In this article, we discuss 10 dividend stocks with over 8% yield.
Stocks with higher dividend yields have historically performed better than those with lower yields in certain periods. According to a study by Heartland Advisors, between 1928 and December 2017, portfolios of companies that paid dividends performed better than portfolios of companies that didn’t. In particular, portfolios with higher dividend yields generally did better than those with lower yields. The report also mentioned that Bank of America-Merrill Lynch split Russell 1000 companies into five groups from 1984 to 2010. They discovered that the second-highest-yielding group offered the best returns when considering risk.
Also read: 12 Cheap Dividend Stocks With High Yields
That said, high dividend yields can also often be a red flag, especially when the respective company’s dividend is not stable. Yield traps can occur when the price of a stock that pays dividends drops significantly because the market expects the company’s future earnings to be much lower. Since dividends depend on earnings, a continuous decline in expected earnings often indicates a potential cut in dividends or, in serious situations, even bankruptcy. In a study, Credit Suisse discovered that among companies offering a certain level of dividend yield, those with lower payout ratios generally had better returns. This suggests that the company has more financial flexibility and may be better positioned to handle unexpected challenges or invest in future opportunities.
However, certain industries, such as utilities, real estate, energy, and telecommunications tend to provide higher dividend yields to shareholders because of their cash-generating nature. Some of the best dividend stocks with high dividend yields include Verizon Communications Inc. (NYSE:VZ), Walgreens Boots Alliance Inc. (NASDAQ:WBA), and 3M Company (NYSE:MMM).
Our Methodology:
For this list, we screened for dividend stocks that have dividend yields above 8%, as of August 18. While the companies mentioned below provide above-average dividend yields, they have a history of consistently paying dividends to their shareholders. Additionally, we took into account the overall financial health of these companies, which indicates that their upcoming dividends are likely to remain dependable. The stocks are ranked in ascending order of their dividend yields, as of August 18.
Image by Sergei Tokmakov Terms.Law from Pixabay
10. Altria Group, Inc. (NYSE:MO)
Dividend Yield as of August 18: 8.83%
Altria Group, Inc. (NYSE:MO) is a Virginia-based tobacco company that also specializes in the manufacturing of cigarettes and related products. The company recently announced its second quarter 2023 earnings and reported a 1.3% year-over-year growth in its revenue at $5.44 billion. Its cash position also remained strong during the quarter as it returned over $1.7 billion to shareholders through dividends, which makes it one of the best dividend stocks on our list.
Altria Group, Inc. currently pays a quarterly dividend of $0.94 per share and has a dividend yield of 8.83% as of August 18. Despite its high dividend yield, the company has been growing its dividends consistently for the past 53 years. Verizon Communications Inc., Walgreens Boots Alliance Inc., and 3M Company are some other stocks with high dividend yields to consider.
At the end of Q2 2023, 43 hedge funds tracked by Insider Monkey reported having stakes in Altria Group, Inc., compared with 49 in the previous quarter. The collective value of these stakes is over $4.46 billion. With over 6.3 million shares, Harris Associates was the company’s leading stakeholder in Q2.
9. Highwoods Properties, Inc. (NYSE:HIW)
Dividend Yield as of August 18: 8.90%
Highwoods Properties, Inc. (NYSE:HIW) is an American real estate investment trust company that primarily focuses on the ownership, development, acquisition, and management of office properties. On July 19, the company declared a quarterly dividend of $0.50 per share, which was in line with its previous dividend. It is one of the best dividend stocks on our list as it has paid regular dividends to shareholders since 1994. The stock’s dividend yield on August 18 came in at 8.90%.
In the second quarter of 2023, Highwoods Properties, Inc. reported revenue of $207.2 million, up 1.7% from the same period last year. The company ended the quarter with over $17 million in cash and cash equivalents and its total assets amounted to over $6 billion.
The number of hedge funds tracked by Insider Monkey owning stakes in Highwoods Properties, Inc. stood at 20 in Q2 2023, the same as in the previous quarter. The collective value of these stakes is nearly $166 million. Cliff Asness’ AQR Capital Management owned the largest stake in the company in Q2.
8. Innovative Industrial Properties, Inc. (NYSE:IIPR)
Dividend Yield as of August 18: 9.27%
Innovative Industrial Properties, Inc. (NYSE:IIPR) is next on our list of the best dividend stocks with over 8% yield. The American real estate investment trust company focuses on the medical cannabis industry and acquires properties that are used for cultivating and processing medical cannabis.
Innovative Industrial Properties, Inc. has grown its dividends every year since 2017. The company currently pays a quarterly dividend of $1.80 per share and has a dividend yield of 9.27%, as of August 18.
