Updated on June 9th, 2021 by Bob Ciura
Spreadsheet data updated daily
When a person retires, they no longer receive a paycheck from working. While traditional sources of retirement income such as Social Security help investors make up the gap, many could still face an income shortfall in retirement.
This is where high dividend stocks can be of assistance. We have compiled a full downloadable list of stocks yielding above 5%.
You can download your full list of all 100+ securities with 5%+ yields (along with important financial metrics such as dividend yield and payout ratio) by clicking on the link below:
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 of 5% and greater, 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. Furthermore, these are large-cap stocks with sufficient size, as well as leadership positions in their respective industries.
In other words, these are relatively safe, high yield income stocks for you to consider adding to your retirement or pre-retirement portfolio.
Table Of Contents
All high dividend stocks in this list have dividend yields above 5%, making them highly appealing in an environment of falling interest rates. A maximum of three stocks were allowed for any single market sector to ensure diversification.
The 7 highest-yielding securities with Dividend Risk scores of C or better are listed in order by dividend yield, from lowest to highest.
- High Dividend Stock #7: Enbridge Inc. (ENB)
- High Dividend Stock #6: Altria Group (MO)
- High Dividend Stock #5: AT&T Inc. (T)
- High Dividend Stock #4: Enterprise Products Partners LP (EPD)
- High Dividend Stock #3: British American Tobacco (BTI)
- High Dividend Stock #2: Magellan Midstream Partners LP (MMP)
- High Dividend Stock #1: MPLX LP (MPLX)
High Dividend Stock #7: Enbridge Inc. (ENB)
- Dividend Yield: 7.0%
- Dividend Risk Score: B
Enbridge is an oil & gas company that operates the following segments: Liquids Pipelines, Gas Distributions, Energy Services, Gas Transmission & Midstream, and Green Power & Transmission.
Note: As a Canadian stock, a 15% dividend tax will be imposed on US investors investing in the company outside of a retirement account. See our guide on Canadian taxes for US investors here.
Enbridge reported its first-quarter results in early May. Distributable Cash Flow (DCF) of $1.37 per common share increased 2.2% from the same quarter last year. Separately, Enbridge reaffirmed its full-year guidance for 2021. The company expects EBITDA of $13.9 billion to $14.3 billion and DCF per share of $4.70 to $5.00 for the full year.
The company also expects steady growth through 2023.
Source: Investor Presentation
We expect 4.5% annual cash flow per share growth for Enbridge over the next five years, due primarily to new projects. Enbridge is one of the largest pipeline operators in North America.
Its vast asset footprint serves as a tremendous competitive advantage, as it would take many billions of dollars of investments from new market entrants if they wanted to be able to compete with Enbridge.
With over 25 consecutive years of annual dividend increases, we view Enbridge as a high dividend stock with a secure payout.
High Dividend Stock #6: Altria Group Inc. (MO)
- Dividend Yield: 7.1%
- Dividend Risk Score: B
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
Altria is a legendary dividend stock, because of its impressive history of steady increases. Altria has raised its dividend for 50 consecutive years, placing it on the very exclusive list of Dividend Kings.
Altria reported first-quarter results on April 29th. Revenue net of excise taxes declined 3.3% year-over-year. Adjusted earnings-per-share declined 1% year-over-year. Declines were mostly driven by lower revenue in the smokeable products segment.
The long-term future is cloudy for cigarette manufacturers such as Altria, which is why the company has invested heavily in adjacent categories to fuel its future growth. The company purchased a 55% equity stake in Canadian marijuana producer Cronos Group, invested nearly $13 billion for a 35% equity stake in e-vapor manufacturer Juul Labs, and recently acquired the remaining 20% ownership stake in Switzerland-based Burger Söhne Group it didn’t already own, for its on! oral nicotine pouch brand.
It has also invested in its own heated tobacco product line called IQOS, which the company continues to expand.
Source: Investor Presentation
We expect new products to fuel the company’s long-term growth. We forecast 3% annual EPS growth going forward, driven by revenue growth as well as share repurchases. Altria utilized $325 million for share repurchases in the first quarter, and has $1.7 billion remaining on its current repurchase program which it expects to complete by June 30th 2022.
Altria enjoys significant 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.
