5 Best High-Yield Stocks With Safe Dividends in 2024
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A dividend stock pays a portion of a corporation’s earnings to its shareholders at regular intervals. It could be monthly, quarterly, or bi-annually.
High dividend stocks are often referred to as strong sectors that can hold up regardless of market conditions, especially in times of financial crisis. High dividend stocks or high-yield stocks are popularly known as safe investments, and they have the potential to stabilize your diversified portfolio.
Dividend stocks are a great option for private investors looking for an investment that can yield regular income. This is partly because companies that pay dividends usually have a substantial flow of cash, which means they are very likely to keep running in the long term. Investors who are retirees or are close to retirement usually gravitate toward high dividend stocks as a passive source of income.
Whether you are looking to diversify your portfolio with high dividend stocks, looking for an extra stream of cash, or just looking for a relatively safe way to invest in stocks, you need to find reliable high dividend stocks. Here are 5 high dividend stocks with safe and sustainable dividends you can invest in 2024.
5 Best High-Yield Stocks with Safe Dividends
#1. Enterprise Products Partners (EPD)
Enterprise Products Partners (EPD) is a master limited partnership (MLP) and one of the largest midstream fossil fuels companies in the United States. EPD deals in transporting and processing natural gas liquids, crude oil, refined products, and petrochemicals. It has a network of oil and natural gas pipelines throughout the US.
Its operations service most producing regions in the Lower 48 states in the US. EPD is dominant in the NGL market. It is also one of the few MLPs that provide midstream services across the full hydrocarbon value chain.
With a current dividend yield of 7.13%, EPD has delivered an increment in its dividend every year for 22 years now. The company is on a steady climb toward joining the dividend aristocrats, which it will achieve in 3 years if its dividends increase.
Since the start of the year and due to the rise of energy and oil prices, the company’s share price has soared, yielding above 15% returns for investors. This makes it ideal for investors looking for a great value.
EPD trades at a price-to-earnings (P/E) ratio of 12.4. This is a relatively low valuation for investors compared to the common practice among companies in the oil and gas industry, where the average P/E is around 25. EPD also offers a dividend payout ratio (DPR) of around 82%. It is important to note that eight rate EPD stock a Buy, while three rates it a Hold out of eleven analysts. None of the analysts rate it a Sell.
#2. Philip Morris International (PM)
With its headquarters in New York City, Philip Morris International is a tobacco company with a workforce of over 69,600. PM has 39 production facilities worldwide devoted to replacing cigarettes with smoke-free products. The company aims to develop less harmful alternatives to cigarettes.
PM was founded in 1847. Today, it is one of the leading tobacco companies in the US. The company has over 930 scientists, engineers, and technicians working at its research facilities in Switzerland and Singapore. PM is listed on the New York Stock Exchange (NYSE: PM).
For 52 years, PM has increased dividend payments to its investors, putting the company among the dividend aristocrats. In an industry where the average stock trades with a P/E of around 25, PM offers a P/E ratio of about 16. This gives investors a relatively low valuation compared to other companies in the industry.
If you are seeking consistent dividend increases, PM stock is for you.
PM’s DPR is about 81%. The company’s average price target sits at $107.88, indicating that there is a potential for at least 15% gains over the next year. Like EPD stock, no analysts rate PM stock a sell. Five out of eight analysts covering it rate it a Buy, while three rates it a Hold.
#3. IBM (IBM)
International Business Machines Corporation (IBM) is a multinational technology corporation headquartered in New York. IBM was founded in 1911. It now has operations in over 170 countries. IBM deals in the manufacturing and sales of computer hardware, middleware, and software. It also provides hosting and consulting services in fields ranging from mainframe computers to nanotechnology.
IBM is one of the 30 companies included in the Dow Jones Industrial Average. It is also one of the world’s largest employers, with currently over 282,000 employees. Since its inception, the company has remained one of the leaders in information technology. IBM stock is a good choice for dividend investors who want to feature the latest in the tech world on their portfolios. It is also best for tech investors looking for strong dividends.
IBM has a dividend yield of over 5%. In 2021, IBM raised its dividend for the 26th consecutive year, placing it among the dividend aristocrats in 2022. The company trades at a P/E ratio of 20.61, while the average P/E ratio in the information technology industry is around 26.
