Stock prices have been under pressure this year as the Federal Reserve raises interest rates to combat inflation. That’s boosting the return on income in lower-risk investments like bonds and bank certificates of deposit. As a result, dividend stock prices are falling, raising their yields to compensate investors for their higher risk profiles relative to bonds.
For investors willing to take a little more risk, many strong dividend stocks look more attractive as their prices fall and yields rise. Here are five high-quality companies with dividend yields above 5%. Those higher returns can provide a huge boost to an investor’s passive income portfolio this September.
Capitalize on the rise of alternatives
black stone (BX -2.66%) is the world’s largest alternative asset manager. The company collects ongoing fee-based revenue as it manages customers’ money. It also generates performance-based income as your investment funds meet their return targets. Those two sources provide Blackstone with a lot of revenue.
The company returns most of that money to shareholders. It buys back shares and pays a dividend that varies from quarter to quarter, depending on its earnings. Based on its payments over the past year, Blackstone’s dividend yields 5.4%. While that payout will fluctuate going forward, it should continue to rise overall as Blackstone grows its alternative asset business, fueled by investors increasingly seeking alternatives to volatile stock and bond markets.
Reaffirming your financing plans
Semiconductor giant shares Intel (INTC 1.39%) They have been under enormous pressure this year. Investors are concerned about the company’s ability to finance its ambitious plan to expand manufacturing capacity, and some are concerned that it will need to cut pay to fund its strategy. That sent its share price down more than 40%, pushing its dividend yield up to 5.1%.
Intel took a big step to address those concerns by ensuring Brookfield Infrastructure (BIPC 1.57%) (GDP -1.55%) as financing partner of two plants. Brookfield and its partners will invest up to $15 billion, half the expected cost. That will protect Intel’s balance sheet, allowing it to fund a healthy and growing dividend. You have a long history of increasing your pay, which seems likely to continue following the Brookfield deal.
A steady source of dividend income
Kinder Morgan (KMI -2.62%) it currently pays a dividend with a yield of 6.1%. natural gas pipeline giant backs that payout with a rock-solid financial profile. It generates a very stable cash flow backed by long-term contracts and government-regulated fee structures. Meanwhile, Kinder Morgan pays about half of its cash flow through the dividend. That allows him to retain money to strengthen his already strong balance sheet, buy back shares and finance expansions.
Kinder Morgan is investing money to expand several pipelines, build a renewable natural gas platform, and develop several renewable fuel hubs. These investments should help increase the company’s cash flow, allowing it to continue to grow the dividend, something it has done for the past five years.
A healthy, high-yield dividend
Walgreens Boots Alliance (WBA 0.12%) has an exceptional dividend record. The health, pharmacy and retail company has paid a dividend for 359 consecutive quarters (over 89 years), increasing it for the last 47 consecutive years. That qualifies him as a dividend aristocrat and puts him a few years below the even more elite class of dividend kings.
Walgreens dividend currently yields 5.6%. The company can easily cover that payment. It produced $2.6 billion of free cash flow in the last three quarters. While that was more than $700 million less than the prior year period due to lower volumes and pandemic-related government support, it easily covered its $1.25 billion dividend payout. That allowed it to retain funds to invest in its continued growth.
A payment backed by real estate
W. P. Carey (WPC 1.37%) is a real estate investment trust (REITs) that pays a dividend with a yield of 5.1%. The company generates very stable rental income to support that payment. It has a diversified real estate portfolio in the office, retail, industrial, warehouse and self-storage sectors. It leases these operationally critical properties to tenants through long-term net leases, making the tenant responsible for the variable costs of property taxes, maintenance, and building insurance. Most leases have annual rate increase clauses linked to inflation. Therefore, WP Carey produces ever-increasing rental income.
That has helped support WP Carey’s ability to increase its dividend. The REIT has given its investors a raise every year since its public listing in 1998. Another driver of dividend growth is its ability to continue to purchase income-producing real estate. The company has an excellent track record in making enriching deals. His strong balance sheet allows him to capitalize on his extensive mandate to find deals in real estate sectors around the world.
Attractive passive income producers
Falling stock prices have pushed up dividend yields to offset their higher risk profiles relative to bonds as the Federal Reserve raises interest rates. That gives investors the opportunity to earn higher returns from some high-quality income contributors this September. Blackstone, Intel, Kinder Morgan, Walgreens, and WP Carey have excellent dividend records of consistently increasing their dividends. That makes them great options for those looking to boost their passive income this month.
Matthew DiLallo holds positions in Blackstone, Brookfield Infrastructure Corporation, Brookfield Infrastructure Partners, Intel, Kinder Morgan and WP Carey and has the following options: $55 November 2022 short calls on Intel and $35 October 2022 short put options on Walgreens Boots Alliance. The Motley Fool has stalls and recommends Blackstone, Intel, and Kinder Morgan. The Motley Fool recommends Brookfield Infra Partners LP Units, Brookfield Infrastructure Corporation and Brookfield Infrastructure Partners and recommends the following options: long January 2023 $57.50 calls on Intel and short January 2023 $57.50 puts on Intel. The Motley Fool has a disclosure policy.
