2 stocks to buy with dividends above 4%
It’s tempting to get into high value stocks dividend yield. However, this is only the first step in the process for investors looking for income. Many companies have inflated returns because their stock prices have fallen, which could very well indicate that the company’s payoff is not sustainable. Therefore, this dividend that you thought you would receive may disappear, in part or in whole.
So the next item on your checklist is to make sure the business is strong and can continue to pay the dividend. Below are two of those companies that offer a dividend yield of over 4% and are worth your consideration.
1. Alliance of Walgreens boots
Alliance of Walgreens boots (NASDAQ: WBA) offers an impressive 5.2%. While other companies have cut dividends during these difficult times, the board of directors of this company has increased the dividend by a dime at about $ 0.47. It’s always encouraging when a business sees fit to increase its earnings. When businesses face a lot of uncertainties due to COVID-19 and the economic fallout that comes with it, it’s even more impressive.
In fact, the last hike took Walgreens’ annual streak to 45. Already a Dividend Aristocrat, he will likely become a Dividend King, which is a S&P 500 Index company that has increased its dividends for 50 years, in just a few years.
Walgreens is a leading pharmacy retailer which sells prescription and over-the-counter drugs, as well as other items such as health and beauty products.
Economic conditions generally do not affect the business, as people still need their medication. In its fiscal third quarter (ended May 31), Walgreens sales were flat from a year ago at $ 34.6 billion. This despite management’s estimate that sales have been affected by $ 700 million to $ 750 million due to the issuance of strict stay-at-home orders by the UK government.
The company’s strong cash flow should also give you confidence in its ability to continue paying dividends. For the first nine months of 2020, its operating cash flow was $ 3.4 billion. After capital expenditures of $ 962 million, there was plenty left to pay the $ 1.3 billion in dividends.
2. Real estate income
Real estate income (NYSE: O) is a real estate investment company (REIT). This means that it must pay out at least 90% of its taxable income as dividends, which makes it ideal for investors looking for income.
Paying dividends monthly, the board increased the payout five times in 2019 and twice this year.
Currently paying $ 0.2335 per month, this equates to a 4.3% dividend yield at the current share price. As of this year, Realty Income is part of the illustrious Dividend Aristocrat group.
Leasing properties to retailers usually involves risk. This is because some retailers have their destiny tied to the economy and depend on consumers spend money. Realty Income manages this risk by renting to a diverse mix of industries, and its top 20 tenants, accounting for around 53% of its rental income, are mostly large, strong retailers. These are companies like Walgreens and General dollar (NYSE: DG).
It certainly boosts my confidence that Realty Income won’t run into a rent collection problem. At the end of the quarter, his occupancy rate was 98.5%, and he received 86.5% of the rent due in the second quarter, which rose to 91.5% in July. It has stood up well to government restrictions on retail store activity.
With its diverse and strong business tenants, I have confidence in Realty Income’s ability to continue to pay dividends.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.