Updated on February 10th, 2020 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-yield 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 200+ securities with 5%+ yields (along with other relevant financial metrics) 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 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.
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 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.
The 10 highest-yielding securities with Dividend Risk scores of C or better are listed in order by dividend yield, from lowest to highest.
- AbbVie Inc. (ABBV)
- AT&T Inc. (T)
- Enbridge Inc. (ENB)
- Superior Plus Corp. (SUUIF)
- Invesco Ltd. (IVZ)
- Enterprise Products Partners (EPD)
- Altria Group (MO)
- Energy Transfer LP (ET)
- Tanger Factory Outlet Centers (SKT)
- Sunoco LP (SUN)
10. AbbVie Inc. (ABBV)
- Dividend Yield: 5.3%
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 $129 billion.
AbbVie is a member of the exclusive Dividend Aristocrats a group of 57 stocks in the S&P 500 Index with 25+ consecutive years of dividend increases.
AbbVie reported strong financial results for the 2019 fourth quarter, and for the full year. For the quarter, sales excluding currency impacts rose 5.3%, while adjusted earnings-per-share increased 16%. For 2019, total revenue of $33.27 billion increased 2.7% operationally, from 2018. Adjusted EPS increased 13% for the full year.
Humira once again weighed down AbbVie. For 2019, U.S. Humira sales increased 8.6% but international Humira sales declined 28% due to biosimilar competition. Humira has lost patent exclusivity abroad, and will lose patent exclusivity in the U.S. in 2023.
Fortunately, AbbVie has invested heavily in new products to generate growth. AbbVie invested $6.4 billion in research and development in 2019. The results are materializing, as new products are leading AbbVie’s growth. For example, Imbruvica sales increased 29% in 2019, while sales of Venclexta more than doubled last year.
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.
9. AT&T Inc. (T)
- Dividend Yield: 5.4%
AT&T is the largest communications company in the world, operating in four distinct business units: AT&T Communications (providing mobile, broadband, video and other communications services to more than 100 million U.S. consumers and more than 3 million businesses), WarnerMedia (including Turner, HBO and Warner Bros.), AT&T Latin America (offering pay-TV and wireless service to 11 countries) and Xandr (providing advertising). AT&T generated $181 billion in annual revenue last year.
On January 29th, 2019 AT&T reported Q4 and full year 2019 results for the period ending December 31st, 2019. For the quarter the company generated $46.8 billion in revenue, down from $48.0 billion in Q4 2018, as growth in domestic wireless services and business services partially offset declines in domestic video, legacy wireline services and WarnerMedia. Adjusted earnings-per-share equaled $0.89 compared to $0.86 previously.
Source: Investor Presentation
For the year AT&T generated $181.2 billion in revenue, up 6.1% led by a full year of Time Warner and growth in domestic wireless services. Adjusted earnings-per-share equaled $3.57 compared to $3.52 in 2018. AT&T reduced its debt-to-EBITDA ratio to 2.5x in 2019. AT&T also updated its 2020 outlook and 3-year financial guidance and capital allocation plan.
For 2020 the company reiterated its expectation of revenue growth of 1% to 2%, adjusted earnings-per-share of $3.60 to $3.70 and a dividend payout ratio in the low-50% range. By 2022, AT&T expects 1% to 2% annual revenue growth, $4.50 to $4.80 in earnings-per-share, continued dividend increases and a debt-to-EBITDA ratio of 2.0x to 2.25x.
AT&T’s future growth will be derived from its core wireless and broadband services, but also from content thanks to the TimeWarner acquisition. AT&T will become a diversified media giant, which also provides a valuable hedge against rising content costs.
AT&T is an attractive stock for income investors, as it has a high dividend yield above 5%, and has also increased its dividend for over 30 consecutive years. Like AbbVie, AT&T is on the prestigious list of Dividend Aristocrats.
