3 Reliable Dividend Stocks Yielding 7% or More

Dividend stocks are all the rage now, for better or for worse, because bond yields have effectively dried up as the Federal Reserve kept interest rates at record lows. I’ve been of mixed feelings about this trend, because the chase for yield has led income investors away from the relative safety of bonds and into dividend stocks, which do carry more risk.

Thus, as more and more money flows into dividend stocks, they start to get stretched as far as valuation is concerned. When it comes to stocks to buy, jumping in simply for the dividend isn’t a great idea.

That’s because, should the valuations of these dividend stocks contract back towards the mean, the loss will be in excess of the dividends paid out over several years.

So I’m trying to find options that are a bit less vulnerable to that kind of price contraction, while also offering a 7% yield or higher to offset some of the existing risk.

3 Dividend Stocks to Buy With Indestructible Payouts of 7%-Plus

Sunoco

Dwight Burdette via Wikipedia

Symbol: SUN

Dividend yield: 11.6%

Sunoco LP is a master limited partnership that offers one of the largest fuel distribution footprints in the country, through gas stations and convenience stores.

Sunoco fuel is available to over 6,800 convenience stores and independent dealers, as well as wholesalers. It has 725 Stripes convenience stores, of which 440 have restaurant service; another 440 convenience stores in the eastern part of the country under the APlus name; and other retails and convenience stores all over the country.

SUN started distributions in late 2012, and is distributing about $3.30 per share per year, a yield of about 11.6% on its stock price of $28.50. Given the high margins that convenience stores pull down, plus both wholesale and retail gasoline distribution, I think SUN is probably in very solid long-term shape.

Starwood Property Trust

Thinkstock

Symbol: STWD

Dividend yield: 8.7%

Starwood Property Trust, Inc. is not to be confused with the hotel company of similar name. I normally stay away from mortgage REITs, but STWD is a commercial play that I am comfortable with because it actually diversifies well beyond originating commercial mortgages.

Yes, it does originate mortgage loans, of both fixed and floating-term, but I’m comfortable that their terms run under five years. In addition, when it comes to commercial mortgages, you want a reasonable loan-to-value ratio. STWD keeps that ratio around 60%. There’s also collateralized mortgage-backed securities in the REIT, it owns some property itself outright, the investments are diversified geographically as well as by type.

I think another reason I like STWD for the long term is that it underwrites so carefully, with no actual realized losses to date. It has a yield of just over 9% right now, and it actually about 7% off recent highs, so it’s a good time to buy.

Ashford Hospitality Trust

Courtesy Ashford Hospitality Trust

Symbol: AHT

Dividend yield: 8.2%

For some crazy reason, the market just refuses to love Ashford Hospitality Trust, Inc. Despite having Q2 RevPAR (revenue per available room, a measure of how effectively rooms are monetized) increases of 4.9%, 17.6% adjusted-funds-from-operations-per-share growth, 10.7% adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) growth, an internal management structure for properties that outperforms its peers in EBITDA flow-through, and one of the most experienced management teams in the industry, AHT stock trades at what I believe is 50% of its intrinsic value.

Management owns 18% of shares of the real-estate investment trust, more than three times that of its closest peer. It is broadly diversified by brand, manager, market and chainscale.

Its dividend yield is now 8.2%, based on an annualized payout of 48 cents per share at $5.83 share price. Its dividend coverage ratio is an astonishing 3.2x. Thus, I would personally look for the stock to approach $10, collect dividends along the way, and then determine if you want to exit your position.

This article is by Lawrence Meyers of InvestorPlace. As of this writing, he had no position in any stock mentioned.

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  • JohnDille

    GO AHEAD AND BUY THOSE STOCKS… THEY HAVE RUN UP BIG IN THE LAST FEW DAYS OR WEEKS OR MONTHS, AND 2 ARE RATED AVOID!!! SORT OF LIKE DONALD TRUMP WAS RATED AVOID… BUT YOU PROBABLY VOTED FOR THAT FRAUD, ANYWAY! AS FOR MY CLAIMING POVERTY… AS I HAVE SAID A NUMBER OF TIMES… BUT WHICH YOU ARE INCAPABLE OF UNDERSTANDING… I WAS TALKING ABOUT THE BUSH JUNIOR ERA,… AND THE NIXON AND REAGAN ERAS, MOST ESPECIALLY!!! I DESPISE REPUBLICANS FOR A REASON…. THEY HAVE SCREWED OVER MANY TENS OF MILLIONS OF WORKING PEOPLE IN THE LAST 45 YEARS OR SO, AND I… AND MOST EVERYONE I HAVE EVER KNOWN… HAVE BEEN AMONG THOSE WORKING PEOPLE SCREWED OVER BY REPUBLICANS… MOSTLY BIG TIME!!! I EXPECT THE SAME UNDER TRUMP… ONLY EVEN WORSE… BECAUSE THAT DIMWIT IS ALMOST AS ARROGANT AND SELF CENTERED AND AS STUPID AS YOU ARE!!! FORTUNATELY, I NO LONGER GIVE A RATS REAR END ABOUT THE WORLD OF WORK. YOU FREAKING ARROGANT SELFISH SELF CENTERED REPUBLICANS CAN TAKE YOUR LOW WAGE JOBS… AND SHOVE THEM WHERE THE SUN DON’T SHINE!!! OR GET OFF YOUR LAZY REPUBLICAN REAR ENDS… AND DO THE CRAPPY WORK YOURSELVES!!! OR… HIRE ILLEGALS LIKE YOU USUALLY DO!!!

  • Joe Cabot

    Hey crabby, all he did was suggest three dividend-paying stocks that, in his opinion, are a bit more stable than most others out there. He did not advise anyone to buy them but provided info as a starting point for investors looking for ideas in this sector. Or maybe you can dispense more of the investment advice that has had you claiming poverty for years on this site.

  • JohnDille

    SO… THIS GUY IS ADVISING US TO BUY STOCKS THAT HAVE ALREADY RUN UP BIG TIME…. AND 2 OF WHICH ARE RATED AVOID AND THE OTHER RATED AS NEUTRAL??? MUST BE A REPUBLICAN, WANTING TO UNLOAD HIS STOCKS ON ALL THE REPUBLICAN PUPPETS OUT THERE!!! OH… WAIT… THE GUY DOES NOT EVEN OWN THESE STOCKS!!! SUCH CONFIDENCE IN HIS OWN STOCK PICKS!!!