High Yield Dividend Stocks 2023 to Boost Your Portfolio

Investing in high yield dividend stocks can be a great way to boost your portfolio. By choosing the right stocks, you can generate a steady stream of income and potentially grow your wealth over time.

Many investors turn to high yield dividend stocks as a way to reduce their risk and increase their returns. For example, companies like Realty Income and National Retail Properties have consistently paid out high dividends to their shareholders.

A high dividend yield can be a sign of a company's financial health, but it's not the only factor to consider. You should also look at the company's history of paying dividends, its financial stability, and its growth prospects.

Investors should be cautious of companies with high dividend yields that are not sustainable. This can happen when a company is struggling financially and is forced to pay out more in dividends than it can afford.

Do consider if you want a dividend. A 2024 survey of global fund managers showed them evenly divided on what companies should do with their cash flow.

Payouts can be helpful, especially if you're retired or living on a fixed income. You might want the companies you invest in to invest in themselves rather than sending money to your mailbox.

Companies that retire debt or increase capital spending can sometimes put themselves into position to improve profits. This can lead to higher profits, which often translate to a higher stock price.

To find the best high yield dividend stocks, you need to do your homework. Research can pay dividends, literally, with a payout ratio of 50-75% being a good starting point.

Surprise! Higher dividends do equal higher earnings growth, according to a 2003 study in the Financial Analysts Journal.

When evaluating dividend stocks, look for companies with a history of steady dividend growth, a low payout ratio, and a respectable current dividend rate. A low payout ratio suggests a company is retaining some earnings, making it less likely they'll reduce dividends in the future.

Here are some key metrics to consider:

A company that grows its dividends tends to outperform its peers over time, so do look at dividend growth and coverage ratio when making your investment decisions.

Dividends are determined on a quarterly or annual basis.

A company typically pays a cash dividend directly into a shareholder's brokerage account. Other forms of dividends are paid in stock.

Dividend yield, calculated by dividing the annual dividend by the current stock price, helps investors understand the return they might generate on a stock.

Consider a simplified example: a company that pays a 2% annual dividend and whose shares are trading at $100 would result in an investor with 100 shares receiving an annual dividend payment of $200.

Dividend yields for many of the largest U.S. companies tend to be lower than that example, with the average dividend yield of S&P 500 companies as of October 2024 being 1.25%.

Research can pay dividends in the world of investing. A good place to start is by looking at a company's history of steady dividend growth. This indicates healthy corporate fiscal policy.

Companies with a low payout ratio are also a good sign, as it suggests they're retaining some earnings and less likely to reduce dividends in the future.

A respectable current dividend rate is also important. Research by Robert D. Arnott and Clifford S. Asness found that low dividends beget lower stock prices, while high dividends beget higher stock prices. A good rule of thumb is to look for dividend stocks yielding at least as much as the current 10-year Treasury note (TNX) yield but no more than twice that amount.

To research dividend stocks, you can use the following criteria:

By doing your research and using these criteria, you can find companies that are likely to pay consistent dividends and grow their earnings over time.

If you're looking for high yield dividend stocks, you're in luck. There are many options to choose from, but some stand out above the rest.

Walgreens Boots Alliance (WBA) has the highest dividend yield of the S&P 500 stocks, with a yield of 10.47% as of December 2024. This is a significant return on investment, making it a great option for those seeking high yield dividend stocks.

Some other high yield dividend stocks worth considering include CME Group (CME) and Altria Group (MO), both with yields above 7%. These stocks are also well-established companies with a history of paying consistent dividends.

Here are some of the top high yield dividend stocks:

Keep in mind that high yield dividend stocks can be riskier than other investments, and it's essential to do your research before making a decision.

If you're looking for individual stocks that offer high yields, there are several options to consider. Altria (MO) is a great example, with a dividend yield of 7.5 percent and an annual dividend of $4.08.

One stock that stands out for its high dividend yield is ARMOUR Residential REIT (ARR), with a whopping 14.8 percent yield. This is significantly higher than the average dividend yield of 6.5 percent offered by Verizon Communications (VZ).

For those interested in real estate investment trusts (REITs), LTC Properties (LTC) is a solid choice, with a 5.8 percent dividend yield. This is a relatively stable option compared to some of the other high-yield stocks on the market.

Another stock that's worth considering is Ellington Credit Co. (EARN), which has a 13.8 percent dividend yield. This is a high-yield stock that's focused on residential mortgage-backed securities.

If you're looking for an even higher yield, you might want to consider Orchid Island Capital (ORC), which has a 17.9 percent dividend yield. This is one of the highest yields on the list, but it's also a relatively small company.

Here's a list of the individual stocks mentioned in this section, along with their dividend yields: