As bond rates rise, many low-yield stocks look less attractive.
A few years ago, when Treasury bonds were consistently yielding 2% or less, it was easy to make the case for diving into dividend stocks. But with the Federal Reserve ratcheting up key interest rates to above 4%, investors are now demanding bigger yields from stocks to offset the additional risk. If you’re on the lookout for high-yield dividend stocks in 2023, then consider starting here. The following stocks are all reasonably large, with market values of $2 billion or greater, and offer dividend yields of at least 5% to comfortably top the ever-rising rates on bonds as we enter 2023.
As bond rates rise, many low-yield stocks look less attractive.
Companhia Siderurgica Nacional (ticker: SID)
An integrated steel producer in Brazil valued at more than $4 billion, SID has been soaring lately thanks to two big factors. The first is general commodity inflation that has lifted the price it can charge on its metal products, which are used in everything from construction to automobiles to home appliances. Additionally, its location in Latin America and its key trade relationship with China have allowed the company to capitalize on the late post-COVID recovery of these regions. Dividends are irregular, as is common for international companies. On top of that, they’re also volatile thanks to a close tie to operations instead of a fixed target sum like domestic blue-chip stocks. But, for what it’s worth, the trailing yield over the last year on this stock is tremendous, which makes it worth a look for the year ahead.
Dividend yield (trailing twelve months or TTM): 13.3%
Hanesbrands Inc. (HBI)
Consumer apparel company Hanes is insulated from a lot of the marketwide volatility thanks to its reliance on reasonably steady undergarment sales. This naturally fuels regular and reliable dividends. However, the stock is also positioning itself for growth in 2023 as it looks to expand the reach of its Champion athletic wear arm. In fact, HBI just saw a big jump in shares late last year on news it will top revenue forecasts in its upcoming Q4 report. Shares are up significantly from their October lows on this optimism, and a big-time yield on top of that makes Hanesbrands a good high-yield investment to consider right now.
Dividend yield (TTM): 7.3%
Medical Properties Trust Inc. (MPW)
An $8 billion real estate company that is focused on the health care sector, Medical Properties Trust is structured as a REIT or real estate investment trust. That special class of company is required to deliver 90% of taxable income back to shareholders, which means a mandate for generous dividends. It operates as a “net lease” hospital company, which means that even though it owns about 430 facilities across nine countries, it makes the tenants at these sites liable for taxes, insurance and maintenance costs on the properties — all in addition to rent. MPW has raised its dividend for each of the last eight years, even through the pandemic-related disruptions that struck some stocks. With health care proven to be one of the most recession-proof sectors on Wall Street, there’s a good chance that it continues to pay generous dividends going forward or ratchets payments even higher in 2023.
Dividend yield (TTM): 8.4%
Cogent Communications Holdings Inc. (CCOI)
Cogent is a smaller U.S. telecom that is focused on high-speed internet access, data center services and “private network” technology for law firms, financial services firms, heath care providers and other companies that need their own walled garden of digital tools to operate securely and effectively. As of last year, CCOI operates more than 50 data centers and provides services to 3,035 single-tenant buildings and another 1,800 to multi-tenant office buildings. Data is the lifeblood of the digital economy, and Cogent can depend on regular checks from clients who rely on its services. And with the recent announcement that it will purchase some of the wireline business of T-Mobile US Inc. (TMUS) to continue expanding its reach, shares have rallied about 30% in the last three months.
Dividend yield (TTM): 5.2%
OneMain Holdings Inc. (OMF)
A $5 billion financial services firm based in Indiana, OneMain is a consumer finance and insurance business that mainly offers car loans, credit cards and life insurance products. It’s not mammoth in scale, but is definitely established with a network of 1,400 branch offices in 44 states. In a rising interest rate environment, OneMain is set to benefit from higher margins on many of its products. And unlike full-service megabanks that have a lot of cost centers and diversified business lines to consider, OMF will benefit more directly from this tailwind. As proof, shares are up about 35% in the last three months, on top of the generous dividend it continues to provide.
Dividend yield (TTM): 9.2%
Xerox Holdings Corp. (XRX)
I know what you’re thinking: What in the world is a copier company doing on a list of investments to buy in 2023? Well, for starters, let’s acknowledge that XRX is not wholly a paper-dependent company anymore and has made great strides in recent years to move into digital document and IT services. Furthermore, with the end of COVID-19 restrictions and a return to office for many corporations, the old machines in the copy room are now finally being replaced at many locations. On top of that, XRX offers a reliable dividend of 25 cents per quarter that has been paid like clockwork since 2017. With the core disruption to its business in a digital age now a decade or two in the rearview mirror, investors may want to consider the 21st century version of this copier king.
Dividend yield (TTM): 5.9%
Kohl’s Corp. (KSS)
Retailer Kohl’s operates its namesake stores, but also produces private brand apparel, footwear, accessories and more for sale at these locations. These include brands such as Apt. 9, Croft & Barrow, Jumping Beans and others. As of 2022, it operated about 1,100 locations, making it one of the largest department stores in the U.S. Brick-and-mortar sales are admittedly challenged in the age of e-tailing, however, Kohl’s has a strong online presence as well as a strong connection with its customers through a focus on value and in-store deals. There’s a bit more risk to this stock than others on the list, as consumer spending declines in 2023 could undercut sales, but so far talk of a recession or belt-tightening has largely proven to be overblown. If you’re not afraid of a more aggressive dividend play in retail, KSS could be worth a look thanks to its big yield and strong recent performance.
Dividend yield (TTM): 6.1%
Jackson Financial Inc. (JXN)
Jackson is a financial services company that largely focuses on retirement income solutions including annuities and life insurance products. These kinds of assets were in favor a decade or two ago, but many younger Americans have been lulled into a false sense of security by the strong performance of the stock market since the financial crisis of 2008. Unfortunately, the rising interest rate environment and supply chain disruptions of recent years have caused many to reassess what they thought was a “sure thing” in stocks alone. Amid this transition, JXN is benefitting not only from the increased interest in its retirement products but also a higher interest rate environment that allows it to put its cash to better use. The result is a generous dividend and a share price that has leaped 50% in the last six months alone.
Dividend yield (TTM): 5.3%
Newell Brands Inc. (NWL)
Atlanta-based Newell is the $6 billion consumer products giant behind a host of products you know and love — Rubbermaid containers, Crockpot and Mr. Coffee appliances, Sharpie markers, Calphalon kitchenware, and Yankee Candle brands, to name a few. This highly diversified operation makes for reliable sales that aren’t dependent on the ups and downs of consumer spending trends, as many of these items are staples rather than discretionary goods. Furthermore, the strong brands in the portfolio insulate it further from changing consumer tastes. That all allows for reliable revenue and a reliable dividend as a result.
Dividend yield (TTM): 5.8%
9 high-yield dividend stocks to buy:
— Companhia Siderurgica Nacional (SID)
— Hanesbrands Inc. (HBI)
— Medical Properties Trust Inc. (MPW)
— Cogent Communications Holdings Inc. (CCOI)
— OneMain Holdings Inc. (OMF)
— Xerox Holdings Corp. (XRX)
— Kohl’s Corp. (KSS)
— Jackson Financial Inc. (JXN)
— Newell Brands Inc. (NWL)
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9 High-Yield Dividend Stocks to Buy originally appeared on usnews.com
Update 01/24/23: This story was published at an earlier date and has been updated with new information.
