- So in this video today we are going to be talking about
six high yielding dividend stocks
that you may want to consider investing in
as a dividend investor looking for income
from their portfolio right now.
And if you guys aren't familiar,
I started this process of building up
a $100,000 dividend stock portfolio
at the beginning of this year
for the purpose of earning passive income,
reinvesting those dividends to earn compound interest
and essentially allowing my money to grow
without really actively involving myself
or you know, funneling more money into that portfolio
if I choose not to.
And at a time like this during market uncertainty,
a lot of people like this idea of dividend investing
and being able to earn those quarterly
or annual dividends or buy in annual dividends
from their investments.
But the one thing you have to watch out for
is something called a dividend yield trap.
I did a whole video on this the other day.
I'll put it up in the corner
if you guys want to check it out.
And that is where people
will solely invest in a dividend stock
based on a high dividend yield.
And the problem is that dividends can be cut,
eliminated, restructured at any point in time.
So you can't just look at the dividend yield
and pick the stocks on the S&P 500
with the highest yields
because those dividends could be at risk
for a cut or worse a suspension.
So instead of just looking at
the dividend yield with these stocks,
we're also going to look at the dividend payout ratio,
which tells you how much of the company earnings
are currently being paid out in the form of dividends.
And we're also going to be looking at
the dividend growth streak
as far as how many years this company
has consecutively grown that dividend.
Because the longer that growth streak is,
the more likely a company is going to continue
paying that dividend rather than disrupting it
and breaking that streak.
And before we get into the picks here guys,
I just have to say this is just my opinion.
This is not any kind of financial advice
and you should always do your own due diligence
before investing in the stock market.
But that being said guys,
my number one high yielding dividend pick right now is 3M.
It is a dividend aristocrat,
which means this company
has been growing dividends consecutively
for 25 years or more
and they have in fact been growing that dividend
for 61 years consecutively.
Now as we go through these,
I'm gonna give these a rating out of five
as far as my opinion
on the likelihood of that dividend
being safe for the near future.
And I'm gonna give 3M a five out of five.
They currently have a payout ratio of 73%,
so they can easily afford that dividend.
It currently pays a dividend yield of 4.05%,
which isn't necessarily, you know, sky high.
But again, we're looking for
a reasonable dividend yield here
as well as a high level of dividend safety.
Because when you get into the yields of six, seven and 8%,
that is when you have to start worrying about
the safety of that dividend.
As far as 3M goes,
I like this company because
they're diversified across thousands of different products.
They serve defensive industries like healthcare
as well as cyclical industries like automotive.
And so as a result, you are going to be susceptible
to the ebbs and flows of the natural business cycle
by owning a stock like 3M.
But they are well diversified
across both defensive and cyclical industries.
So that is why it is my number one high yield dividend pick
and a large component of my dividend stock portfolio.
All right, so coming in at number two
is another stock that I own in my portfolio,
and that is IBM.
And I would give this stock as well a five out of five
in terms of the dividend safety for the following reasons.
First of all, the dividend payout ratio is at 60%.
So they have a very healthy profit margin
in terms of earnings they're retaining
for the company themselves
rather than distributing all earnings to shareholders.
In terms of their dividend yield,
it is at 5.46%, which is very appealing
and their dividend growth streak is currently at 20 years.
So in just a few short years,
IBM will be joining the list of dividend aristocrats.
Assuming nothing happens with that dividend
and based on the company
and where they are at right now
and the types of technologies they're involved with,
I wouldn't expect them to be having
any trouble in the future.
Now the reasons why I like IBM as an investment
is primarily because of their involvement in cloud computing
as well as their acquisition of Red Hat,
which is a enterprise level software
in cloud computing company.
I think it's a tremendous business to be involved with.
And IBM is currently in this position,
where they are shedding their legacy hardware business
and building out this new cloud computing business.
I think as a result, they've been largely overlooked
over the last couple of years,
but now I see it as a great mix of both growth,
potential as well as a superb high dividend yield.
And I expect them to become a dividend aristocrat
in the coming years.
So that is why they are my number two pick.
And then number three guys,
is another stock I own in my portfolio.
