Sure Dividend

Updated on November 4th, 2019 by Bob Ciura

Table data updated daily

This article examines securities in The Sure Analysis Research Database with:

• Yields of 5% or greater
• Dividend Risk Scores of C or better

Note: We update this article at the beginning of each month so be sure to bookmark this page for next month.

With yields between 5% and 10%, these securities all offer high dividends (or distributions). And with Dividend Risk Scores of C or better, they don’t suffer from the usual excessive riskiness of truly high yielding securities.

All stocks in this list have dividend yields above 5%, making them highly appealing in an environment of falling interest rates. Stocks were further screened based on a qualitative assessment of business model strength, competitive advantages, and debt levels.

In other words, these are relatively safe, high yield income stocks for you to consider adding to your retirement or pre-retirement portfolio.

You can download your full list of all 300+ securities with 5%+ yields below to save for future reference.

You can also see these 300+ securities in the table below.

Table Of Contents

The 10 highest-yielding securities with Dividend Risk scores of C or better are listed in order by dividend yield, from lowest to highest.

• Universal Corporation (UVV)
• AbbVie Inc. (ABBV)
• Superior Plus Corp (SUUIF)
• Enterprise Products Partners (EPD)
• Office Properties Income Trust (OPI)
• Invesco Ltd. (IVZ)
• Altria Group (MO)
• Tanger Factory Outlets (SKT)
• Energy Transfer LP (ET)
• Imperial Brands plc (IMBBY)

10. Universal Corporation (UVV)

• Dividend Yield: 5.4%

Universal Corporation is the world’s largest leaf tobacco exporter and importer. The company is the wholesale purchaser and processor of tobacco that operates between farms and the companies that manufacture cigarettes, pipe tobacco, and cigars. Universal Corporation was founded in 1886, and trades with a market capitalization of $1.4 billion. With 49 years of dividend increases, Universal Corporation is one year away from joining the exclusive list of Dividend Kings.

Source: Investor Presentation

Universal Corporation reported its first quarter (fiscal 2020) earnings results on August 7. The company generated revenues of $297 million during the quarter, which was 21.8% less than the revenues that Universal Corporation generated during the previous year’s quarter. Management explains that revenues were in line with expectations, and that the drop versus the previous year’s quarter can be attributed to carryover crop volumes. Adjusted for those, volumes and revenues would have been comparable to the previous year’s quarter.

Universal’s earnings-per-share totaled $0.19 during the first quarter, which was roughly one-third of the earnings-per-share that the company generated during the previous year’s quarter. Profits were impacted by carryover crop volumes as well; it thus is not a large surprise that profits declined massively year over year.

As the leader in a declining industry, we do not expect the company to deliver strong business growth for the foreseeable future. However, Universal Corporation is highly profitable. The company does not need to invest meaningful amounts of money into its business. This gives Universal Corporation the ability to utilize a substantial amount of its free cash flows for share repurchases and dividends. With a projected dividend payout ratio of 77% for fiscal 2020, and a positive earnings-per-share growth outlook due to modest revenue growth and share repurchases, the dividend appears secure.

9. AbbVie Inc. (ABBV)

• Dividend Yield: 5.7%

AbbVie is a biotechnology company focused on developing and commercializing drugs for immunology, oncology and virology. AbbVie was spun off by Abbott Laboratories (ABT) in 2013. AbbVie has become a giant in the biotech industry, with sales of $33 billion annually and a market capitalization of $121 billion.

AbbVie reported its third-quarter earnings results on November 1st. Revenue of $8.5 billion increased 3.5% operationally. Revenue was positively impacted by strong growth from Imbruvica, grossing sales of $1.3 billion, up 29% from the previous year’s quarter.

However, Humira’s total global revenue declined by 3.2% year over year. Domestic sales growth of 10% for Humira was more than offset by a 32% decline in the international markets, due to biosimilar competition. On an adjusted basis, AbbVie grew earnings-per-share by 8.9% year-over-year.

Along with its quarterly results, the company raised its full-year guidance. AbbVie now expects 2019 adjusted EPS in a range of $8.90 to $8.92, up from $8.82 to $8.92. The new guidance range represents full-year adjusted EPS growth of 12.6%, at the midpoint.

