High-yield dividend stocks are a good way to diversify any portfolio, and 2% yields simply aren’t good enough to enjoy a substantial income from dividends. But there are three dividend stocks paying high yields that every investor should consider going into the second half of the year.
1. STAG Industrial (STAG)
STAG offers a high-yield dividend of 6.5% and is an REIT that is growing at a rapid pace. The company has an impressive portfolio and operates differently than most REITs. STAG has industrial properties that house just one occupant, which is considered a high risk as occupancy can go from 100% to 0% overnight.
A portfolio of hundreds of properties allows the company to maintain high profits and reduce risks. STAG further benefits from reduced competition when acquiring new buildings and properties, which further allows the company to negotiate lower prices for acquired properties.
STAG is in a unique position and has positioned itself for substantial growth as a result. The company’s revenues grew 19% in the last quarter.
The company purchased five new properties in Q1 2016 at a value of $27.9 million. Occupancy rates at the time of acquisition were 62.7%. The company also sold four buildings, or 1.2 million square feet of buildings for $32.8 million. The company executed 16 leases in Q1 with a 42.4% retention rate for leases expiring on the quarter.
2. Medical Properties Trust (MPW)
Medical Properties Trust is an REIT, and the trust focuses on healthcare facilities and hospitals. An aging economy almost ensures that the healthcare industry will thrive for the foreseeable future, and Q1 2016 reports show the prominence of MPW.
The company invested $5.7 billion in total in 204 properties across the United States. The company has also invested internationally into Spain, Germany, Italy and the United Kingdom. The stock offers a yield of over 6%. With 25% growth in the first-quarter, this is one of the most promising dividend-yielding stocks.
MPW also merged Capella Health Holdings and RegionalCare in March. The merger will result in $550 million for the trust, which will be used to reduce debt and make it even more attractive to investors.
3. Kohl’s (KSS)
Kohl’s stock has tumbled as of writing this article, but this is still a high-yield dividend stock with yields of 4.7%. The retail sector as a whole is having trouble, with many retailers noting a drop in sales. Kohl’s earnings per share dropped 5% last year due to increased costs, but comparable-store sales rose slightly by 0.7% in 2015.
The company’s stock is in a slump, and while it may be a bit riskier than our first two choices, Kohl’s is still an attractive buy in terms of dividend yield. Kohl’s also trades at 10.5 times its earnings, which is a safer option than many tech stocks that trade at a much higher multiple compared to earnings.
First-quarter results for Kohl’s is a sign of caution for retail stores, and the company’s comparable sales slid 3.9% on the quarter, the steepest drop since 2009. It will be interesting to see what happens to sales in Q2 as weather around the country has steadied after an unseasonably warm winter lowered apparel sales.
Anthony Young
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