Four out of twelve analysts rate IBM stock a Buy, six rates it a Hold, while two rates it a Sell. The company has a conservative payout ratio of 64.32%, and quarterly dividend payment is valued at $1.64 per share.
#4. Duke Energy (DUK)
Duke Energy Corporation (DUK) is electric power and natural gas holding company based in North Carolina. DUK owns 58,200 megawatts of base-load and peak generation in the United States. With approximately 29,000 employees, the company caters to 7.2 million customers across the US.
DUK was founded in 1900. The company has since grown and expanded and now boasts 9 subsidiaries, including the Duke Energy Renewable Services (DERS). It is one of the largest electric utility companies in the US. DUK also boasts of its strong balance sheet and reliable business model.
DUK has a valuation in league with its competitors, with a P/E ratio of 22.28. Despite this, analysts do not suggest it is time to sell the stock. Out of thirteen analysts, eight favor holding the stock, while five-vote a Buy. It means that there are no Sell ratings yet. DUK has a dividend yield of 3.51% and a dividend payout ratio of 74.95%.
It offers a quarterly dividend payment of $0.98 per share. DUK stock is best for investors looking for a strong utility pay.
#5. Chevron (CVX)
Chevron Corporation (CVX) is a multinational energy corporation. It is based in California and is active in over 180 countries worldwide. CVX deals in the oil and gas industry in areas that include hydrocarbon, exploration and production, refining, marketing and transport, chemicals manufacturing and sales, and power generation.
CVX is the second-largest oil company in the United States. It comes behind only ExxonMobil, which is the largest. It owns a network of nearly 20,000 gas stations and convenience stores throughout the US and in other countries. CVX aims to provide reliable, affordable, and cleaner energy for people worldwide. For over 140 years, CVX has maintained its position as a global leader in oil and gas.
CVX stock is best for global energy investors. With a P/E ratio of 20.2 in an industry where the average is around 25, CVX is relatively undervalued. The company offers a dividend yield of 3.45% and is a dividend aristocrat, having increased its dividend payments to investors for 35 years consecutively.
The dividend payout ratio of CVX sits at 69.78%. Analysts have a rather positive view of CVX stock. Only one out of twenty-three analysts covering its stock rate it a Sell. Fifteen rate it a Buy, and seven rates it a Hold.
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Conclusion: Best High-Yield Stocks with Safe Dividends
Dividend-paying stock is usually identified by a metric called the dividend yield.
The dividend yield is a financial ratio that shows how much a company pays its investors in dividends per year relative to its stock price. The dividend yield is expressed as a percentage. It is calculated by dividing the annual dividend per share by the price per share. Investors often prefer companies with high dividend yields. With a stock screening service, you can identify a high dividend yield company.
Dividend yield stocks are diverse, and it is important to learn as much as possible about them before investing in them. Dividend stocks are not completely independent from market forces despite their numerous benefits. A downturn in the market performance of a company could mean a reduction in the number of dividends it pays put to investors.
Nonetheless, consistent and growing dividend payments could be a positive sign that a company is financially stable. So as much as it is important to buy high-yield stocks, it is also important to look out for companies with safe and reliable dividends.
Best High-Yield Stocks with Safe Dividends FAQs
Is it worth investing in High Yield Stocks?
Dividend stocks provide two ways in which investors can make a profit. The first is through appreciation in the stock price, while the second is through earning distributions made by the company. The earnings could be in cash, though this is not always the case.
Some companies offer dividend reinvestment plans. This is a way through which investors can reinvest the income from their dividends back into stock. The company allows investors to buy more of the company shares with their dividends. As a private investor, this strategy helps you build a stronger position in the company over time.
Another good reason to invest in dividend stocks is that most companies that pay dividends are strong performers with a lot of cash. This makes them able to pay investors and still have enough cash to pour back into their business. Dividend stocks thus deliver relatively better performance, which means they enjoy lower volatility. This translates into more stability in your portfolio as an investor.
Finally, companies that pay dividend stocks are usually in the defensive sector. Defensive sectors include food and beverage stocks, and pharmaceutical and healthcare companies. They are characterized by their low level of volatility and are more likely to maintain their value during periods of economic instability. This makes them suitable for private investors with a low risk-tolerance level.
