High dividend stocks offer a way for investors to earn a return regularly before realizing any gains from the sale of the stock. The dividend can be spent or reinvested in the company. In either case, it is essentially free money. High dividend stocks do not necessarily cost more than their non-dividend bearing counterparts. Not all companies offer dividend stocks and certainly amongst those who do all dividends are not created equal.
There are some companies that pay exceptionally low dividends, such as those that pay less than 1%, but there are also those that offer significant dividends. These dividend bearing stocks tend to have dividend yields over 2%, enough to make up small losses.
Here are 7 stocks that have high dividend yield and high prospects for future earnings and growth:
1. Walgreen Company (WAG) is a US drugstore chain. WAG has a market cap of $30.29 billion and a price-to-earnings ratio of 11.37. It offers a dividend yield of 2.69% and recently traded at $33.56 a share. Steven Cohen, SAC Capital Advisors, is a fan of WAG. He has over $50 million invested in the stock (check out Steve Cohen’s top picks for SAC Capital).
2. Lancaster Colony Corporation (LANC) is a company that manufactures and markets consumer products, particularly those relating to specialty foods for retail and food service markets. It has a market cap of $1.73 billion and offers a dividend yield of 2.22%. LANC is a favorite of Chuck Royce of Royce & Associates. He has more than $137 million invested in the company for his fund (see Chuck Royce’s favorite stocks).
3. Air Products and Chemicals Inc. (APD) provides process and specialty gases, various performance materials, and equipment. This company has a market cap of $17.69 billion and a price to earnings ratio of 15.58. It is currently trading at $83.03 a share, which is close to its 52-week median. Rick Dillon keeps over $154 million invested in APD for his Diamond Hill Capital (read about Rick Dillion’s largest positions).
4. The Coca-Cola Company (KO) is the market leader in soft drinks worldwide. KO has a market cap of $153.61 billion and a price to earnings ratio of 12.50. It is currently trading at $66.90 a share and offers a 2.81% dividend. Warren Buffett famously keeps more than 25% of Berkshire Hathaway’s fund invested in KO (see Warren Buffett’s most bullish positions).
5. Stanley Black & Decker Inc. (SWK) makes hand tools and security solutions. It has a $9.43 billion market cap and a price to earnings ratio of 15.55. It recently traded at $56.04 a share and offers a dividend of 2.93%. John Rogers holds 2.29% of his Ariel Investments fund in SWK stock (check out John Rogers’s favorite positions).
6. The McGraw-Hill Companies Inc. (MHP) is an information services and media company. It recently traded at $43.33 a share and offers a dividend yield of 2.31%. MHP has a market cap of $13.06 billion and a PE ratio of 15.51. Barry Rosenstein has over $322 million of the Jana Partners fund invested in MHP (see Barry Rosenstein’s top positions).
7. Brady Corp. (BRC) makes products that protect property, people and products. It has a PE ratio of 14.12 and a market cap of $1.51 billion. BRC offers a dividend yield of 2.59% and recently traded at $28.59 a share. John Rogers is also bullish about BRC. He holds over $94 million of the Ariel Investments fund in the stock.