HomeBusiness3 Best High Yield Dividend Stocks to Consider Buying in May

3 Best High Yield Dividend Stocks to Consider Buying in May

3 Best High Yield Dividend Stocks to Consider Buying in May

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When looking for high-yield dividend stocks, it is essential to consider several factors to ensure the sustainability and growth potential of the dividends. Below, we discuss three high-yield dividend stocks selected based on a thorough methodology that includes analyzing dividend consistency, assessing financial health, considering payout ratios, and evaluating analyst recommendations.

However, it’s important to note that what may be a great dividend stock for one investor may not suit another investor’s long-term goals or risk tolerance. You should always conduct your own research and consult a financial advisor before making any investment decisions. That said, here’s the methodology used to pick these three high-yield dividend stocks to buy this month.

Methodology

To identify the best high-yield dividend stocks for May, we applied the following criteria:

1. Minimum dividend yield of 5%: We focused on stocks that offer a substantial dividend yield, giving investors significant income potential.

2. Dividend consistency: We looked for companies with a history of consistently paying and increasing their dividends over time, demonstrating a commitment to rewarding shareholders.

3. Financial Health: We evaluated each company’s financial stability by examining metrics such as debt-to-equity ratio, interest coverage ratio, and cash flow to ensure they have the financial strength to maintain their dividend payments.

4. Payout Ratios: We’ve analyzed the dividend payout ratio to ensure the company’s dividends are sustainable and don’t eat up too much of its profits or cash flow.

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5. Analyst Recommendations: We reviewed analyst ratings and price targets to gauge market sentiment and potential upside for each dividend stock.

Here are the three companies that stood out when we looked at the above criteria:

Pfizer Inc. (NYSE:PFE)

Pfizer Inc. is a global biopharmaceutical company that develops, manufactures and markets a broad range of medicines and vaccines. With a dividend yield of 6.04% and a market cap of $157.48 billion, Pfizer is an attractive option for investors looking for income.

The company has a strong track record of paying dividends, with an annual dividend of $1.68 per share. Pfizer’s payout ratio of 71.79% indicates that its dividends are sustainable and well covered by earnings. The interest coverage ratio of 17.41 and the debt-to-equity ratio of 0.42 demonstrate its financial stability and ability to maintain dividend payments.

Analysts have a consensus price target of $40.28 for Pfizer, with recent ratings from Morgan Stanley, BMO Capital and Cantor Fitzgerald. The average price target of $36.67 from these three analysts implies an upside potential of 30.32% for the stock.

VICI Properties Inc. (NYSE:VICI)

VICI Properties Inc. is an experiential real estate investment trust (REIT) that owns a portfolio of gaming, hospitality and entertainment properties in the United States and Canada. With a forward dividend yield of 5.76% and a market cap of $30.04 billion, VICI Properties offers investors an attractive income opportunity.

The company has an annual dividend of $1.66 per share and a payout ratio of 64.59%, indicating a sustainable dividend payout. VICI Properties’ interest coverage ratio of 4.48 and debt-to-equity ratio of 0.71 demonstrate its financial stability and ability to maintain dividend payments.

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Analysts have a consensus price target of $34.05 for VICI Properties, with recent ratings from Morgan Stanley, Mizuho and Wells Fargo. The average price target of $32 from these three analysts implies an upside potential of 10.96% for the stock.

Ares Capital Corporation (NASDAQ:ARCC)

Ares Capital Corporation is a business development company that specializes in providing financing solutions to mid-market companies across a variety of industries. With a forward dividend yield of 9.32% and a market cap of $12.53 billion, Ares Capital offers investors an opportunity for high-yield income.

The company has an annual dividend of $1.92 per share and a payout ratio of 81.36%, indicating a sustainable dividend payout. Ares Capital’s interest coverage ratio of 5.22 and debt-to-equity ratio of 1.13 demonstrate its financial stability and ability to maintain dividend payments.

Analysts have a consensus price target of $19.58 for Ares Capital, with recent ratings from JP Morgan, Truist Securities and Oppenheimer. The average price target of $22.33 from these three analysts implies an upside potential of 6.81% for the stock.

Looking for income outside of dividend stocks? Check out these alternative options

While high-yield dividend stocks can provide a steady income stream, investors may also want to consider alternative income-generating options. Two attractive alternatives are the Cityfunds Yield Fund and the Single Family Residential Fund from Arrivald.

Cityfunds Revenue Fund

The Cityfunds Revenue Fund targets an APY of 8% and offers investors stable cash flow, backed by real estate assets. The fund invests in a diversified pool of collateralized real estate loans, including equity-backed notes and short-term mortgage bonds, with the goal of generating consistent interest income for its investors.

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Investors in the Cityfunds Yield Fund receive quarterly distributions, which can be reinvested to boost returns or paid directly into their bank accounts. With a five-year term and liquidity options after twelve months, this fund offers a balance between liquidity and long-term growth potential.

Click here to see how much you can earn with Cityfunds Yield.

Single-family housing fund

Arrived Single-family housing fund offers investors the opportunity to gain exposure to a portfolio of single-family rental properties in dynamic rural markets. Launching in the fourth quarter of 2023, the fund aims to provide a steady income stream and long-term capital growth by acquiring properties in markets with strong job and income growth, affordability and increasing housing demand.

As of the first quarter of 2024, the fund has built a portfolio of 33 properties and paid an annualized dividend of 4.0%. With plans for continued acquisitions in attractive markets and improvements in operational efficiencies, Arrivald’s Single Family Residential Fund offers investors an attractive opportunity to diversify their income streams through real estate investments.

Click here to learn more about the Single Family Residential Fund or browse individual rental properties you can invest in with as little as $100.

The end result of these high-yield investments

When considering high-yield dividend stocks, it is crucial to analyze several factors to ensure the sustainability and growth potential of the dividends. Pfizer Inc., VICI Properties Inc. and Ares Capital Corporation stand out as attractive options based on their dividend yields, consistency, financial health, and analyst recommendations.

However, investors should also consider alternative income-generating options, such as Cityfunds Yield Fund and Arrivald’s Single Family Residential Fund, to diversify their portfolios and potentially increase their income streams. As always, investors should conduct thorough research and consider their individual financial goals and risk tolerance before making any investment decisions.

This article 3 Best High-Yield Dividend Stocks to Buy in May originally appeared on Benzinga.com

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