8. Enbridge Inc. (ENB)
- Dividend Yield: 5.4%
Enbridge is an oil & gas company that operates the following segments: Liquids Pipelines, Gas Distributions, Energy Services, Gas Transmission & Midstream, and Green Power & Transmission.
Enbridge made a major acquisition in 2016 (Spectra Energy, for $28 billion) and currently trades with a market capitalization of $85 billion. Enbridge was founded in 1949 and is headquartered in Calgary, Canada. Today, the company owns a highly impressive infrastructure of energy assets.
Source: Investor Presentation
Enbridge reported its third quarter earnings results on November 8. The company generated revenue growth of 2.2% on a year-over-year basis. Enbridge’s revenues, which were equal to $8.9 billion when translated to U.S. dollars, came in slightly below the consensus analyst estimate, missing it by $50 million.
That said, the company grew revenue, profit, and cash flows substantially versus the previous year’s quarter. This was possible thanks to high-grading across its portfolio, as well as due to the build-out of new projects. Enbridge was able to grow its adjusted EBITDA to a record level of US$2.4 billion.
The most important metric which decides what Enbridge can pay out to its owners, distributable cash flow, grew 31% from the previous year’s quarter. Enbridge maintained its guidance for distributable cash flow-per-share of ~CAD$4.50 during 2019, and CAD$5.00 during 2020, which equates to US$3.40 and $3.80 during the current and the next year. Beyond 2020, Enbridge forecasts that its growth rate will be in the 5%-7% range.
Enbridge paid out less than 50% of its cash flows through 2016, but starting in 2017, its payout rose to roughly two thirds of the cash flows that it generates. The company has guided for meaningful dividend growth throughout the next couple of years, at a rate that will likely be a bit higher than the cash flow growth rate. Enbridge’s cash generation is not very cyclical, thus the dividend would likely be safe even during a recession.
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. Competitive risks, therefore, are low. Due to its fee-based nature Enbridge’s business is not cyclical, and not dependent on commodity prices.
The company’s future growth and competitive advantages will help the company continue to increase its dividend. On December 10th, Enbridge increased its quarterly dividend by 10%. It has increased its dividend for 25 consecutive years, in its home currency.
7. Superior Plus Corp. (SUUIF)
- Dividend Yield: 6.3%
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 $1.5 billion.
Source: Investor Presentation
Superior Plus performed well in 2019. Adjusted EBITDA for the third quarter increased 86% from the same quarter last year. Strong growth was due to higher EBITDA from Canadian propane distribution and Specialty Chemicals, an improvement in U.S. propane distribution, and lower realized losses on foreign currency hedging contracts. EBITDA from operations for the third quarter increased 66% year-over-year.
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 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. Based on this, Superior Plus stock has an attractive dividend yield of 6.3%.
6. Invesco Ltd. (IVZ)
- Dividend Yield: 6.8%
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 $8.3 billion and has over $1.1 trillion of assets under management (AUM).
In the 2019 fourth quarter, Invesco generated revenues of $1.27 billion, up 38.2% compared to the prior year’s quarter. Invesco’s revenue increase was primarily based on an increase in the company’s assets under management, to more than $1.2 trillion, with the majority of that AUM growth stemming from the Oppenheimer Funds acquisition.
Invesco saw long-term net outflows of $14 billion during the quarter, which offset some of the growth from the Oppenheimer Funds takeover. Earnings-per-share of $0.64 for the fourth quarter rose 45% year-over-year, again mainly from Oppenheimer.
Source: Earnings Slides
For the year, adjusted net revenue increased 15.6% to $4.4 billion, while adjusted EPS increased 4.9% to $2.55.
Invesco’s future growth will depend largely on its recent acquisitions. Invesco acquired Oppenheimer Funds for ~$5.7 billion. 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.
