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7 Good Stocks Yielding 5% or More

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The dividend yield of the U.S. stock market today is 2.0%. But plenty of companies pay a lot more. We wondered if we could find attractive stocks that yield at least 5%—two and a half times the overall market’s yield.

We found seven, but before we identify them, here’s a brief explanation of why a high yield may not always be all it’s cracked up to be. Yield is basically a stock’s annual dividend rate divided by its share price. So if a stock pays a 50-cent-per-share quarterly dividend, the annual rate is $2 per share. If the stock trades for $50, the yield is $2 divided by $50, or 4.0%.

SEE ALSO: 12 Stocks to Earn Dividends Every Month

A dividend yield can climb if a company boosts its payout. The yield can also rise if the share price falls. In fact, an ultra-high yield due to a plunging stock price may signal that a company is in trouble and that it may have to cut, or even eliminate, the dividend. But a high yield can spell opportunity when a troubled company is on the cusp of a rebound. Find those businesses that are about to snap back and you stand to benefit not only from a hefty payout but from stock-price appreciation, too.

The following seven stocks fit that bill, with yields of 5% or more. Just as important, each of the companies generates enough free cash flow—the cash profits left after the capital expenditures needed to maintain a business—or soon will produce enough free cash to cover the payouts, reducing the chance of a dividend cut.

Stocks are listed in alphabetical order. All prices, yields and returns are as of November 12. Price-earnings ratios are based on estimated 2016 earnings.

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