7 High-Yield Stocks To Safeguard Your Income
Earning high, consistent dividends is the aim of every income investor. This goal, however, has become nearly impossible in today’s market, largely thanks to persistently low rates and the hoards of investors trying to squeeze every penny of growth out of shares.
My research has identified seven stocks with varying degrees of risk that are still regularly shelling out sizeable income. Consider the following securities for your income portfolio.
1. Omega Healthcare Investors (NYSE: OHI)
Sometimes everything lines up to create an ideal investment. Throwing off an incredible 8.2% yield, OHI is in the perfect choice for income-starved investors.
Omega Healthcare is a real estate investment trust (REIT) specializing in assisted living facilities and skilled nursing facilities in the United States and the United Kingdom. Boasting a $9 billion-plus portfolio of over 975 units, the company has increased its dividend fifteen years in a row. A P/E of just under 18 and five-year EPS growth in excess of 7% sweeten the deal.
#-ad_banner-#OHI’s future is looking bright as well. Nearly 15% of the U.S. population is 65 years of age or older. This number is projected to continue to grow over the next century, providing a never-ending stream of customers (and cash) for this leading healthcare provider.
2. Spectra Energy Partners (NYSE: SEP)
SEP is a master limited partnership (MLP) yielding 6.6% with the lowest P/E ratio of its peers at 14.2. Dividends have increased annually for the last nine years, with a growth rate of just over 7% during the previous five years.
The natural gas company’s cash flow is protected by long-term contracts, with 90% of revenue coming from capacity reservation fees for its pipelines and storage assets. This setup means that Spectra’s income is not dependent on oil and gas prices. Even better, the company’s pipeline is nearly impossible to replicate economically, providing a substantial and defensible competitive advantage.
3. Main Street Capital (NYSE: MAIN)
Every list of high-yield stocks needs a business development company (BDC). A BDC is an unregistered investment company that invests in small- and medium-sized businesses.
Main Street’s investment portfolio consists of around 200 companies, with an average investment of $9 million per company. Boasting a total of $3.5 billion in assets under management, approximately 90% of its investments are structured as first-priority loans, which help to lower default risk.
Shares are trading higher by over 8% this year and the stock yields 5.7%. The dividends have been increasing at a clip of nearly 10% annually over the last five years.
4. Iron Mountain (NYSE: IRM)
Shares of this REIT specializing in information management have climbed over 20% this year and now pay 5.4%.
The company is rapidly expanding into emerging markets, and expects these areas to account for 20% of all sales by 2020. Management has plans to increase dividends by 13% this year, 7% next year, and then at a 4% annual rate from 2019 onward.
5. Target (NYSE: TGT)
You may not think a retailer would fit the bill for high growth stocks, but Target pays a solid 4.1%. A dividend aristocrat, the company boasts a 49-year dividend growth record, has a forward P/E ratio of 13, and a five-year EPS growth rate of nearly 9%.
Make no mistake, Target is struggling, with its shares off by over 17% this year. However, a variety of initiatives and a partnership with Google parent company Alphabet (Nasdaq: GOOG) has started to stabilize the ship.
Risk-embracing investors who believe in Target’s long-term plans, product mix, and management may be looking at a bargain at the now-depressed share price.
6. Black Box (Nasdaq: BBOX)
Yielding an astounding 14.6%, this technology infrastructure solutions company has fallen on tough times. First-quarter earnings sent shares plunging into the sub-$3.00 range in September. However, the price soon found a bottom and rallied back to $3.30.
The company pays a quarterly dividend and is heavily investing in systems, people, and processes to improve the bottom line. Potential for growth means this ultra-high yielder is an ideal choice for risk-taking, bottom-fishing investors.
7. CSI Compressco LP (Nasdaq: CCLP)
CCLP is another ultra-high yielding stock at 14.5%, largely because the share price has been beaten down by 47% this year. At this price, CCLP could be an ideal technical buy opportunity.
Structured as an MLP, the company focuses on compression services and equipment for natural gas production, gathering, transportation, processing, and storage.
Climbing natural gas prices thanks to high U.S. exports, slowing production, and underpriced winter contracts have worked in the company’s favor. Shares are an excellent choice for natural gas bulls and those who do not mind taking on some risk to earn outsized dividends.
Risks To Consider: Remember: the higher the dividend, the higher the risk. Always diversify your income portfolio and allocate prudently rather than merely chasing highest yielders.
Action To Take: Consider adding one or more the above high-yielding stocks to your portfolio.
Editor’s Note: We’re sitting on a collection of the safest, most generous monthly payers available. And while $11,200 in dividend checks is a welcome addition to anyone’s income, investors also love racking up capital gains as high as 446%. Start generating a 10%-plus income stream for life today from these consistent companies.