Stocks that pay double-digit yields are few and far between. Finding one that consistently and reliably pays high yields across several years is like finding a needle in a haystack. But with the right tools, you can find these hidden double-digit gems.
The only thing is not everyone has the knowledge, experience, and, frankly, time to do these in-depth stock analyses. We all have our lives outside the stock market—or at least I hope you do. It can certainly be nerve-racking looking at stock charts all day - unless you're like me and enjoy it!
Today, I'll show you the top three reliable dividend stocks with double-digit yields and how I found them so you can use Barchart and do it yourself!
How I Screened for the Following Stocks
I started my search first with Barchart’s Stock Screener, where I looked for companies that exhibited the following criteria:
- Dividend payout ratio: 90% or less. Typically, I set these to between 30 and 50%, but this screen will most likely include REITS, which are required by law to pay 90% of their taxable earnings as dividends.
- Number of analysts: 8 or more.
- Current analyst rating: 3.5 (moderate buy) to 5 (strong buy).
- Annual dividend yield: 10% or more.
Using these filters resulted in ten companies.
From there, I arranged the companies from highest to lowest for dividend yields on a trailing twelve-month basis, then added two more criteria to narrow down the results further:
- Dividend payment history: 15 or more years of dividend payments.
- Dividend payment consistency: “Consistent dividend payment” is defined as having a minimum of four quarterly payouts or twelve monthly payouts for the last ten years.
This criteria isn’t available as a screening filter yet, so I manually checked all the companies’ dividend histories to see which fit the bill. It’s a very exacting criteria, and only five companies made the cut. I excluded the second and fourth on the list, VALE and SAR, because of inconsistent payout schedules.
Then, I arranged the results based on which company has paid dividends the longest. So, let’s talk about the top three oldest, most reliable dividend stocks with double-digit yields, starting with the top one on the list:
Annaly Capital Management (NLY)
Unsurprisingly, the first on the list is a real estate investment trust. Annaly Capital Management primarily invests in securities backed by mortgages for residential and commercial properties.
Annaly Capital Management focuses on mortgages backed by government-sponsored enterprises (GSE) like Fannie Mae, Ginnie Mae, and Freddie Mac, which gives it a high level of guaranteed payments, even in the event of a default. The company has a $75-billion portfolio and $11 billion worth of permanent capital.
So far, Annaly's business model is working well, as its first dividend payments date back to August 1997. Dividend rates fluctuate based on earnings, of course, though Annaly Capital Management has managed to pay dividends consistently every quarter.
NLY stock’s current dividend rate is $2.6 on a forward basis, which translates to a hefty 13.07% yield. It also has an 88.08% dividend payout ratio and a moderate buy rating with an average score of 3.91 from analysts.
MidCap Financial Investment Corporation (MFIC)
MidCap Financial Investment Corporation is a business development company that provides financing solutions to middle-market companies in the United States. Middle-market companies are the ones that occupy the space between, say, small businesses and larger enterprises, and they make up about one-third of the U.S. economy. That means MidCap Financial has plenty of business.
According to the company's dividend history, MidCap Financial has consistently paid shareholders since 2004 (though it had a different company name between 2004 and 2007). Its latest forward dividend rate is $1.52 annually, translating to an 11.10% yield, excluding any potential special dividends.
This annual dividend represents 85.70% of the company’s earnings. Meanwhile, analysts rate MFIC stock as a moderate buy, with an average score of 3.89.
AGNC Investment Corp (AGNC)
Like Annaly Capital, AGNC Investment is another REIT specializing in securities backed by mortgages supported by GSEs like Fannie Mae and Freddie Mac, which it calls Agency MBS assets. Over 98% of AGNC’s investments are Agency MBS assets, making its business model less risky than regular REITs.
The company has been paying dividends since its inception in 2008, amidst the U.S. housing bubble burst. Despite that and other economic meltdowns, AGNC has consistently paid quarterly dividends until Q3 2014 and monthly thereafter.
AGNC stock’s current forward annual rate is $1.44, translating to an impressive 14.25% yield. It also has a dividend payout ratio of 56.17%.
Final Thoughts
Investing in reliable, high-yield stocks is an excellent strategy when building your retirement nest egg. However, it’s still best to diversify your portfolio in case of sector crashes. Furthermore, you still need to do your digging; due diligence is non-negotiable in stock investing. These articles can serve as recommendations for constructing your stock-picking strategy.
On the date of publication, Rick Orford did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