In addition, AbbVie raised its quarterly dividend by 10%.

AbbVie’s future growth will be shaped by its organic growth, as well as its recent and massive acquisition of Allergan (AGN).

Source: Investor Presentation

AbbVie recently announced the $63 billion acquisition of Botox-maker Allergan to further diversify its products. The combined company will have annual revenues of nearly $50 billion, based on 2018 results.

AbbVie expects the transaction to be 10% accretive to adjusted earnings-per-share over the first full year following the close of the transaction, with peak accretion of greater than 20%. We expect 9.5% annual earnings-per-share growth over the next five years.

This should allow AbbVie to not only maintain its dividend, but also continue to increase its dividend each year.

8. Superior Plus Corp. (SUUIF)

• Dividend Yield: 6.0%

Superior Plus Corp is a relatively small gas utility company, but it is one of the larger propane delivery companies. Superior operates a specialty chemical (chlorates) operation, which generates about 25% of total revenue. The company is the dominant distributor in Canada, and has significant operations in the U.S. (1/3 of total revenues). Superior Plus had 2018 revenues of $2.7 billion and has a current market cap of $1.6 billion.

Superior Plus is off to a very good start to 2019. Revenue and EBITDA were up substantially from the second quarter a year ago ($483.1 to $541.2 million and $49.7 to $71.4 million, respectively). Cash flow was down for the quarter, but up for the first half versus last year ($1.06 to $1.28/share). More importantly, adjusted EBITA guidance for 2019 of $510 million would be substantially above the $374 million generated last year.

Superior Plus made progress on a number of its goals in the second quarter.

Source: Investor Presentation

Superior Plus has an ambitious growth plan, which calls for a $220.5 million increase in annual EBITDA from operations by 2020, compared with 2016 levels. This growth plan involves the company executing on multiple growth initiatives, both internally and through acquisitions.

For example, the acquisitions of NGL Propane acquisition and Canwest Propane, along with 12 tuck-in deals, represent the company’s aggressive acquisition strategy. Separately, Superior Plus is investing heavily in its own organic initiatives, including an expansion of its operations in California.

These measures should help improve the company’s dividend safety. The company maintains a target dividend payout ratio of 40%-60% over the long-term. It also monitors the health of its balance sheet, with a long-term target debt-to-EBITDA ratio of 3.0x.

Superior Plus currently pays a monthly dividend of CAD$0.06; in U.S. dollars its annualized payout translates to approximately US$0.54 per share. Superior Plus stock has an attractive dividend yield of 6.0%.

7. Enterprise Products Partners (EPD)

• Dividend Yield: 6.6%

Enterprise Products Partners was founded in 1968. It is structured as a Master Limited Partnership, or MLP, and operates as an oil and gas storage and transportation company.

Enterprise Products has a tremendous asset base which consists of nearly 50,000 miles of natural gas, natural gas liquids, crude oil, and refined products pipelines. It also has storage capacity of more than 250 million barrels. These assets collect fees based on materials transported and stored.

Source: Investor Presentation

On 10/28/19, Enterprise Products reported third-quarter 2019 financial results. Distributable cash flow increased 4.7% to $1.64 billion. This enabled Enterprise to achieve 1.7x distribution coverage for the third quarter, and retain significant cash flow for growth capex.

Enterprise has positive growth potential moving forward, thanks to new projects and exports. For example, Enterprise Products has started construction of the Mentone cryogenic natural gas processing plant in Texas, which will have the capacity to process 300 million cubic feet per day of natural gas and extract more than 40,000 barrels per day of natural gas liquids. The facility is expected to begin service in the first quarter of 2020.

Enterprise Products is also developing the Shin Oak NGL Pipeline, which is scheduled to be placed into service next year. The Shin Oak NGL Pipeline is expected to have total capacity of 600,000 barrels per day. Exports are also a key growth catalyst. Demand for liquefied petroleum gas and liquefied natural gas, or LPG and LNG respectively, is growing at a high rate across the world, particularly in Asia.

In terms of safety, Enterprise Products Partners is one of the strongest midstream MLPs. It has credit ratings of BBB+ from Standard & Poor’s and Baa1 from Moody’s, which are higher ratings than most MLPs.

