Generally, there’s a trade-off between risk and reward in investments. That’s why “junk” bonds from troubled corporations yield significantly more than short-term U.S. government bonds, as a way to compensate investors for the added uncertainty that comes with them.
The same is true for stocks. Consider that global icon Apple Inc. (ticker: AAPL) yields a mere 0.4%, despite having roughly $100 billion in net income and one of the most entrenched brands in the planet. That’s because it’s easy to maintain a nominal dividend, but much harder to drive a huge yield — even for titans like Apple.
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Fundamentally, dividends take profits from a company’s operations and distribute them directly to shareholders. That’s great when things go well, but if something goes wrong there’s less wiggle room and dividends can get reduced or cut altogether as a result.
The following stocks are admittedly more risky than mega-cap stocks like Apple, but deliver yields of 5% or more, a figure that’s more than triple the average of the S&P 500 at present:
| Dividend stock | Yield |
| Altria Group Inc. (MO) | 7.9% |
| Highwoods Properties Inc. (HIW) | 6.6% |
| Lincoln National Corp. (LNC) | 5.4% |
| Lloyds Banking Group PLC (LYG) | 4.9%* |
| Main Street Capital Corp. (MAIN) | 6.8% |
| Medical Properties Trust Inc. (MPW) | 7.4% |
| Western Midstream Partners LP (WES) | 8.2% |
*LYG’s yield only recently dipped below 5% following a surge in the share price.
Altria Group Inc. (MO)
Market value: $86 billion Dividend yield: 7.9%
Tobacco giant Altria is regularly near the top of the list of the highest-yielding S&P 500 dividend stocks, with generous and reliable payouts. Specifically, MO has a history of 55 consecutive years of dividend increases. It is definitely not a growth stock, but powerful brands including Marlboro cigarettes, Black & Mild pipe and cigar products, and Copenhagen smokeless tobacco continue to see steady sales thanks to loyal customers. What’s more, the unique nature of this “staple” in consumer budgets means that Altria sees steady sales even during times of market stress, which makes this high-yield dividend stock a good low-risk option for those a bit worried about the global economy right now.
Highwoods Properties Inc. (HIW)
Market value: $3.3 billion Dividend yield: 6.6%
North Carolina-based Highwoods is a commercial real estate company that specializes in urban office space. It serves nearby cities including Charlotte and Raleigh but also top-tier destinations including Atlanta, Dallas, Nashville and others. Structured as a real estate investment trust, or REIT, HIW gets special tax treatment for its property assets. But in exchange, it must deliver 90% of taxable income back to shareholders — creating a mandate for mammoth dividends. The company has paid 50 cents per quarter like clockwork dating back to 2021, showing consistency despite a rise in work-from-home employees since COVID-19. While shares have softened up a bit in the last few months, HIW is still up more than 40% in the last 12 months when you include its generous dividend.
Lincoln National Corp. (LNC)
Market value: $5.6 billion Dividend yield: 5.4%
Lincoln National provides multiple insurance and retirement product businesses in the United States, ranging from life insurance and annuities for individuals to group coverage and retirement plan services for employers. Part of the reason the yield is so high, however, is because LNC has struggled over the last few years and taken significant write-downs, including billions related to a massive 2023 reinsurance agreement with Fortitude Re. But while shares have been cut in half since their 2021 highs, LNC has stabilized and improved its business recently, posting a total return (which includes dividends) of 28.2% in the last 12 months through Jan. 21. The combination of regular revenue from premiums plus a bargain valuation adds up to a more than 5% yield for this mid-cap dividend stock in the financial sector.
[See: Artificial Intelligence Stocks: The 10 Best AI Companies.]
Lloyds Banking Group PLC (LYG)
Market value: $45 billion Dividend yield: 4.9%
Sure, the dividend yield technically just dipped below 5% on this dividend stock following a jump in its share price, but shares of London-based megabank Lloyds still fit the theme here: high-quality stocks that pay juicy dividends. Lloyds may not be as recognizable to some U.S. consumers as big-time Wall Street financial firms, but as far as size is concerned, the company is on par with regional financials like M&T Bank Corp. (MTB) and other global leaders such as Deutsche Bank AG (DB).
For some brief context, the stock was simply obliterated by COVID-19, with profits slumping 70% for fiscal 2020, and it has been a long road back to stability. The bank finally topped its early 2020 highs recently, and while dividends are only recorded twice annually in August and April, the annualized yield is incredibly generous when compared with other similar financial stocks out there. If you want to look beyond the U.S. for a high-yield dividend stock, Lloyd’s is near the top of the list.
Main Street Capital Corp. (MAIN)
Market value: $5.4 billion Dividend yield: 6.8%
Main Street Capital is a business development company, or BDC. These companies operate similarly to a private equity fund in that they buy between 5% and 50% of small- or middle-market firms. It then makes money if those enterprises succeed — and they usually do. This BDC specializes in slightly distressed firms, focusing on recapitalizations, buyouts, refinancings, industry consolidation and the like. It is not a flashy Silicon Valley specialist, however, and invests in areas including freight, auto parts, chemicals, construction, hospitality and energy. With a long track record of success in the industries it serves, MAIN currently delivers a super-sized dividend as it passes through the profits from its investments on to its shareholders. The dividend can fluctuate quarter to quarter, however the annualized yield is still well north of 5%.
Medical Properties Trust Inc. (MPW)
Market value: $2.6 billion Dividend yield: 7.4%
Medical Properties Trust is, perhaps obviously, a health care real estate company that is largely focused on hospital facilities. It is down significantly over the last several years thanks to issues at major tenants Steward Health Care and Prospect Medical, both of which have had massive debt issues and bankruptcy trouble. However, with shares down about 80% over the last five years, it’s hard to argue that the negativity isn’t reflected in the stock price of MPW. Shares have moved dramatically higher in the last 12 months however, posting a total return of 55.1% through Jan. 21 as signs of stabilization emerge and hopes that lower rates in 2025 will help its tenants. And after all, health care is less volatile than other sectors as patients need care in both good and bad economic environments, a fact that provides a bit of stability to this stock now that it has stopped its previous downward slide.
Western Midstream Partners LP (WES)
Market value: $16 billion Dividend yield: 8.2%
A “midstream” energy company that is primarily involved in compressing, storing and transporting natural gas liquids and crude oil, WES is a key part of the energy supply chain. It operates from the Rocky Mountains to Texas to Northern Pennsylvania. Insulated from the volatility of commodity markets, Western Midstream has a steady revenue stream as it moves fossil fuels around the U.S. economy. This supports a generous dividend of 87.5 cents per quarter, which adds up to a payout that’s roughly six times the yield of the S&P 500 at present. There’s been little for investors to complain about recently, with shares posting a 1-year total return of 68.8% through Jan. 21.
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7 Dividend Stocks Paying 5% And Above originally appeared on usnews.com
Update 01/22/25: This story was previously published at an earlier date and has been updated with new information.
