You see, these five heavy-hitting, high-yield dividends are virtually bulletproof. Or, to be more precise, they’re “recession proof.”
That means these stocks – unlike other high-yield, high-risk dividends – can stand the test of hard financial times.
Sound too good to be true? Think again...
These five explosive dividends are considerably above the S&P average yields, but they’re also
For a while, these
five high-yield
dividends were my
best-kept secret...
but now we just can’t
keep quiet any longer.
High-Yield Pick #1: Altria Group (MO)
Yield: 4.9%
•Payout Ratio: 80%
Whatever your moral standing is on the subject, there’s no denying the dependable profitability of “vice” stocks.
Enter Altria Group, the nation’s leading tobacco company. It’s always shown solid stock performance (gaining over 400% in the last decade) and consistent earnings per share growth (25% in the last year).
Although the company appears to have a high level of debt, its sheer revenue and overall market strength are enough to outweigh this risk.
Again, among the few “recession-proof” industries, tobacco has a history of impressive standings seemingly immune to the fluctuations of the S&P. Even in the face of rising taxes, public health concerns and general stigmatization, Altria continues to make gains.
High-Yield Pick #2: Consolidated Edison (ED)
Yield: 4.4%
•Payout Ratio: 68%
Founded in 1884, Consolidated Edison is one of the oldest utilities. It provides steam, natural gas and electricity to one of the most densely populated markets in the country – the Northeast.
The result? There’s virtually no risk that the company is going out of business. Shares aren’t a screaming bargain at a forward P/E ratio of 12.5. But such a valuation is hardly considered expensive.
What’s compelling about Consolidated Edison is its dividend yield, which is nearly double the 2.4% dividend yield of the S&P 500 Index.
Rest assured, the dividend is safe, as the company’s dividend payout ratio is nice and conservative – giving them a cushion against any slow economic times. And payments are all but guaranteed to increase, too. For 39 years in a row (and counting), management has increased the dividend.
W
What’s compelling
about Consolidated
Edison is its
dividend yield,
which is nearly
double the 2.4%
dividend yield of the
S&P 500 Index.
High-Yield Pick #3: Avista Corporation (AVA)
Yield: 4.1%
•Payout Ratio: 66%
Avista, like Consolidated Edison, is a solid utility play, is recession-proof and has deep roots.
It’s been around for over a century. And its history of dividend payments, largely consecutive, goes back to the 1950s. Translation? Avista isn’t going anywhere, and neither are its dividends.
It currently sports an annualized dividend of $1.27, representing a yield of 4.1%. And again, like Consolidated Edison, that’s practically twice the S&P 500 average.
Better still, it has a five-year average growth rate of 12.07%, which means the yield on cost will beat the pants off of most stocks well into the future.
High-Yield Pick #4: Corrections Corporation of America (CXW)
Yield: 5.9%
•Payout Ratio: 72.7%
The incarceration rate in the United States is through the roof, with over two million inmates and rising. As a result, state and federal prisons, already strapped for cash, are at or past capacity.
Considering that 90% of the jails in the country are government owned, the niche that privatized prisons occupy is narrow yet profitable. Corrections Corporation of America is one of the few and the largest of the private prison contractors in the United States, operating 67 facilities in 20 states.
Whatever your stance is on the issue of for-profit prisons, you’d have a hard time arguing the solid numbers behind CCA’s business profile, with the stock itself outperforming, clocking in with a gain of 414% over the last decade.
With prison deterioration and overcrowding becoming increasingly problematic, CCA offers a viable alternative to the financially burdened state and federal institutions. And for investors seeking higher dividend yields, the recent conversion of CCA to REIT status makes it an even more attractive deal.
High-Yield Pick #5: Kinder Morgan Energy Partners (KMP)
Yield: 6.9%
•Payout Ratio: 92%
Buying stock in the energy sector is usually a decent move, but even safer than putting your money behind companies that refine, produce, or provide is betting on the people who transport and store.
These transportation companies have no need to invest capital in research or exploration and, in relative terms, tend to be more isolated from resource shortages or gluts.
For example, as natural gas becomes more widely accepted, Kinder Morgan, the dominant player in oil and gas transportation and storage, should prove to be an excellent investment opportunity.
Kinder Morgan owns the largest natural gas pipeline and storage facility in the country, and while most energy providers could take a hit from the high supply of natural gas, at least until demand can catch up, Kinder Morgan will only stand to make more money.
Since the company doesn’t own the commodities it handles, Kinder Morgan isn’t as exposed to market volatility as the companies it serves and, consequently, stock in its business remains fairly stable.
Max Yields in a Zero-Interest World
So there you have it... Five high yielders set to outperform, well, indefinitely.
Best of all, this year is set to be the biggest year for dividends yet, with companies everywhere giving investors more of what they want – cash.
But with more and more companies jumping on the dividend bandwagon, the world of income investing is starting to get crowded – and might even seem confusing.
It doesn’t have to be.
Remember: It’s actually simple to find high-yield dividend stocks in this zero-yield world. Ones that are reliable and virtually immune to dividend cuts or suspensions.
Ahead of the tape,
J.W. Langford
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