That is Walgreens Boots Alliance,
another dividend aristocrat.
And it is the final stock on my list
I'm giving a five out of five
in terms of my opinion on the safety of that dividend.
Now Walgreens Boots Alliance
currently has a payout ratio of just 46%,
which indicates this dividend is very healthy
and very sustainable for them.
The dividend yield is currently 4.21%
with a growth streak of 44 years.
And in terms of the short term right now guys,
this is a company that's actually poised
to do pretty well here.
Because they are one of the only retailers
that were allowed to stay open
because they're involved in the retail pharmacy business,
which is considered to be an essential business.
So people have been going to CVS and Walgreens
and grocery stores more than ever
because these are the only businesses for the most part,
that have been allowed to stay open,
versus, you know, other brick and mortar businesses,
small businesses.
Maybe before you were going to,
you know, a local store for soaps and toiletries.
Well now you're going to Walmart and Walgreens
and these other stores,
whether or not you like it,
because that's all that's allowed to be open.
So because this is an essential business,
they're going to benefit here
in the short term, in my opinion,
or at least not be hurt as much
as the other retailers out there.
And going into this guys,
I believe Walgreens was trading at a very fair evaluation
before the economic crisis started.
On top of that,
beyond just owning the Walgreens stores here in the US,
you also own the boots stores in the UK,
which is a beauty related store
as well as Alliance healthcare,
which is a diversified healthcare company.
So you get exposure to both the retail pharmacy business,
the beauty stores
as well as a diversified healthcare company.
So overall I think as a solid choice, solid investment,
and that is why it is part of my dividend stock portfolio.
It's not the highest yield out there,
but in my opinion it is a very safe dividend
that I am happy to rely on.
All right guys, so my next three picks here
are going to be higher dividend yielding stocks.
But corresponding to that
there is going to be more risk there
of the dividend safety
and these dividends possibly being cut in the future.
Every one of these stocks here has a yield above 6% .
So if you're looking for a higher yield
that may have more risk involved,
these may be picks that you may want to consider.
And also guys, if you've enjoyed this video so far,
all that I ask is that you drop a like
for the YouTube algorithm
as it allows this video to be shared with more people.
But anyways guys, coming in at number four
is a stock called Leggett & Platt.
You may have never heard of it before.
It is basically
a home furnishing fixture and appliance company,
but they are a very solid dividend pick right now.
And for the most part, the yield is very high
because the stock has sold off massively,
down about 50% from when the pandemic started.
So as far as this business goes guys,
they're involved with the consumer cyclical industry,
so it's not necessarily recession proof
and that is why it is sold off.
Their core businesses for them,
are bedding products,
furniture slash flooring and textile,
as well as specialized products
serving the aerospace industry, automotive
as well as manufacturing tools.
But for the most part, they're involved in
furniture, furnishings and bedding for the home.
So obviously during a recession,
if we are going into a true recession,
people are gonna cut down on those
consumer discretionary purchases
and a company like this will make less money.
But despite that, they're currently sitting here
with a payout ratio of just 64%.
They are a dividend aristocrat
with a dividend growth streak of 48 years.
So they weathered the last few recessions
and crashes just fine
and were able to continue growing that dividend.
And they currently have a dividend yield of 6.1%.
so there's a little bit more risk built in here
because this is not a recession proof industry,
but they are durable and time tested.
So I'm gonna give them a safety score here
of 3.5 out of five.
They'll probably be fine,
but you just have to remember
this is a consumer discretionary industry
and their earnings are likely to fall
if we are entering a recession.
All right, so coming in at number five,
it is a component of the Dow,
a very popular dividends stock
that has been battered right now,
and that is Exxon Mobil.
Now, right off the bat here, let's talk about
what we are looking at numbers wise.
The dividend yield is 8.6%.
So a lot of people are just flocking towards the stock
thinking they're gonna get a guaranteed
8.6% return every single year.
And they may be right or they may be wrong.
Here's the deal with Exxon Mobil guys.
The payout ratio is currently 102%,
which means for every dollar the company is earning,
they're paying a dollar and 2 cents in dividends.
