Investors can earn returns in stocks through share-price appreciation or dividend payments. You can also do both, and then reinvest the dividends. TipRanks compiled buy-rated stocks with high dividend yields, including Ford and Mercedes-Benz. One way to profit in the stock market is by betting on a company’s ability to grow its share price over time.
Another way is by buying shares of a company that pays dividends. Some investors then employ a dividend reinvestment plan that puts the dividends back into the stock, potentially snowballing their position and increasing its payout over time.
Investors can aim for the best of both worlds by seeking out dividend-paying stocks with price upside.
One way to find these names is by reviewing Wall Street analyst ratings on stocks and comparing them to their dividend yields.
But when searching through any list of dividend payers, investors need to do additional research. One thing to pay attention to is what each company is paying out relative to its industry average, said Max Wasserman, a dividend investor and the founder and senior portfolio manager at Miramar Capital.
For example, utilities and energy stocks tend to have higher yields than consumer staples and financials. Wasserman gets a little concerned when companies start exceeding their typical industry averages. He recommends checking the stock’s five-to-10-year historical payout to see if it has gradually increased. A sudden spike in payout combined with a drop in stock price could be a red flag, he noted.
Also, because dividend yields are calculated as the annual dividend per share divided by share price, a stock’s dividend yield may be high because its price is in decline.
Below is a list of 20 buy-rated, dividend-paying stocks, including some with double-digit yields. The dividend yields are sourced from Nasdaq, while the ratings are compiled by TipRanks, a financial data firm that aggregates and analyzes stock-market data.
TipRanks describes strong buys as stocks that analysts expect to “far exceed the average return” of the market, and moderate buys as stocks expected to “outperform” the market.