Share buybacks will also help boost earnings-per-share growth. During 2019, the company purchased $670 million of its common shares. Since it announced its $1.2 billion stock repurchase plan in October 2018, the company has repurchased $973 million of its common shares. It expects to utilize the remaining ~$227 million by the first quarter of 2021.
Invesco ranks well in terms of dividend safety with a payout ratio of 49% for 2019. This should allow the company to maintain its dividend payout. Invesco also has a strong balance sheet, with a credit rating of BBB+ from Standard & Poor’s.
5. Enterprise Products Partners (EPD)
- Dividend Yield: 7.0%
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.
In late January (1/30/20), Enterprise Products reported fourth-quarter and full-year 2019 financial results. Adjusted EBITDA increased 8.1% for the fourth quarter, and 12.4% for 2019 ($3.69 on a per-unit basis.) Distributable cash flow increased 1% for the fourth quarter, and 10.6% for the full year. Growth was fueled by volume increases and new assets placed in service.
In the fourth quarter, gross operating profits increased 17% in the NGL Pipelines & Services segment, and increased marginally in Crude Oil Pipelines & Services excluding non-cash items. Growth was somewhat offset by a 9.5% decline in Natural Gas Pipelines & Services, and an 8.2% decline in Petrochemical & Refined Products Services. Enterprise Products $2.7 billion of distributable cash flow in 2019, an increase of 27% from the previous year.
Enterprise has positive growth potential moving forward, thanks to new projects and exports.
Source: Investor Presentation
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. It also had a high distribution coverage ratio of 1.7x for 2019, meaning the company generated approximately 70% more distributable cash flow than it needed for distributions last year.
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 62 quarters in a row.
4. Altria Group Inc. (MO)
- Dividend Yield: 7.3%
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).
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.
In late January, Altria reported strong fourth-quarter earnings. Revenue (net of excise taxes) increased 0.3% for the fourth quarter, and 0.9% for 2019 as price increases more than offset volume declines. Adjusted earnings-per-share increased 7.4% for the fourth quarter.
For 2019, adjusted earnings-per-share increased 5.8% to $4.22, due to cost controls and share repurchases. Altria exceeded its target of $575 million in cost reductions. Separately, Altria took a non-cash impairment charge of $4.1 billion related to its investment in Juul, bringing total Juul-related charges to $8.6 billion for 2019.
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: Earnings Slides
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.
Altria reaffirmed its guidance for 2020 full-year adjusted diluted EPS to be in a range of $4.39 to $4.51, which would be 4% to 7% growth from 2019. The company also expects 4% to 7% annual adjusted EPS growth from 2020-2022.
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.
3. 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
Energy Transfer reported third-quarter results on November 6th. Adjusted EBITDA continued its streak of strong growth on the back of another record operating performance in the Partnership’s NGL and refined products segment, increasing 8% year-over-year to $2.79 billion. Distributable cash flow increased by 10% to $1.52 billion, reflecting improving cash flow generation efficiencies.
This led to $712 million in retained cash flow and a 1.88x distribution coverage ratio, making the company’s double-digit yield very safe. The company also continued to improve its balance sheet, with $3.32 billion of liquidity and a credit agreement leverage ratio of 3.63x.
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.
The company’s new projects will help secure its attractive distribution, which currently yields nearly 10%. 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.
2. Tanger Factory Outlet Centers (SKT)
- Dividend Yield: 10.5%
Tanger Factory Outlet Centers is a Real Estate Investment Trust. Tanger Factory Outlet Centers is one of the largest owners and operators of outlet centers in the United States. It operates and owns, or has a stake in, a portfolio of 39 upscale outlet shopping centers.
Tanger’s operating properties are located in 20 states and in Canada, totaling approximately 14.3 million square feet, leased to over 2,800 stores which are operated by more than 510 different brand name companies.
Tanger’s diversified base of high-quality tenants has led to steady growth for many years.