And it doesn't take a mathematician to determine
that that doesn't make sense
and that's not sustainable longterm.
So Exxon Mobil has to increase their earnings
to continue paying and growing their dividends.
But the problem is right now
they are up against an oil crisis
where oil prices have absolutely plummeted,
based on some feuds between
the largest producing countries that produce oil.
So the payout ratio is 102%,
the yield is 8.6%
and their growth streak is 37 years.
So they are a dividend aristocrat.
But based on the current payout ratio of 102%
and the oil situation,
I'm giving them a safety score
of three out of five in my opinion.
They pretty much have a double whammy
against them right now.
First of all, oil prices have crashed
because of the feuds
and second of all, we're involved in the global pandemic
that has caused everyone to stay at home and not travel.
So a lot less demand for oil,
for airplanes as well as passenger vehicles,
all that being said.
Not to mention we are involved in a mega trend right now
of the shift away from fossil fuels to renewable energies.
So that is why I wouldn't buy Exxon Mobil.
I personally don't believe in the longterm future of oil,
but I could be totally wrong.
If you believe it
and you think we're still gonna be using oil
in 25 or 50 years,
maybe you see it as a buy.
It's just certainly one we had to talk about here
because so many people are eyeballing Exxon Mobil
and that near 9% dividend yield.
And then lastly guys, number six on my list here is AT&T,
another very popular dividend stock
and this one has my lowest safety score here.
I'm putting it at about a 2.5 out of five.
And the reason behind that
is because AT&T currently has a payout ratio of 108%.
So for every dollar of earnings that they make,
they're paying out a dollar and 8 cents in dividends.
The current dividend yield is 6.9%
and they have a 35 year dividend growth streak
making them a dividend aristocrat.
Now the deal with AT&T guys,
this company has been splashing warning for years,
in terms of a high payout ratio,
but they have still been able to grow that dividend
and pay that dividend every single year.
So they haven't yet had this crisis
where they've had to suspend the dividend growth
or cut their dividend,
but they have been unable to afford that dividend
for quite some time.
Now the main reason that I just don't like AT&T right now
and I've never invested in it
is because they completed a near $90 billion merger
with Time Warner last year,
but that involved taking on massive amounts of debt.
It was mostly a debt acquisition.
And I honestly just don't understand
how this company has any growth potential.
Maybe it has income potential,
but, you know, when the customer base
is pretty much saturated
and they're trying to continue to grow that dividend,
they're gonna have to explore different avenues for revenue
and I just don't see it for AT&T.
However guys, it is a very popular dividend stock.
They probably are gonna be fine
based on how long they've grown that dividend.
But because that payout ratio is so high,
I think there is a risk involved here
of AT&T potentially having to restructure that dividend.
And if they did that
that stock would go into a free fall,
because pretty much all AT&T has had to offer people
over the last couple of years is solely that dividend.
There's been no asset appreciation
in terms of that stock increasing in value,
because there's just no real growth opportunities
for a company that has saturated the market like AT&T has.
And that leaves them in this kind of crappy situation
where their only means for growth is by acquiring
or gobbling up other companies,
which involves taking on a large amount of debt.
So it's just not really a great situation
to be involved with
and personally not a stock I would want to invest in.
However, it is a very high yielding dividends stock
and one that you may want to consider.
But anyways guys, that's gonna wrap up this video.
I hope you enjoyed it.
Like I said, I started a new series
at the beginning of this year,
building a $100,000 dividend stock portfolio from scratch.
I'll put that playlist up in the corner
if you guys wanna check it out.
And lastly guys,
I just wanna mention in case you are interested
in getting two free stocks,
WeBull is currently running a promotion
where if you open a brokerage account with them.
Just for opening the account,
you're gonna get one free stock.
And then if you fund the account with $100 or more
on your initial deposit,
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So for opening and funding an account with a hundred bucks,
you get two free stocks.
If you guys wanna check that out,
that's gonna be down in the description below.
And I am affiliated with WeBull,
so I may earn a commission in the process.
But thanks so much for watching guys.
I hope you enjoyed this video
and I will see you in the next one.