Innovative Industrial Properties, Inc. generated over $76.4 million in revenues in the second quarter of 2023, which showed an 8.4% growth from the same period last year. At the end of June 30, the company had over $92.6 million available in cash and cash equivalents, up from $87 million in the prior-year period.
As of the close of Q2 2023, 16 hedge funds tracked by Insider Monkey reported having stakes in Innovative Industrial Properties, Inc., up from 15 in the previous quarter. The consolidated value of these stakes is over $122.3 million.
7. Energy Transfer LP (NYSE:ET)
Dividend Yield as of August 18: 9.63%
Energy Transfer LP (NYSE:ET) is a Texas-based energy company that is engaged in natural gas and propane pipeline transport. On July 25, the company declared a quarterly dividend of $0.31 per share, having raised it by 0.8% from its previous dividend. This marked the company’s seventh consecutive quarter of dividend growth. It also maintains a 5-year streak of consistent dividend growth, which makes it one of the best dividend stocks on our list. The stock has a dividend yield of 9.63%, as reported on August 18.
At the end of June 2023, 34 hedge funds owned investments in Energy Transfer LP, compared with 35 in the previous quarter, as per Insider Monkey’s database. These stakes are collectively worth over $606.3 million. With over 17.8 million ET shares, Abrams Capital Management was the company’s largest stakeholder in Q2.
6. Ares Capital Corporation (NASDAQ:ARCC)
Dividend Yield as of August 18: 9.98%
Ares Capital Corporation (NASDAQ:ARCC) is a California-based asset management company that specializes in providing financing solutions to middle-market companies. In addition to providing financial support, the company often takes an active role in working with the companies it invests in, offering guidance, expertise, and resources to help them succeed.
In the second quarter of 2023, Ares Capital Corporation posted revenue of $674.8 million, which showed a 9.16% growth from the same period last year. Its net income for the quarter came in at $144.5 million.
Ares Capital Corporation currently pays a quarterly dividend of $0.77 per share and has a dividend yield of 9.98%, as of August 18. It is one of the best dividend stocks on our list as the company has been raising its dividends consistently for the past three years.
In addition to Verizon Communications Inc., Walgreens Boots Alliance Inc., and 3M Company, Ares Capital Corporation can be added to dividend portfolios because of its stable dividends and above-average dividend yield.
According to Insider Monkey’s database of Q2 2023, 28 hedge funds owned stakes in Ares Capital Corporation, compared with 31 a quarter earlier. These stakes have a consolidated value of over $677.8 million. HMI Capital was the company’s leading stakeholder in Q2 holding a stake worth over $277.4 million.
Vulcan Value Partners mentioned Ares Capital Corporation in its Q1 2023 investor letter. Here is what the firm has to say:
“Ares Management Corporation (NYSE:ARES), is a global, diversified alternative asset manager with a focus on credit and debt funds. Among alternative asset managers, Ares has a leading market share in credit products. These credit products generate fee-related revenue, which we believe translates to stable earnings power. Ares is benefiting from increasing investor demand for private credit assets. According to industry data, the gap between current and target allocations for institutions is wider for private credit than for private equity, implying that private credit has substantial opportunity for growth. Ares has generated strong historical returns in private credit. Demand for private credit funding has increased from private equity sponsors, who are Ares’s primary customers. This increased demand has resulted in market share gains for private credit against the banks and public markets, and we believe that trend will continue. We think that scale and relationships are Ares’ most important competitive advantages and, to the extent these advantages lead to strong returns, this should lead to continued growth in AUM. The alternative asset management space is competitive, but we believe that Ares is well positioned.”
5. Devon Energy Corporation (NYSE:DVN)
Dividend Yield as of August 18: 10.27%
An American energy company, Devon Energy Corporation (NYSE:DVN) ranks fifth on our list of the best dividend stocks with over 8% yield. Though the company’s revenue declined by 38.7% on a year-over-year basis in the second quarter of 2023, its cash position remained strong. The company generated over $1.4 billion in operating cash flow. During the quarter, it also returned $690 million to shareholders through dividends and share repurchases.
On August 2, Devon Energy Corporation announced that it will pay a regular quarterly dividend of $0.20 per share, along with an additional dividend of $0.29 per share, resulting in a combined quarterly dividend of $0.49 per share. This is different from the previous dividend approach, which was $0.20 fixed and $0.52 variable per share. The stock’s dividend yield on August 18 came in at 10.27%.
Devon Energy Corporation was a part of 45 hedge fund portfolios at the end of Q2 2023, as tracked by Insider Monkey. The stakes owned by these hedge funds have a total value of over $638.6 million.
