Dividend stocks will pay you for being patient. These payments are even more valuable in a world where interest rates are at zero percent, which the Federal Reserve has said will be the case until 2022. When a company pays a dividend…
it’s ideally a signal that its business is stable and well-managed enough to give some money back to shareholders.
However, not all dividend stocks are great investments. Sometimes, these companies are in industries with poor prospects, or they have prioritized paying shareholders over investing in their own operations which makes them vulnerable to disruption. So, it’s good to be skeptical about companies paying high dividends.
Fortunately, the StockNews.com POWR Ratings system can help you identify high-quality companies. Here are 2 dividend stocks yielding more than 5%:
BHP Group (BBL)
BBL focuses on discovering, acquiring, and marketing of natural resources around the world. It is involved in oil and gas, coal, zinc, gold, uranium, iron ore, and many other resources.
BBL currently pays an annual dividend of $2.60, which yields 6.2% based on its current price. The company has been paying dividends for more than a decade now. It reduced its dividend payment by 16.7% in March 2020.
However, it’s unlikely to be cut again given the global recovery in iron ore and other commodities. The total revenue of BBL has increased steadily over the last three years and operating cash flow remained almost stable over this period. So, it’s dividend payments should continue.
Moreover, the stock has been rising since hitting a low of $23.64 on March 12th due to the coronavirus-led market crash. Since then, BBL has gained more than 70% during this period. It’s now nearing a breakout to new, 52-week highs, and there’s good reason to expect that momentum might continue given the strength in iron ore.
How does BBL stack up for the POWR Ratings?
A for Trade Grade
B for Buy & Hold Grade
B for Industry Rank
B for Peer Grade
B for overall POWR Rating
The stock is also ranked #6 out of 33 stocks in the Industrial – Metals Industry.
Physicians Realty Trust (DOC)
DOC acquires, manages, and leases real estate to the healthcare industry such as hospitals and physicians.
Being a REIT DOC is attractive from a dividend income perspective. DOC currently has a dividend yield of 5.5% and a payout ratio of 86.8%. The company has been consistently paying a dividend of $0.23 since 2014.
Consistent increase in DOC’s cash flow indicates that the company should be able to sustain its dividend payments in the future. Free cash flow for DOC has increased for the 5th quarter in a row. Moreover, DOC offers a dividend yield in the top 22.39% of dividend paying stocks in the StockNews.com universe.
The market expects the company to deliver an EPS of $0.07 for the quarter ended June 2020, which is 75% higher than year-ago EPS of $0.04. The consensus revenue estimate for the quarter also indicates an improvement of 12.6%.
Also, the stock has rebounded by 45% after it hit a low point of $11.6 in March due to the overall stock market dip caused by the spread of the coronavirus. Further, DOC’s dividend is tied to the healthcare industry which is recession-proof in many ways. As the population gets older, demand will continue to increase.
DOC’s strong fundamentals are reflected in its POWR Ratings, it has a “Buy” rating with an “B” in Trade Grade and an “A” in Peer Grade. Within the REITs – Healthcare group, it’s ranked #1 out of 16 stocks.