High Dividend Stock #5: AT&T Inc. (T)
- Dividend Yield: 7.2%
- Dividend Risk Score: B
AT&T is a telecommunications giant, as its core Communications segment provides mobile, broadband and video to 100 million U.S. consumers and 3 million businesses.
On April 22nd, 2021 AT&T reported Q1 2021 results for the period ending March 31st, 2021. For the quarter the company generated $43.9 billion in revenue, up 2.7% from $42.8 billion in Q1 2020, as higher mobility and WarnerMedia revenue more than offset declines in domestic video, business wireline and Latin America.
Source: Investor Presentation
Reported net income equaled $7.5 billion or $1.04 per share. On an adjusted basis, earnings–per–share equaled $0.86 compared to $0.84 in the year-ago quarter. AT&T ended the quarter with a net debt–to–EBITDA ratio of 3.1x.
AT&T is undergoing massive changes as it seeks to unload its satellite TV and media assets. On February 25th, AT&T announced it will spin off multiple assets into a separate company called New DIRECTV that will own and operate the DirecTV satellite TV business, as well as AT&T TV and U-verse video. AT&T will own 70% of the company, and will sell 30% ownership to TPG for approximately nearly $8 billion, which will be used to pay down debt.
On May 17th, 2021 AT&T announced an agreement to combine WarnerMedia with Discovery, Inc. (DISCA) to create a new global entertainment company. AT&T will receive $43 billion in a combination of cash, securities and retention of debt. AT&T shareholders receive stock representing 71% of the new company, with Discovery shareholders owning 29%.
We believe these various deals with allow AT&T to simplify its operations, become more efficient, and return to its core focus on telecom services. Indeed, 5G is a major area of focus for AT&T. The company continues to expand 5G to more cities around the country. AT&T’s 5G service now covers more than 120 million people.
AT&T is optimistic about generating reasonable growth and the payout ratio had been falling, resulting in excess funds to divert toward paying down debt. AT&T also has a long history of increasing dividends each year (AT&T is currently a Dividend Aristocrat).
High Dividend Stock #4: Enterprise Products Partners LP (EPD)
- Dividend Yield: 7.3%
- Dividend Risk Score: B
Enterprise Products Partners was founded in 1968. It 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.
EPD is a Master Limited Partnership, or MLP for short. You can see our entire MLP list here.
In early May, Enterprise Products reported strong first-quarter results in which distributable cash flow increased 12% to $1.73 billion. The company generated a DCF coverage ratio of 1.7x for the first quarter. Enterprise Products also retained $746 million of DCF for the first quarter of 2021.
We believe Enterprise Products has positive long-term growth potential moving forward, thanks to new projects and exports. In 2021 and 2022, Enterprise Products sees growth capital expenditures of $1.6 billion and $800 million, respectively. In all, Enterprise Products has $3.4 billion of major projects under construction.
Source: Investor Presentation
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. The company also had a modest leverage ratio of 3.3x in the trailing 12 months.
Another attractive aspect of Enterprise Products is that it is a recession-resistant company. 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 22 consecutive years.
In addition, it has world-class assets and a very long history of distribution increases. Combined with a 7.6% current yield, Enterprise Products is built to outlast a recession.
High Dividend Stock #3: British American Tobacco (BTI)
- Dividend Yield: 7.5%
- Dividend Risk Score: C
British American Tobacco is one of the world’s largest tobacco companies. British American Tobacco owns many tobacco brands, including Kool, Benson & Hedges, Dunhill, Kent, and Lucky Strike. The company also acquired the remaining 48% stake in Reynolds American Tobacco that it did not already own in July of 2017.
British American Tobacco announced its fourth quarter and full year earnings update for fiscal 2020 on February19. British American Tobacco’s revenue performance during the most year was solid, as British American Tobacco generated revenues of 25.8 billion Pound Sterling. This equates to US$35.6 billion.
Revenue was down 0.4% year over year, but adjusted for some forex rate headwinds, revenues would have increased versus the previous year’s quarter. Results also include some headwinds from the pandemic, which management estimated at around 2%–3% for the year.
The fact that results held steady, despite COVID and currency rate headwinds, can be explained by success in its New Categories (reduced risk products) segment, where British American Tobacco has been able to grow its market share in 2020. British American Tobacco generated earnings–per–share of 3.32 Pound Sterling in 2020, which equates to $4.58. This was in–line with management’s guidance for the year.