Enterprise Products’ high-quality assets generate strong cash flow, even in recessions. As a result, Enterprise Products has been able to raise its distribution to unitholders for 61 quarters in a row.

6. Office Properties Income Trust (OPI)

• Dividend Yield: 6.6%

Office Properties Income Trust is an office REIT that currently has a portfolio of 200 properties, which are primarily leased to single tenants with high credit quality. The REIT’s portfolio currently has a 93.3% occupancy rate, an average remaining lease term of 5.7 years, and an average building age of 17 years. It has a market capitalization of $1.6 billion.

Source: Investor Presentation

The U.S. Government is the largest tenant of OPI, as it represents 39% of the annual rental income of the REIT. After acquiring First Potomac Realty Trust (FPO) in 2017 and merging with SIR, OPI is now in the process of selling assets to reduce its leverage to a healthy level. It aims to generate more than $700 million of gross proceeds from asset sales. In the first half of the year, it has sold or has agreed to sell 54 properties for $683.8 million.

In early August, OPI reported financial results for the third quarter of fiscal 2019. FFO-per-share declined 2% year-over-year, while FFO per unit decreased by 32% for the quarter, primarily due to an increased share count as a result of the merger with SIR.

Nevertheless, the REIT exceeded analysts’ consensus for both revenue and FFO last quarter, assisted by a sequential increase in its occupancy rate from 91.6% to 93.3%. Rising occupancy bodes well for the company’s future growth, which will help boost sustainability of the dividend.

OPI generates significant cash flow, much of which is used to reward shareholders with a hefty dividend. With an annual dividend payment of $2.20 per share, OPI has an expected 2019 payout ratio of 38% in terms of FFO. Such a low payout ratio indicates a sustainable dividend. The company’s strong cash flow is the result of its competitive advantages.

OPI generates 64% of its annual rental income from investment-grade tenants. This is one of the highest percentages of rent paid by investment-grade tenants in the REIT sector. Moreover, U.S. Government tenants generate 39% of total rental income and no other tenant accounts for more than 2.7% of annual income. This exceptional credit profile constitutes a meaningful competitive advantage.

5. Invesco Ltd. (IVZ)

• Dividend Yield: 7.0%

Invesco is a global investment management firm. It has more than 7,000 employees and serves customers in more than 150 countries. Invesco currently trades with a market capitalization of $8.0 billion and has over $1.1 trillion of assets under management (AUM).

Last quarter, Invesco’s net revenue increased 19%, primarily due to acquisitions. Average AUM increased 12.5% for the quarter. Thanks to synergies, operating margin expanded by more than four percentage points for the quarter, leading to 7.7% earnings-per-share growth.

Source: Investor Presentation

Invesco is investing heavily in growth, mainly through acquisitions. First, Invesco acquired Oppenheimer Funds for ~$5.7 billion. The deal was for $4 billion in preferred shares and 81.9 million Invesco shares. This acquisition is expected to boost earnings-per-share by ~18% in 2019. Acquiring Oppenheimer Funds grew Invesco into becoming the 6th-largest U.S. retail investment management company.

Separately, Invesco also acquired the ETF business from Guggenheim Investments for $1.2 billion. Invesco also made a significant investment in financial technology with its acquisition of Intelliflo, a leading technology platform for financial advisors that supports approximately 30% of all financial advisors in the U.K.

Invesco ranks well in terms of dividend safety with an expected payout ratio of 53% for fiscal 2019. This should allow the company to continue increasing its dividend on an annual basis going forward. Invesco also has a strong balance sheet, with a credit rating of BBB+ from Standard & Poor’s.

4. Altria Group Inc. (MO)

• Dividend Yield: 7.4%

Altria Group is a tobacco products giant. Its core tobacco business holds the flagship Marlboro cigarette brand. Altria also has non-smokable brands Skoal and Copenhagen chewing tobacco, Ste. Michelle wine, and owns a 10% investment stake in global beer giant Anheuser Busch Inbev (BUD).

