Highest Yield Dividend Stocks For Your Stocking

| December 16, 2015

Ready to stuff your stocking with a few of the highest yield dividend stocks?

Want to find some good dividend stocks to buy… that are off the beaten path?

Start by brushing up on the dividend yield essentials.

And this is the time of year when it makes sense to look at the ghost of dividends past.

See what kind of big picture yield we’re dealing with, and how we stack up on yield as we close in on the end of 2015.

When 2015 is over, look for the average yield for an S&P 500 stock to come in at 2%.

Study yields for the S&P 500 stocks for the past five years, and you’ll see they tend to average less than 2.5%.

But go back to the 1980s and 1990s, and you find quite a few years where the average yield for a large cap stock was over 3%.

And in 1978, 1979, and 1981, the yield was actually more than 5%.

Those days are clearly gone.  Could things change, and could we see a new era of higher yields from the large caps?

Who knows.

(But I wouldn’t hold my breath.)

Looking For Love In An Era Of Low Yield

Every dividend investor out there is looking for a better deal.  High yield stocks that can deliver more income.

Something I never get tired of pointing out is the importance of proven, consistent, performance in a dividend stock.  It’s the growth that matters.

Flash in the pan high dividend stocks are easy to find, and easy to lose money on.

Proven, consistent, performance is the way to get rid of some of the risk.

What are the highest yield dividend stocks you should think about stuffing in your stocking?

Take a look at the S&P 500 Dividend Aristocrats as we close in on the end of the year and you’ll find 16 stocks that pay a yield of 3% or more.

Great companies like Procter & Gamble $PG and Coca-Cola $KO.

If you say, “Hey, that’s not exactly a high yield,” I hear you loud and clear.

It’s not.  But remember the times we’re in.

Your CD isn’t exactly a gusher of income.

And remember that the real payoff doesn’t come from the yield, but the compounding of dividend growth over time.

So even though you can find a few Dividend Aristocrats with decent, although not exciting yields, there’s an even better place to look.

Smaller Companies That Keep The Dividends Growing

I’ve got a soft spot for consistent behavior, and it’s because of the power of compounding.

Want an example?

If you invested $10,000 in McDonald’s in 1980, held on for 30 years, and spent the dividends as they came in, you’d wind up with $600,229.

But if you reinvested the dividends, you’d wind up with $903,951.

This isn’t a freakish, unusual event.  And it holds just as true for the midcaps as the large caps, maybe even more because of the growth of the stock price.

Let me show you three of the highest yield dividend stocks to stuff in your stocking… without chasing a high yield that could vanish before the next quarter.

ONEOK $OKE is in the natural gas business.  It’s involved in processing, storing, and transporting.

Natural gas prices tumbled in early 2015.  Since then, they have traded in a narrow range.  But even though prices have stopped the big skid, most natural gas companies have been hurting.

Check out how the industry as a whole has been doing the past five years…

$UNG Natural Gas Companies 5 year stock chart

Timing market turnarounds is a fool’s game.

Natural gas has clearly taken its lumps.  None of the experts who follow the industry are sticking their necks out and forecasting a rebound in prices.

So why would you want to buy ONEOK stock?

Well, the company guts it out.  It manages to pay a dividend.

It’s been growing the dividend for the past 12 years.  The yield is a rather rich 11%.

And the dividend payout ratio is also high… a bit of a danger signal at 168.

But if you figure natural gas has been beaten down about as low as it can go, and if you’re willing to be patient, ONEOK deserves your attention.

A Less Risky Dividend Stock For Your Stocking

Nu Skin Enterprises Inc. $NUS has taken a hit this year and is a bargain.

In June, $NUS traded at more than $62.00.  Today it’s in the low $30s.

Why do we like Nu Skin?  Fourteen years of dividend growth, a 3.85% yield, and a healthy dividend payout ratio of 48%.

It’s in the business of manufacturing and marketing anti-aging skin care products.   The P/E Ratio is in line with the overall market at 15.19.

And then there’s this quiet company out of Milwaukee.

Brady Corp. $BRC is in the safety business.  Specifically, it makes signs, labels, and lockout devices.

Not too exciting… except that Brady has been paying a growing dividend for the past 29 years and the yield is 3.22%.

The payout ratio is a bit high at 65%.

The stock price has been wobbling through the year, almost hitting $29 in the spring, then plunging to $19.52 in September.

(Not much of a safety net for an outfit in the safety business.)

So there you go.

A trio of good dividend stocks.

Nice yields, nice track records, and solid businesses.

Giving yourself a holiday gift?

Any one of these stocks… or all three… would look good in your portfolio.

From all of us here at Dividend Stocks Research, have a wonderful holiday season.

And 2016… why not make it a healthy and profitable year?

Cordially,

Paul Duke
Dividend Stocks Research

Note:  Paul Duke writes and edits DividendStocksResearch.com.  Sign up for our free dividend reports and dividend newsletter at http://www.dividendstocksresearch.com/free-sign-up.  We’ll show you how to create regular income by investing in dividend stocks, easily, step-by-step.

 

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