3 Safe High-Yield Dividend Stocks

You may be looking at dividend-paying stocks as part of your risk management diversification strategy or as a means of establishing additional revenue streams. If yield-paying investments go well, you can benefit by compounding dividend payments, reinvesting them in other ventures to make you even more money, or simply putting additional cash in your pocket. We have picked W.P. Carey (NYSE:WPC), Dow Inc.(NYSE:DOW), and Enterprise Products Partners (NYSE:EPD) for our list of 3 safe high-yield dividend stocks. They all have an established reputation and have demonstrated core attributes that make them reliable sources of income for years to come.

Every investment has an element of risk. You will get burned if the price of the dividend stocks you own falls below the break-even point despite you continuing to earn the same or higher yield percentage. High dividend yields can be a red flag because they usually occur when the stock price falls sharply. A $50 stock offering a $3 annual dividend provides a 6% yield, but the same $3 per annum rate would convert to a 12% yield if the stock’s price falls to $25.

How Can Investors Find the Best Safe High-Yield Dividend Stocks?

Before investing, seek to learn as much about the sector and company as possible to guide your decision-making. Each investor is on a unique journey in terms of their financial education. The good thing is, you don’t need advanced degrees or experience overseeing a multi-billion dollar fund to identify safe high-yield dividend stocks. Here are some helpful pointers to note.

Target blue-chip rated companies with high market capitalization. They are less vulnerable to price volatility and have earned a reputation for being well run. You can find their stocks listed on indexes like the S&P 500, the Dow, or the FTSE 100 that consolidate the top companies within the world’s largest stock exchanges.

Look for companies offering yields of between 3% to 6%. While higher yields suggest problems, there are cases where undervalued companies pay yields higher than 6% because they can afford to sustain these payments based on their sound financial fundamentals and balance sheets.

Analyze the company’s financials, including its income, balance sheet, cash flow, and ratios over time (the last three to five years); these will tell you how it is performing. Analysts use this data combined with estimates to make projections about potential gains or losses. It’s a lot of information, but the details explain what is going on behind the scenes, so pay keen attention to these numbers.

Detailed summarized information for public companies is at your fingertips online. If you struggle with financial analysis, follow the recommendations, actions, and pronouncements of objective experts like stockbrokers, financial advisors, academics, and fund managers. Trust the experts because they have analyzed the data, or they can access other’s research; they can speak and act from an informed position.

W.P. Carey a 5.57%-Yielding Real Estate Investment Trusts

Market Capitalization $14.28 Billion

Real Estate Investment Trusts (REITs) are traditional cash cows, and blue-chip REIT W.P. Carey (NYSE:WPC) is also a well-run company and net-lease real estate investment trust behemoth. It was surprising that W.P. Carey dividends still increased every 2020 quarter – the peak of the COVID-19 pandemic. Bear in mind that factories, warehousing and storage facilities, office, retail, and residential spaces globally closed either temporarily or lost tenants.

https://www.buymeacoffee.com/dividendtalk

W.P. Carey continued the trend into 2021 with increased dividends for both the first and second quarters. The most incredible statistic about the trust’s performance is this makes 23 consecutive years of dividend increases.

Other reasons to buy W.P. Carey

Chart Showing WP Carey Price and Dividend –The Motley Fool

I don’t think I could provide a better endorsement than Rueben Brewer below.
“If you are looking to add a stock to your portfolio today, W.P. Carey should be high on your list. It has proven to be a reliable dividend payer over time, and it has a business model that suggests it can continue to succeed. It is the kind of stock that you buy and hold forever.”
Reuben Gregg Brewer (The Motley Fool Contributor and Analyst)

Dow Inc A 4.63%- Yielding Evergreen Blue-Chip Dividend Stock

Market Capitalization $45.05 Billion

Chemical and manufacturing component producer Dow Inc. (NYSE:DOW) current stock yield is 4.63. Admittedly, the rate has benefited from a 15.53% decline in the price from the 52 wk high (71.37) reached Jun 04th. Nasdaq.com reported in August; all DOW’s fundamentals look pretty strong, and we expect the price to rebound sharply. Despite raising prices recently, the manufacturing boom of the recovery and the inelasticity of demand for Dow’s products meant sales remained robust.