Related: The Best Tobacco Stocks Now, Ranked In Order

In late October, Altria reported strong third-quarter earnings. Revenue (net of excise taxes) increased 2.3% year-over-year to $5.4 billion. Adjusted earnings-per-share came in at $1.19 increased 10% over the year-ago period. Revenue and earnings-per-share both beat analyst expectations.

Altria said it was on track to achieve $575 million in annual cost savings this year as it combats lower smoking rates in its markets.

Separately, Altria took a non-cash impairment charge of $4.5 billion related to its investment in Juul.

Altria’s key challenge going forward will be to generate growth in an era of falling smoking rates. Consumers are increasingly giving up traditional cigarettes, which on the surface poses an existential threat to tobacco manufacturers. Altria expects cigarette volumes will continue to decline at a 4% to 6% annual rate through 2023.

For this reason, Altria has made significant investments in new categories, highlighted by the $13 billion purchase of a 35% stake in e-vapor giant JUUL. This acquisition gives Altria exposure to a high-growth category that is actively contributing to the decline in traditional cigarettes.

Source: 2019 CAGNY Presentation

Altria also recently announced a $1.8 billion investment in Canadian marijuana producer Cronos Group. Altria purchased a 45% equity stake in the company, as well as a warrant to acquire an additional 10% ownership interest in Cronos Group at a price of C$19.00 per share, exercisable over four years from the closing date.

In the meantime, Altria reaffirmed its guidance for 2019 full-year adjusted diluted EPS to be in a range of $4.19 to $4.27, which would be 5% to 7% growth from 2018. The company also expects 5%-8% adjusted EPS growth from 2020-2022.

Altria receives top marks in terms of safety, due to its competitive advantages. It operates in a highly regulated industry, which significantly reduces the threat of new competitors entering the market. And, Altria’s products enjoy tremendous brand loyalty, as Marlboro controls more than 40% of U.S. retail market share.

Altria is also highly resistant to recessions. Cigarette and alcohol sales fare very well during recessions, which keeps Altria’s strong profitability and dividend growth intact. With a target dividend payout of 80%, Altria’s dividend is secure.

3. Tanger Factory Outlets (SKT)

• Dividend Yield: 8.4%

Tanger Factory Outlet Centers is a Real Estate Investment Trust. Tanger operates, owns, or has an ownership stake in a portfolio of 40 shopping centers. Properties are located in Canada and 20 U.S. states, totaling approximately 14.4 million square feet, leased to over 500 different tenants.

Tanger’s diversified base of high-quality tenants has led to steady growth for many years.

Source: Earnings Slides

Tanger released 2019 third-quarter results on October 30th. Revenue of $119 million declined by 4%, while adjusted funds from operations (FFO) fell 7.9% year-over-year. Tanger’s occupancy rate stood at 95.9% in the most recent quarter, down only slightly from 96.0% in the previous quarter.

Occupancy is expected to decline somewhat in 2019 to a range of 95.5% to 95.8%, due to anticipated store closures by certain tenants. Fortunately, the company has maintained an occupancy rate of 95%+ for 25 consecutive years.

The dip in occupancy this year will negatively impact the company’s AFFO, but Tanger will still be able to cover its hefty dividend payment.

Tanger has a current dividend payout of $1.42 per share annually, which represents a current yield of 8.4%. This is a very high yield and is clearly attractive for income investors. The biggest concern with a yield this high is sustainability. Fortunately, Tanger appears to have a secure dividend payout.

We expect Tanger will generate AFFO-per-share of $2.25 for 2019. With an expected dividend payout of $1.47 per share, Tanger’s expected 2019 dividend payout ratio is 65%. This is a manageable payout ratio, which leaves room for modest annual hikes. For example, in February Tanger raised its dividend by 1.4%.

2. Energy Transfer LP (ET)

• Dividend Yield: 9.7%

Energy Transfer is a midstream oil and gas Master Limited Partnership, or MLP. Energy Transfer’s business model is storage and transportation of oil and gas. Its assets have total gathering capacity of nearly 13 million Btu/day of gas, and a transportation capacity of 22 million Btu/day of natural gas and over 4 million barrels per day of oil.

Energy Transfer’s diversified and fee-based assets provide the company with steady cash flow, even when oil and gas prices decline. As a midstream operator, Energy Transfer’s cash flow relies heavily upon volumes, and less so on commodity prices.

