8 High-Yield Dividend Stocks That Deserve Your Attention

Interest rates still are flirting with generational lows, making it difficult to put together a portfolio that generates a decent income stream.

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Interest rates still are flirting with generational lows, making it difficult to put together a portfolio that generates a decent income stream. Sure, there are high-yield dividend stocks offering sky-high income of 10% or more. But for most investors, what looks too good to be usually is.

But you also want to determine the safety of the dividend, as well as the stock itself. Even in large-cap indexes such as the Standard & Poor’s 500-stock index, there is always a General Electric (GE) lurking to throw that theory out the window. Professional analysts slice and dice a company’s balance sheet using tools that most individual investors do not have. However, there is one quick analysis anyone can do using data that are readily available online for free.

The dividend payout ratio – the dividend per share divided by earnings per share – tells us whether the company earns enough profit to continue paying its dividend. There is no hard-and-fast set of rules to follow, and a payout ratio doesn’t tell the whole story, but a ratio of 50%-70% typically means a company can at least comfortably sustain its current dividend. Below 50%, and it can comfortably grow it. A ratio above 70%, and you have a little more reason for concern.

We also can do a price safety check by looking at simple stock charts. The market itself has a good track record when it comes to assessing the health of a company. In the simplest of terms, if the price of a stock is rising over time, the market is expressing optimism. And if it is falling over time, the market is expressing concern about the company’s direction.

Here are eight high-yield dividend stocks to consider right now. All of them feature safe payout ratios, encouraging price trends and a few other positive fundamentals that should inspire confidence from income investors.

Disclaimer

Data is as of April 28. Dividend yields are calculated by annualizing the most recent quarterly payout and dividing by the share price. Payout ratio data provided by Morningstar.

Michael Kahn
Contributing Writer, Kiplinger.com
Michael Kahn, CMT (Chartered Market Technician) has been writing about the markets since 1986. He is the author of three books on technical analysis published in five languages. His specialty: jargon-free analysis accessible to everyone. He has contributed to many leading financial media including Barron's Online, MarketWatch and Nightly Business Report and was the Chief Technical Analyst for BridgeNews.