Four High-Yielding Dividend Shares Offering over 4% Returns, Ideal for Purchase in December
Dividend yields have taken a tumble lately, thanks to the unceasing rally in the stock market. The S&P 500's dividend yield is now hovering around 1.2%, marking a significant drop from the 1.6% it boasted just a year ago. This slide can be attributed to the impressive 30% surge in the broad market index during the same period.
Despite this dip, there's still a plethora of attractive income opportunities available. Here are four top dividend stocks yielding more than 4% that you might want to consider investing in this winter:
Brookfield Renewable
Brookfield Renewable (BEPC, BEP) currently offers a yield of over 4.5%. Known as a leading global renewable energy producer, Brookfield has demonstrated an impressive ability to grow its dividend at a 6% compound annual rate over the past 20 years. It expects to maintain this momentum, aiming for 5% to 9% annual growth in the future.
Four major factors are expected to drive this impressive growth:
- Inflation-linked rate increases on existing power purchase agreements.
- Margin enhancement activities, such as capturing higher market prices as legacy contracts expire.
- Development projects.
- M&A activities.
These components should contribute to more than a 10% annual increase in the company's funds from operations (FFO) per share over the next decade. A significant portion of this growth is securely in place through 2029, with an increasing portion beyond that timeframe.
Chevron
Chevron (CVX) offers a yield of just over 4%. The oil giant has a remarkable track record of increasing its dividend for an impressive 37 consecutive years, boasting exceptional growth during the past five years. Its dividend hike this year hit a staggering 8%.
Chevron is optimistic about delivering more than 10% annual free cash flow growth through 2027, assuming oil averages $60 per barrel. This positive outlook is grounded in several factors:
- A high-return capital program focused on investing in its lowest-cost and highest-margin assets.
- The acquisition of Hess, which has the potential to significantly boost free cash flow by 2027.
- A robust balance sheet that allows the company to continue investing in its business even if oil prices average $50 per barrel over the next couple of years.
Realty Income
Realty Income (O) provides a yield of 5.5%. Known as an REIT, Realty Income is renowned for its uninterrupted growth. It has boosted its dividend for 30 straight years and 108 consecutive quarters. Since its initial public offering, the company has raised its payout at a 4.3% compound annual rate.
The REIT anticipates growing its adjusted FFO per share at a 4% to 5% annual rate in the future, thanks to:
- Rent growth.
- Acquisitions.
- Its strong balance sheet.
- Its plan to tap the private capital markets.
Meanwhile, Realty Income consistently sources billions of dollars worth of deals each year, offering numerous expansion opportunities.
Verizon
Verizon (VZ) presents a yield of more than 6%. Over 18 years, it has consistently increased its payout, boasting the longest active streak in the US telecom sector.
Verizon's extraordinary cash flow generation enables it to invest in expanding its network and maintain its high-yielding dividend without any hassle. Its excessive cash flow gives it the freedom to make strategic acquisitions, such as purchasing Frontier Communications for $20 billion. This transaction will extend its fiber network and earnings, further supporting its high-yielding payout.
In conclusion, these four stocks - Brookfield Renewable, Chevron, Realty Income, and Verizon - are remarkable dividend stocks. They each offer attractive yields coupled with a promising outlook for future dividend growth. Adding these stocks to your portfolio could significantly boost your dividend income this December.
In terms of money management and investments, despite the decrease in dividend yields due to the market rally, there are still numerous income opportunities available. For instance, Brookfield Renewable, with a yield of over 4.5%, is a leading global renewable energy producer that aims for 5% to 9% annual growth in the future.
When it comes to finance and investing, Chevron offers a yield of just over 4%, known for its impressive 37-year streak of increasing its dividend and potential free cash flow growth over the next decade.