The company expects constant–currency revenue growth of 3%–5% for 2021, and mid–single digit earnings–per–share growth, which points to earnings–per–share of about $4.80 in 2021. This should cover the company’s dividend payment.
High Dividend Stock #2: Magellan Midstream Partners LP (MMP)
- Dividend Yield: 8.0%
- Dividend Risk Score: C
Magellan Midstream Partners is a Master Limited Partnership with the longest pipeline system of refined products, which is linked to nearly half of the total U.S. refining capacity. This segment generates ~65% of its total operating income while the transportation and storage of crude oil generates ~35% of its operating income. MMP has a fee-based model; only ~10% of its operating income depends on commodity prices.
Source: Investor Presentation
In late April, MMP reported (4/29/21) financial results for the first quarter of 2021. The MLP recovered from the pandemic thanks to improved demand for refined products, while it also benefited from the winter storms. As a result, distributable cash flow per share fell only 9% over last year’s first quarter, from $1.36 per unit to $1.24 per unit. The distribution coverage ratio improved sequentially from 1.13 to 1.21. MMP also raised its guidance for its annual distributable cash flow by 5%, from $1.02 billion to $1.07 billion.
MMP has promising growth prospects ahead, as it has several growth projects under way. The company invested $1.0 billion in these projects in 2019, and $355 million in 2020. It also has more than $500 million of potential growth projects under consideration.
We expect DCF-per-unit of $4.70 for 2021, which would sufficiently cover the distribution. MMP’s fee-based model (~85% of operating margin is comprised of fee-based activities) help insulate the company’s cash flows from volatile swings in commodity prices.
MMP also has a relatively healthy balance sheet for an MLP, with an investment-grade credit rating of BBB+ from Standard & Poor’s, and a debt-to-EBITDA ratio of 3.5x at of the end of 2020.
High Dividend Stock #1: MPLX LP (MPLX)
- Dividend Yield: 9.4%
- Dividend Risk Score: C
MPLX, LP is a Master Limited Partnership that was formed by the Marathon Petroleum Corporation (MPC) in 2012. The business operates in two segments: Logistics and Storage – which relates to crude oil and refined petroleum products – and Gathering and Processing – which relates to natural gas and natural gas liquids (NGLs). In 2019, MPLX acquired Andeavor Logistics LP.
The company’s Logistics and Storage segment has pipeline capacity of 4.7 million barrels per day.
Source: Investor Presentation
On May 4th, 2021 MPLX released Q1 2021 results for the period ending March 31st, 2021. For the quarter Net Income equaled $739 million compared to a loss of –$2.72 billion in Q1 2020. Distributable cash flow (DCF) equaled $1.137 billion (~$1.10 per unit) versus $1.078 billion (~$1.02 per unit).
Results were slightly better on a per unit basis as a result of a lower unit count. MPLX ended the quarter with a consolidated debt to adjusted EBITDA ratio of 3.9x (down from 4.1x in Q1 2020). Distribution coverage equaled 1.56x compared to 1.44x in the year ago period.
MPLX has positive growth prospects, due primarily to its projects currently under development. Pipelines tend to have a stronghold in terms of extracting economic rents, and natural gas is cleaner than coal.
In the last decade, natural gas has overtaken coal as the leading source of electricity generation in the U.S. Building pipelines requires years of approvals and ongoing regulation. MPLX in particular has a strong position in the Marcellus / Utica region, with long-term contracts from Marathon.
MPLX is an attractive MLP for yield and distribution growth. MPLX has so far maintained its quarterly distribution at a rate of $0.6875 per unit, with a forward yield above 9%.
Final Thoughts
Interest rates have seriously declined. After two years of the Federal Reserve raising rates, the central bank announced immediate and profound interest rate reductions. Investors might scramble to search for suitable income in a low-rate environment, but these high-yield stocks are still presenting strong income generation ability.
The 7 stocks on this list have high yields above 5%. And importantly, these securities generally have better risk profiles than the average high-yield security. That said, a dividend is never guaranteed, and high dividend stocks are potentially at risk of dividend reductions or suspensions if a recession occurs in the near future. Investors should continue to monitor each stock to make sure their fundamentals and growth remain on track, particularly among stocks with 10%+ dividend yields.