4. British American Tobacco p.l.c. (NYSE:BTI)
Dividend Yield as of August 18: 10.7%
British American Tobacco p.l.c. (NYSE:BTI) specializes in the manufacturing of tobacco, nicotine, and related products. The company is based in London, United Kingdom. On February 9, 2023, the company announced a dividend of £2.309 for every £0.25 regular share. This dividend will be given in four equal portions of £0.5772 per share, distributed in May 2023, August 2023, November 2023, and February 2024. With a dividend yield of 10.7% as of August 18, BTI is one of the best dividend stocks on our list.
As of the close of Q2 2023, 22 hedge funds in Insider Monkey’s database reported having stakes in British American Tobacco p.l.c. (NYSE:BTI), the same as in the previous quarter. The collective value of these stakes is nearly $489 million.
3. Barings BDC, Inc. (NYSE:BBDC)
Dividend Yield as of August 18: 11.43%
Barings BDC, Inc. (NYSE:BBDC) is an American business development company that specializes in providing financing and investment solutions to middle-market companies. On August 9, the company announced a 4% hike in its quarterly dividend to $0.26 per share. It has raised its dividends multiple times since 2018, which makes it one of the best dividend stocks on our list. The stock offers a dividend yield of 11.43%, as of August 18.
At the end of the June quarter of 2023, 12 hedge funds in Insider Monkey’s database reported having stakes in Barings BDC, Inc., up from 11 in the previous quarter. The consolidated value of these stakes is over $38.6 million.
2. Arbor Realty Trust, Inc. (NYSE:ABR)
Dividend Yield as of August 18: 11.44%
Arbor Realty Trust, Inc. (NYSE:ABR) is a real estate investment trust company that acquires and manages a wide variety of real estate properties, with a primary focus on multifamily and commercial real estate. The company hiked its quarterly dividend by 2.4% to $0.43 on July 28. Through this increase, it took its dividend growth streak to 11 years, which makes it one of the best dividend stocks on our list. The stock’s dividend yield on August 18 came in at 11.44%.
Arbor Realty Trust, Inc. was a part of 12 hedge fund portfolios at the end of Q2 2023, according to Insider Monkey’s database. The total value of stakes owned by these hedge funds is over $55 million.
Silver Beech Capital mentioned Arbor Realty Trust, Inc. in its Q2 2023 investor letter. Here is what the firm has to say:
“Arbor Realty Trust, Inc. (NYSE:ABR) is a small-capitalization mortgage REIT that primarily originates bridge multifamily and single-family home loans. Arbor also has in-house asset-light agency loan origination and mortgage servicing right segments that are a good strategic fit for properties that mature out of Arbor’s bridge multifamily loan program. Over the last decade, in part due to Arbor’s unique business combination and capital allocation strength, the company has earned among the highest returns on equity and shareholder returns in the mortgage REIT sector. (Click here to read the full text)
1. Medical Properties Trust, Inc. (NYSE:MPW)
Dividend Yield as of August 18: 15.47%
Medical Properties Trust, Inc. (NYSE:MPW) tops our list of the best dividend stocks to consider with high yields. The company currently offers a quarterly dividend of $0.29 per share and has a dividend yield of 15.47%, as of August 18.
At the end of Q2 2023, 20 hedge funds tracked by Insider Monkey presented a bullish stance on Medical Properties Trust, Inc.. The stakes owned by these hedge funds have a collective value of roughly $170 million.
Miller Value Partners mentioned Medical Properties Trust, Inc. in its Q2 2023 investor letter. Here is what the firm has to say:
“Medical Properties Trust, Inc. (NYSE:MPW) gained after it reported 1Q23 revenues of $350.2MM, -14.5% Y/Y, below consensus of $352.5MM, and Normalized Funds from Operations (FFO)/share of $0.37, -21.3% Y/Y, slightly below consensus of $0.38. The company’s CEO noted “The terms of recently announced transactions including Springstone, the acquisition by CommonSpirit of Steward’s Utah operations, Healthscope, and Prime, have valued our hospital investments near and in excess of our original purchase prices. This confirmation of our underwritten asset values by sophisticated market participants, as well as our existing liquidity and prudently planned debt structure, position us to have no debt maturities until 2025.” The REIT saw a modest uptick in leverage during the quarter, with the company’s Adjusted Net Debt to Annualized Earnings Before Interest, Taxes, Depreciation, and Amortization for Real Estate (EBITDAre) ratio standing at 6.5x as of quarter-end, compared to 6.4x as of 12/31/22. Management maintained its quarterly dividend of $0.29/share, or a 12.5% annualized yield. Management updated full-year 2023 (FY23) guidance for Normalized FFO/share of $1.56 (vs. prior guidance for $1.58), implying a P/FFO multiple of 5.9x, to account for the impact of announced deleveraging asset sales (and expected $1.4B in debt reduction).”
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This article is originally published at Insider Monkey.
