including an extensive pipeline of new renewable energy projects — plus additional acquisitions. Brookfield Renewable has already secured and funded at least 8% annual funds from operations (FFO) per share growth through 2027.
5. Duke Energy
Duke Energy is a leading utility. The company's electric utilities serve 8.2 million customers across six states, while its natural gas utilities provide gas to 1.6 million customers across five states. Its businesses generate very stable cash flows backed by government-regulated rate structures.
Duke has a large-scale investment program underway to expand its transformation and distribution network. These investments should grow its earnings per share by 5% to 7% annually through 2027. The earnings growth should enable the utility to continue growing its dividend.
Dividend Stocks 6-10
6. Crown Castle International
Crown Castle is a REIT focused on owning communications infrastructure in the U.S., including cell towers, small cells, and fiber optic networks. Its infrastructure is crucial to supporting the mobile industry's next-generation network: 5G. Crown Castle sees a decades-long opportunity to invest in new 5G-related infrastructure. That should drive 7% to 8% annual dividend growth over the long term. It has grown its dividend payment at a 9% compound annual rate since 2016.
The big oil giant's top financial priority is to sustain and grow its dividend. The company delivered its 36th consecutive annual dividend increase in 2023, one of the longest streaks among oil stocks. Chevron has grown its dividend at a 6% compound annual rate over the last 15 years. Chevron's integrated operations, low-cost oil business, and lower-carbon energy investments position it to sustain and grow its dividend in future years.
Canadian oil pipeline giant Enbridge has been an outstanding dividend stock over the years. It has paid dividends for more than 68 years, including expanding its payout in each of the past 28 years.
While the world is transitioning its fuel supply from oil to cleaner alternatives, Enbridge is adapting by investing in infrastructure to support natural gas projects and offshore wind farms. The investments have the company on track to increase its cash flow per share by a mid-single-digit annual rate for the next several years, which should support continued dividend growth.
9. Enterprise Products Partners
Enterprise Products Partners ranks as one of the top players in the midstream oil and gas market. The master limited partnership (MLP) has increased its payout for almost a quarter century.
While the company currently focuses on fossil fuels, it formed an evolutionary technology group in 2021 to pursue opportunities in the energy transition. The future investments should give Enterprise the fuel to continue increasing its dividend.
10. Gilead Sciences
Gilead Sciences pays one of the most attractive dividends in the biotechnology sector. The company has a solid dividend track record, increasing its payout every year since it initiated one in 2015. Its strong HIV franchise is the biotech's anchor.
However, Gilead has also been able to cash in on its antiviral treatment Remdesivir, one of the few approved treatments for COVID-19. It has several other promising drugs in the pipeline that should drive continued sales growth in the future.
Dividend Stocks 11-15
Leading alternative asset manager Blackstone has a unique dividend policy. The company returns almost all of its earnings to investors via dividends and share repurchases. Because of that, its dividend payment changes each quarter as its earnings fluctuate. However, the overall payment has steadily risen over the years, along with Blackstone's earnings.
12. Regions Financial
Regions Financial is one of the country's largest banks, focusing on the South and Midwest. Regions Financial has a long history of paying dividends. While the company reset its payment level during the 2008-09 financial crisis, it has increased the dividend 20-fold since that time.
13. Extra Space Storage
Extra Space Storage is a REIT focused on owning, operating, and managing self-storage facilities. The company has been one of the best-performing stocks in the REIT sector over the past decade. A big driver is its rapidly rising dividend. Extra Space Storage has increased its payout by almost 550% over the last 10 years.
3M has been a phenomenal dividend stock. The industrial conglomerate has paid dividends for more than a century, including increasing its payout in each of the past 65 straight years. As such, it's a Dividend King, a company with 50 or more years of consecutive dividend increases. The company's strategy of investing in new products has driven that steady growth. It has expanded its sales and enabled 3M to keep increasing its dividend.
Pfizer has paid dividends for roughly 340 consecutive quarters. The pharmaceutical giant's investments in research and development are paying off. The company developed one of the first vaccines against COVID-19 and followed that up with a successful oral treatment. The commercial successes have enabled Pfizer to continue making research and development (R&D) investments and strategic acquisitions that should increase its cash flow in the future. Pfizer should continue to generate plenty of cash to fund future dividends.
Dividend Stocks 16-20
16. VICI Properties
VICI Properties is a REIT focusing on owning experiential real estate like casinos. The company leases those properties back to operating companies under long-term triple net leases (NNN). The agreements supply it with steadily rising rental income from annual rate increases. The company also steadily invests in new gaming and non-gaming real estate. VICI Properties' growing income has enabled it to increase its dividend in all five years since its formation.
17. Realty Income
Realty Income lives up to its name. The REIT, which pays a monthly dividend, has made more than 635 consecutive payments. Even better, it has increased its payout more than 100 times since its initial public offering in 1994, expanding it at a 4.4% compound annual rate. That adds up to more than 25 consecutive years.
Driving that growth has been a steady diet of acquisitions. Realty Income purchases single-tenant properties in sale-leaseback transactions, acquires larger property portfolios, and merges with other REITs to grow its portfolio, rental income, and dividend.
18. Verizon Communications
Telecommunications giant Verizon has been a great income stock over the years. The company delivered its 16th consecutive annual dividend increase in 2022, the longest current streak in the U.S. telecom sector. Verizon should be able to continue increasing its dividend as it invests to transition its mobile network to 5G, bringing faster data speeds to its customers.
19. Walgreens Boots Alliance
Pharmacy giant Walgreens has paid dividends for more than 90 years, expanding its payout in each of the past 47. The company expects the streak to continue. It's steadily transforming into a consumer-centric healthcare company that should accelerate its earnings growth. The strategy should enable the company to continue increasing its payout.
20. W.P. Carey
W.P. Carey is a REIT that owns a diversified real estate portfolio. The company has an excellent dividend track record and has increased its payout each year since its IPO in 1998. Behind that steady growth has been W.P. Carey's ability to steadily expand its portfolio of cash-flowing commercial real estate. With a solid financial profile, the REIT has the flexibility to keep growing in the coming years.
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Great income now, more later
All 20 of these dividend stocks offer an above-average yield, making them stand out in a time when many companies don't pay very high dividends. Even better, each one has a solid track record of steadily increasing their dividend and showing no signs of stopping. Because of that, they're great income stocks to buy and hold for the long haul.