Source: Earnings Slides
Tanger released 2020 fourth-quarter and full-year financial results on January 27th. Fourth-quarter revenue of $121 million declined by 5% year over year, while adjusted funds from operations (AFFO) fell 7.8% year-over-year. For the full year, AFFO declined 6.9% to $2.31 per share. Tanger’s occupancy rate stood at 97% in the most recent quarter, up from 95.9% in the previous quarter.
For 2019, blended average rental rates increased 2.7% on a straight-line basis but decreased 1.3% on a cash basis for all renewals and re-tenanted leases. Same-center net operating income, or NOI declined 0.7% for 2019, due to the impact of tenant bankruptcies, lease modifications, and store closures. Tanger also increased its annual dividend by $0.01 per share, for the 27th consecutive year of dividend growth.
Tanger has a current dividend payout of $1.43 per share annually, which represents a current yield of 10.7%. This is a very high yield and is clearly attractive for income investors. The biggest concern with a yield this high is sustainability. Tanger appears to have a secure dividend payout.
We expect Tanger will generate AFFO-per-share of $2.39 for 2020. With a current annual dividend payout of $1.43 per share, Tanger’s expected 2019 dividend payout ratio is 60%. This is a manageable payout ratio, which leaves room for modest annual hikes.
Investors should closely monitor Tanger’s financial results each quarter, to ensure the company remains on track. The difficulties facing malls in the U.S. are significant, and Tanger’s declining revenue and AFFO are valid concerns. The dividend payout appears secure for now, but continued deterioration in the company’s financial results could put the dividend in danger of being cut.
1. Sunoco LP (SUN)
- Dividend Yield: 10.9%
Sunoco is a Master Limited Partnership that distributes fuel products through its wholesale and retail business units. The wholesale unit purchases fuel products from refiners and sells those products to both its own and independently-owned dealers. The retail unit operates stores where fuel products as well as other products such as convenience products and food are sold to customers.
Sunoco was founded in 2012, is headquartered in Dallas, and currently trades with a market capitalization of $2.7 billion.
Source: Investor Presentation
Sunoco reported its third-quarter earnings results on November 6th. Adjusted EBITDA and distributable cash flow declined 7.7% and 11%, respectively, compared with the same quarter last year. Excluding a one-time cash benefit of $25 million, adjusted EBITDA and distributable cash flow would have grown by a small amount. Growth was driven by record fuel volumes of 2.11 billion.
Sunoco reported current quarter cash coverage of 1.55x, and trailing twelve month coverage of 1.30x which indicates a secure distribution. At the same time, investors should keep a close eye on the company’s debt levels, as Sunoco ended the quarter with a leverage ratio of net debt to adjusted EBITDA, of 4.51x.
Sunoco does not have a long history, as the company was created just a few years ago. During that time frame its results varied significantly. Going forward, Sunoco can generate growth through multiple factors. Following the sale of a large amount of its convenience stores, Sunoco is now more dependent on its fuel wholesale business, where it profits from significant scale and revenue consistency.
In Texas, Sunoco is one of the largest independent fuel distributors, and Sunoco is also among the top distributors of Chevron, Exxon, and Valero-branded motor fuel in the rest of the United States. In the fuel wholesale industry, scale is important, as increased scale allows for higher margins and a better negotiating position with both suppliers and customers. Total gasoline sales declined relatively steadily since the beginning of the current millennium, but bottomed in 2015 and started to rise again over the last three years.
This macro shift towards higher gasoline consumption, can be explained by customers’ preference for larger, less efficient models such as SUVs and trucks. Higher gasoline demand is a macro tailwind for Sunoco’s business.
With a projected distribution payout ratio of 46% for 2019, and a distribution coverage ratio above 1.3x for the trailing four quarters, Sunoco’s distribution appears to be sustainable for now. That said, investors should carefully weigh the various unique risk factors associated with investing in MLPs, as well as the company’s fairly high level of debt.
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 falling 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, particularly among stocks with 10%+ dividend yields.