Dow’s excellent balance sheet and market power drove the company to experience its best quarter to date – Q2 of this year. The company’s management has never missed paying a dividend in 109 years of operation, and with increasing product demand, expect even better results for future quarters.

Other reasons to buy Dow

Dow has an ROE (return on equity) rate of 26% VS a 14 % industry average, meaning for every $1 invested by a shareholder, Dow made $0.26 profit after tax. Dow also outperforms the chemical industry by $0.12 per dollar.
Dow’s modest five-year net income growth of 5.2% outperforms the industry’s 3.3% rate.
Sales: Increased 66% year/year.
Debt: Fell by $1.1 billion. No Significant debt maturing before late 2025.
Free cash flow: $1.7 Billion

Energy Giant Enterprise Products 8.15%-Yield As Energy Market Booms

Market Capitalization $48.28 Billion

As economies, manufacturing, and travel recover after the 2020 pandemic-induced crash, energy is in demand driving oil and gas prices up. The energy sector can currently offer huge dividends on the back of high oil and gas prices, a trend that does not seem set to change in the immediate future.

We believe Enterprise Products Partners (NYSE:EPD) 8.15% yield is attractive, but we are even more interested in EPD’s ability to sustain attractive dividend yields over the medium to long term. It is a top high-yield oil and gas stock to own. The company’s diversification limits risk and drives revenue. These factors, its master limited partnership structure, and a superior balance sheet allow EPD to offer larger dividend yields than competitors. EPD is experiencing a reduction in its average debt costs; the company could afford to fund all its capital investments from TTM (Trailing Twelve Months) operations cash flow.

Enterprise Products Partners already has significant operations geared toward cleaner fossil fuels and natural gas, so it is less prone to actions like the Environmentalist Hedge Fund Engine No 1’s disruptive invasion of Exxon Mobil’s (NYSE:XOM) board.

The commitment of EPD’s leadership to continue the 22 consecutive years of dividend payments and increased forays into clean and renewable energy (25% of revenue) underpin why it will continue to thrive and pay solid dividends for the foreseeable future.

Other reasons to buy EPD

In June, Samuel Smith of seekingalpha.com listed the stock as undervalued despite excellent diversification and a “fortress balance sheet.” Shareholders could therefore benefit from significant capital gains; he believes the price could double.

EPD walks the clean energy talk – of the $3.4 Billion capital investments scheduled in the short term; the company only earmarked 1% for crude oil projects. The remaining 99% will fund sustainable energy projects, helping to curtail environmental risks to growth.

If you would like a copy of the template I use to to perform stock analysis than feel free to grab your copy below.

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The Bottom Line

We have confidence that these 3 safe high-yield dividend stocks. W.P. Carey (NYSE:WPC), Dow Inc.(NYSE:DOW), and Enterprise Products Partners (NYSE:EPD), are solid stock recommendations to invest in and earn consistent dividends. Though offering less dividend yield than other companies, these well-run companies offer stability while easing the stress of excessive stock price volatility that could erode your dividend earnings, putting you in a losing position. Each stock has sound fundamentals, consistent dividend payment track records, and favorable earnings projections.

Despite our confidence in these stocks, we cannot overemphasize the importance of risk management to building your investment portfolio. Never place all your eggs in one, two, or even three baskets; diversify as much as possible to spread your risk by limiting your exposure to particular companies, industries, and stock types.

Recommendations

Simply Investing Report review – For investors who might like to have all the research done for them

Sure Dividend – Ben and his team help individual investors build high-quality dividend growth portfolios for the long run and offer a lot of excellent content for free. I also write company review articles on Sure Dividend each Quarter.

Dolphin Utilities – If you want to save money from your utilities than check out these guys. (If you mention my name, i receive a small fee while you save money)

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