3 High-Yield Dividend Stocks to Buy Now

Wednesday, August 19, 2020 | Sean Sechler
3 High-Yield Dividend Stocks to Buy Now

There’s something so satisfying about getting dividend payouts deposited into your account. Watching the payouts stack up and compound over time is one of the most rewarding aspects of investing. People tend to gravitate towards dividend stocks because they generate passive income and can signify that a company has enough financial health to return money to shareholders. In an uncertain market, buying a company that has a strong history of dividend growth helps to provide investors with the reassurance that their money is parked in the right place for the long term.

Unfortunately, some investors that are new to dividend stocks end up chasing the highest yield stocks they can find and end up getting burned. This is usually due to the fact that when a company’s dividend payout ratio gets too high to be sustainable, it will often have to cut or eliminate its dividend altogether at some point. That’s why it’s so important to do your research before buying any dividend stocks, especially when they are high-yield. The good news is that we’ve done the hard work for you and created a list of 3 high-yield dividend stocks to buy below.

AbbVie (NYSE:ABBV)

The first stock on our list is a major pharmaceutical company that currently has a dividend yield of 4.93%. Big pharma companies like this one can be a good pick for dividend investors since they have a strong line-up of best-selling drugs that generate consistent free cash flows. AbbVie is a company that fits the bill and is in a good place financially thanks to products like Humira, which is a popular drug for people with rheumatoid arthritis. It is also a company that has some nice long-term growth potential.

Investors should be impressed by the fact that AbbVie has raised its annual dividend payout for 48 consecutive years and is a dividend aristocrat. It is also a great buy due to the potential of AbbVie’s pipeline, as it has tons of new pharmaceutical products in different phases of clinical trials. In particular, Skyrizi (for plaque psoriasis) and Rinvoq (for rheumatoid arthritis) both look promising and could eventually be best sellers for Abbvie. It looks like biotech stocks aren’t being negatively impacted by the pandemic as much as many investors initially anticipated, which is another reason why AbbVie is a strong buy at this time.

IBM (NYSE:IBM)

There’s a good chance that you are already familiar with this global information technology company. It’s worth a look thanks to its 5.22% dividend yield and a strong history of generating solid free cash flows, which means that its dividend is safe for the time being. IBM is a worldwide provider of information technology products and services and its business can benefit from new trends like cloud computing and the digitalization of major companies.

This is another dividend aristocrat that might not be growing its earnings like it once was but will be a reliable dividend-payer for those investors looking for extra income. The company’s Q2 earnings weren’t amazing, but there were some positives such as a 14.7% year-over-year increase in free cash flow to $2.9 billion in Q2. It’s also nice to see a strong balance sheet when buying a high dividend yield stock, and IBM had $14.3 billion of cash on hand at the end of Q2. Although this company faces some challenges related to the pandemic, its attractive dividend yield, strong brand name, and value at these price levels make it worth a look for dividend investors.

Realty Income (NYSE:O)

There are quite a few REITs out there that are not looking like good investments at this time. With the pandemic causing so many retailers to shutter their doors, you need to be extra careful when buying companies whose cash flows are dependent on tenants paying their monthly rent. However, Realty Income is a dividend-paying REIT that is still worth a look even in an uncertain environment for commercial properties. It’s unique in that it pays monthly dividends, which means you can expect more frequent payouts than with most other stocks. With a dividend yield of 4.55%, it is absolutely worth a look for any dividend portfolio.

The reason Realty Income is a REIT that should be on your radar has to do with the properties that make up its portfolio. Realty Income owns over 6,500 properties with a large portion of that made up of dollar, convenience, and drug stores. This is good news since those types of properties will always have a strong demand for their products and services regardless of the state of the economy. Realty Income collected 91.5% of its July rent and is another company with a very strong balance sheet. If you are looking for safety and steady income from a high-yield dividend stock, consider the fact that Realty Income has paid a dividend for 602 consecutive months.


7 Tech Stocks That Are Heating Up as Anti-Trust Talk Cools Down

For the better part of the last year, Congress has had “big tech” in its crosshairs. But the reasons why largely depend on what side of the aisle a particular individual was on.

On the one hand, there are politicians who are concerned about the role that technology companies play in restricting the free flow of information. On the other hand, there are politicians that are concerned about these companies' stranglehold on competitors and innovation.

But big tech scored an important, albeit not final, victory in late June. At that time, a U.S. judge dismissed two separate complaints against Facebook (NASDAQ:FB). The question in front of the judge was whether Facebook held a monopoly on social media. Due to a surge in the company’s stock price after the ruling, Facebook became a member of the exclusive $1 trillion market cap club. While big tech companies will remain under the Congressional microscope, there’s no denying that investors are looking at the ruling as a signal to rotate back into tech stocks. And that’s the focus of this presentation. What tech stocks should you be buying as anti-trust pressure eases?

It would be easy to start and end the list with the FAANG stocks. After all, the motto “Keep it Simple Stupid” comes to mind. There are simply those companies that offer products that are changing our lives now and will continue to do so in the future. And furthermore, customers will continue to pay for their products.

And I do have a couple of these stocks on my list. But the bulk of the stocks on this list are less expensive alternatives to at least one of the FAANG stocks. It doesn’t mean they’re superior companies, but a rising tide tends to lift all boats. And that means these companies have a large upside and you can purchase the stocks for a lot less.

View the "7 Tech Stocks That Are Heating Up as Anti-Trust Talk Cools Down".


Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
AbbVie (ABBV)3.1$107.73-0.3%4.83%29.04Buy$124.15
International Business Machines (IBM)2.3$135.23flat4.85%22.80Hold$154.17
Realty Income (O)2.4$67.68flat4.18%68.36Buy$77.14
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