Federal Reserve officials decided in November to hold target interest rates steady at 5.25% to 5.50%, and hinted they’d take it easy with additional changes to monetary policy. Some hopeful investors have started speculating that may mean rate hikes are over, or that perhaps a cut is likely in 2024.
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But let’s face it, with rates like this — up from effectively zero as recently as 2021 — it’s undeniable that we all have to make our peace with a “new normal” of higher interest rates. Even a modest cut at the Fed isn’t going to get us back to where we were previously, after all.
There are a lot of changes that come with this shift. But one big one is the need for dividend investors to seek out higher yields than in prior years. Why settle for a lackluster stock paying less than 2% when you can get two or even three times the yield in the bond market, with a fraction of the risk?
If you want to get ahead from an income perspective, you have to demand more. And the following seven stocks all offer yields of 5% or more right now to stand apart from the typical dividend crowd:
| Stocks | Trailing-12-Month Dividend Yield* |
| Ares Capital Corp. (ticker: ARCC) | 9.8% |
| Canadian Imperial Bank of Commerce (CM) | 6.4% |
| Cheniere Energy Partners LP (CQP) | 7.2% |
| Dow Inc. (DOW) | 5.4% |
| Lamar Advertising Co. (LAMR) | 5% |
| Prudential Financial Inc. (PRU) | 6.6% |
| Southern Copper Corp. (SCCO) | 5.4% |
*Yields are calculated based on the stock’s closing price on Nov. 20.
Ares Capital Corp. (ARCC)
Ares Capital is a business development company, or BDC. This special class of publicly traded company operates similar to a private equity fund or hedge fund, as it deploys capital in specialized situations to pursue big returns — and if successful, shares that success with stockholders via generous dividends. ARCC specializes in acquisitions, recapitalizations and other corporate restructurings across a host of industries such as restaurants, retail, oil and gas, and technology. Ares has been paying out a cash dividend of 48 cents payable for over a year, which amounts to a nearly double-digit yield at current pricing.
Dividend yield: 9.8%
Canadian Imperial Bank of Commerce (CM)
As you no doubt could guess by the name, this Toronto-based financial institution provides diversified banking services across Canada. Valued at roughly $36 billion and conducting core operations such as business banking, home loans and wealth management, CM is similar in many ways to some of the largest regional U.S. banks, such as Truist Financial Corp. (TFC), in both its makeup and size. Where it stands out, however, is its big-time dividend that is currently 87 cents per quarter (in Canadian dollars). There’s a slight fluctuation thanks to exchange rates, but the income is as consistent as in other financial stocks.
Dividend yield: 6.4%
Cheniere Energy Partners LP (CQP)
Cheniere is a $28 billion “midstream” energy stock that specializes in liquefied natural gas, or LNG. It owns and operates an extensive network of pipelines, terminals and regassification facilities to service utilities and other end users of LNG. It also operates the critical Sabine Pass terminal in Louisiana, one of the most important hubs for exporting natural gas from the U.S. to the rest of the world. This key position in the LNG supply chain means Cheniere can offer a dividend consistency unmatched by other, more volatile energy stocks.
Dividend yield: 7.2%
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Dow Inc. (DOW)
Dow is one of the most successful chemicals and materials companies in the world, servicing a wide range of customers in industries that range from packaging to infrastructure to consumer goods. It has a worldwide customer base, too, offering even more diversification in its business. Admittedly, the goods cranked out by Dow aren’t particularly sexy, as they include specialty plastics for packaging, wire and cable for construction, and specialty coatings, adhesives and sealants. However, Dow makes up for its lack of flash with a $30 billion operation that services a wide array of customers at a scale and reliability that makes it noteworthy for low-risk investors. The more than 5% dividend is nice, too.
Dividend yield: 5.4%
Lamar Advertising Co. (LAMR)
You may recognize the Lamar name, which is often pasted at the bottom of roadside billboards in green letters. But Lamar does much more than just old-school billboards these days, with digital inventory that provides more flair to ads as well as premium real estate for captive audiences on public transit or in airports. The company just posted strong fiscal third-quarter numbers in November and has seen shares surge about 20% in the last month as a result of strong demand trends and increased investor optimism. But even after this run, the company provides a best-in-class dividend of 5% to appeal to income investors, too.
Dividend yield: 5%
Prudential Financial Inc. (PRU)
A force in North America thanks to its vibrant life insurance and wealth management businesses, PRU is a great example of a slow-and-steady financial stock with generous income potential. Admittedly, there’s not going to be a huge windfall for Prudential anytime soon, as it is involved in the rather low-profile business of insurance, annuities and retirement-plan services like running 401(k)s for employers. But these businesses are very consistent and low-risk endeavors, allowing for generous and consistent dividends as a result.
Dividend yield: 6.6%
Southern Copper Corp. (SCCO)
With regular quarterly dividends of $1 per share, SCCO is one of the more generous materials stocks out there. However, investors should take into account the “cyclical” nature of copper, as it is a critical component in electronics, plumbing, construction and other workaday applications. If the global economy hits a snag, then naturally copper demand takes a hit, too. However, as one of the largest mining companies out there with a market value of almost $60 billion, there’s a good chance that SCCO will be around to deliver dividends in the years ahead regardless of any short-term volatility for copper.
Dividend yield: 5.4%
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7 Dividend Stocks Paying 5% and Above originally appeared on usnews.com
