With the world’s most powerful central bank committed to a hawkish monetary policy, the narrative for high-yield dividend stocks to buy – which can present fundamental risks – just got much more interesting.
Let’s get the bad stuff out of the way first. While companies that pay dividends generally attract attention from long-term investors, too much of a good thing does exist. In other words, if a firm provides an incredibly generous payout, there might be a reason for it. Usually (although not always), it’s not a good one. Here, the list will aim toward a more balanced approach regarding high-yield dividend stocks to buy.
Of course, the encouraging aspect about acquiring dividend providers is that they provide some level of reassurance. With the Federal Reserve recently signaling that it will raise borrowing costs, the incentive profile for risk-on assets declined sharply. However, fundamentally sound businesses now attract more attention. Therefore, reliable high-yield dividend stocks to buy present considerable intrigue for astute investors.
Again, the focus for this list will be on a balance between payouts and business stability and relevance. So, if you’re ready, here are the high-yield dividend stocks to buy now.
Best High-Yield Dividend Stocks: Exxon Mobil (XOM)
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Dividend Yield: 3.68%
One of the biggest names in the energy market, Exxon Mobil (NYSE:XOM) is the largest direct descendant of John D. Rockefeller’s Standard Oil.
Exxon Mobil really came alive in 2022 due to Russia’s invasion of Ukraine. Since then, the subsequent reduction of global energy supplies due to tit-for-tat sanctions and reflationary responses augured well for XOM.
How well? Let’s consider the context. More than two years ago, the crude oil sector suffered a catastrophic loss as the underlying asset briefly dipped below zero. So far this year, XOM gained nearly 55%. In comparison, the S&P 500, despite some recent moves higher, is down 15% during the same period.
Currently, Exxon Mobil features a forward yield of 3.68%. Granted, it’s not the biggest payout among high-yield dividend stocks to buy. However, with the winter season fast approaching and Russia willing to weaponize energy supplies, XOM represents one of the more dependable names within the passive income category.
Truist Financial (TFC)
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Dividend Yield: 4.4%
Headquartered in Charlotte, North Carolina, Truist Financial (NYSE:TFC) represents one of the largest banks in the U.S. According to its 2020 Form 10-K disclosure, Truist operates 2,781 branches in 15 states and Washington, D.C. Primarily, the company operates in the eastern half of the country, most notably in the Carolinas.
Moving forward, the geographical influence of Truist should be significant. For instance, the Carolinas feature many cities that attract millennials. While housing prices may come down due to the Fed raising interest rates to attack inflation, they’re not coming down fast enough. Further, costs of living in the Carolinas are much more competitive than coastal metropolises like Los Angeles or New York.
Presently, Truist Financial features a forward yield of 4.4%. Again, it’s not the highest among high-yield dividend stocks to buy. Nevertheless, the underlying business could be reliable based on millennial migration trends.
Best High-Yield Dividend Stocks: Philip Morris (PM)
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Dividend Yield: 5.3%
Easily one of the more controversial names among high-yield dividend stocks to buy, Philip Morris (NYSE:PM) nevertheless deserves attention. While no one claims that the underlying tobacco industry represents a feel-good story, the company serves certain adult liberties. And though smoking rates historically have declined, it’s always possible that stressors can reverse this trend.
Already, many households feel the strain of multidecade highs in inflation. Should the Fed be successful in implementing its aggressively hawkish monetary policy, the economy could experience a correction. It’s also possible that a recession could be on the horizon. People deal with these matters in myriad ways, which may lift demand for Philip Morris’ products.
As well, the company specializes in discreet, convenient vaporizers, which offer users a cleaner experience. That should help mitigate some of the controversy associated with PM stock.
Currently, Philip Morris features a forward yield of 5.3%.
National Health Investors (NHI)
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Dividend Yield: 5.5%
A real estate investment trust or REIT, National Health Investors (NYSE:NHI) specializes in sale-leaseback, joint-venture, mortgage and mezzanine financing of need-driven and discretionary senior housing and medical investments, according to its website. Further, NHI’s portfolio consists of independent, assisted and memory care communities, entrance-fee communities, skilled nursing facilities, medical office buildings and specialty hospitals.
Fundamentally, the narrative supporting NHI as one of the high-yield dividend stocks to buy comes down to demographics. Specifically, the Pew Research Center stated that baby boomers represented the largest adult population in the U.S. until millennials took over back in 2019.
Now, the country faces another demographical framework. Per a Pew report published in November 2020, the “pace of Boomer retirements has accelerated in the past year.” In other words, NHI simply benefits from mathematical realities: Baby boomers boomed and now they need to be taken care of.
Best High-Yield Dividend Stocks: Vornado Realty Trust (VNO)
Dividend Yield: 7.9%
Before you consider adding Vornado Realty Trust (NYSE:VNO) to your portfolio, you must understand that it’s incredibly risky. Through the end of the Sept. 9 session, VNO shares slipped nearly 37% on a year-to-date basis. So, even with their generous payout, stakeholders may still encounter steep disappointments.
Nevertheless, VNO may justify inclusion on this list of high-yield dividend stocks to buy because of potentially brewing relevance. Vornado specializes in premiere assets in the New York City office and Manhattan retail markets. Put another way, should the return-to-office sentiment pick up steam, VNO could be a big winner.
Frankly, employees engaged in a stare down with their employers might not win the telecommuting wars. And that’s probably due to Fed Chair Jerome Powell. If the central bank succeeds a bit too much with its hawkishness, the economy could slip into recession. Then, it would be incumbent upon workers to demonstrate value to their bosses.
Having a pugnacious attitude, on the other hand? That wouldn’t be smart. Currently, VNO features a forward yield of 7.9%.
Antero Midstream (AM)
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Dividend Yield: 8.9%
If 2022 turned out to be like any other year, Antero Midstream (NYSE:AM) may be too risky of an idea. After all, the current political and ideological framework centers on renewable energy powering electric vehicles. While EVs may very well represent the future, we are learning that oil and gas will be around for a long time.
Naturally, Russia’s invasion of Ukraine contributed to a massive spike in high-yield dividend stocks to buy tethered to the energy sphere. Just as importantly, though, soaring inflation bolsters the case for Antero Midstream.
Earlier this year, Kelley Blue Book reported that the average price of a new EV stood at nearly $63,000. That’s just too big of a price tag for many — if not most — households. Thus, combustion-powered vehicles will likely be relevant for years to come.
As well, the disruptive events of the new normal taught Americans the importance of critical supply chains. From a fundamental perspective, Antero’s business model will be pertinent for the foreseeable future. Presently, the company features a forward yield of 8.9%.
Best High-Yield Dividend Stocks: Sociedad Quimica y Minera de Chile (SQM)
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Dividend Yield: 9.61%
Getting back to the future, many countries wish to transition to sustainable sources. Therefore, Sociedad Quimica y Minera de Chile (NYSE:SQM) and its lithium-mining business should intrigue long-term investors. While it’s the most generous name within this list of high-yield dividend stocks to buy, SQM is also trustworthy.
That’s not to say the company doesn’t have its risks — because it does. Admittedly, the business of lithium mining generates its own controversies due to environmental damage. However, since lithium powers zero-emission EVs, the net result could be better for the planet. Still, it’s worth keeping this risk profile in mind when considering SQM.
Ultimately, though, the broader catalyst for SQM centers on the global pivot to renewable energy. Thanks to Russia’s belligerence, several European leaders seek to fast-track their renewable infrastructure initiatives. Currently, SQM features a forward yield of 9.61%.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.