Source: Investor Presentation

ET reported 2019 second-quarter results on August 8th. In addition to distribution coverage reaching 2x for the second straight quarter, the company reported a record $2.82 billion of adjusted EBITDA and $1.6 billion of distributable cash flow to partners, backed by significant growth in four of its five core businesses, with record operating performance achieved in the natural gas liquids and refined products segment.

Looking ahead, the partnership expects to reach its leverage targets within the next few quarters and will then consider growing the distribution, as well as buying back units with its significant amount of excess distributable cash flow.

The company is also making strong progress on several growth projects which should be adding to cash flows in the coming quarters and years. For example, Energy Transfer announced it will construct a seventh natural gas liquids (NGL) fractionation facility at Mont Belvieu, Texas, with 150,000 barrels per day of capacity. Fractionator VII is scheduled to be operational in the first quarter of 2020 and is fully subscribed by multiple long-term contracts.

The company is also progressing with plans on a Bakken pipeline optimization project, which is expected to start up in 2020. And, Energy Transfer is currently expanding its Permian Express pipeline system by an additional 120,000 barrels per day. The Permian Express 4 expansion is expected to be in-service by the 2019 third quarter.

The company’s new projects will help secure its attractive distribution, which currently yields nearly 9%. Energy Transfer anticipates a distribution coverage ratio of ~1.7x to ~1.9x for 2019, which is better than average for an MLP.

We believe Energy Transfer is capable of delivering distributable cash flow per share of around $2.20 for 2019. Energy Transfer has a very high yield and a secure payout, which makes it an attractive stock for income investors.

1. Imperial Brands (IMBBY)

• Dividend Yield: 11.3%

Imperial Brands is a tobacco company that was founded in 1901. Today, it is headquartered in the United Kingdom and has a market capitalization of $21 billion.

The company manufactures and sells a variety of tobacco products, including cigarettes, tobaccos, cigars, rolling papers, and tubes. Some of its core brands include Winston, Davidoff, Gauloises, L&B, Bastos, Fine, Gitanes, Kool, Jade, and many more.

Source: 2019 CAGNY Presentation

Imperial Brands reported first half of fiscal 2019 results on May 8th. Net revenue increased 2.3% mostly due to the core tobacco group. Tobacco revenue grew 2.5% in constant currency as a 6.5% increase in prices offset volume declines. The company increased its cigarette share in the U.S.

Adjusted earnings-per-share declined 1.3% in constant currency as market loss in the e-cigarette category in the U.S. was partially offset by cost cuts.

On September 26th, the company revised its full-year guidance, now expecting revenue growth of 2% along with flat EPS. One highly positive note is that Imperial Brands expects its next-generation portfolio to grow around 50% this year.

Imperial Brands reported a volume decline of 4.5% in the first half of fiscal 2019. Going forward, the company will need to address the long-running trend of declining smoking rates. Imperial Brands’ future growth will be fueled by its next-generation product line, including vapor and heated tobacco products, such as blu.

To help finance its growth investments, the company is launching an aggressive cost reduction program, targeting up to US$2.6 billion in cost savings over the next one to two years. We expect 3% annual earnings growth through 2024.

Share buybacks will also help boost EPS growth. The company recently announced a US$250 million share repurchase by the end of fiscal 2019.

Imperial Brands is expected to maintain a dividend payout of US$2.39 per share for 2019 based on current exchange rates, which equals an impressive dividend yield over 11%. The company recently announced a revised dividend policy going forward, in which its future dividend growth will vary and depend on the underlying business performance.

Still, Imperial Brands’ current dividend appears secure, with a projected payout ratio of ~67% for 2019.

Final Thoughts

Interest rates are on the decline once again. After two years of the Federal Reserve raising rates, the central bank announced a recent interest rate reduction, and rates are broadly on the decline once again. Investors might scramble to search for suitable income in a low-rate environment, but these high-yield stocks are still presenting strong yields.

The 10 stocks on this list have high yields above 5%. And importantly, these securities generally have better risk profiles than the average high yield security. Investors should continue to monitor each stock to make sure their fundamentals and growth remain on track, but investors comfortable with owning individual stocks should consider these 10 high yielders.