2 High-Yield Dividend Stocks to Buy With No Hesitation

Investing in dividend stocks is one of the most popular and powerful strategies for generating a steady income stream, building wealth through the power of compounding and mitigating portfolio risk with historically more stable and resilient businesses. With all of that said, here are two excellent dividend stocks with yields topping 5%.

Better packaging. Better investment.

With a motto of "Better Packaging. Better Life." it seems fitting that Sonoco Products (NYSE: SON) might be the total package for income investors. Not only does it have a high-yield dividend at 5.4%, the company has delivered dividends to shareholders for 402 consecutive quarters, or for 100 years, and has increased its dividend for 42 consecutive years.

Throughout its 100-year history, Sonoco has collected a diverse portfolio of industrial and consumer packaging that includes reels and spools, rigid plastics, pallets, and composite containers, and serves consumer and industrial end markets across North America. Sonoco has two primary segments, consumer packaging and industrial packaging, and has reshaped its business over the past few years. The company now focuses more on a few core businesses and has divested from products such as high-density film and European contract packing, among others.

Further, the company has been busy expanding its food packaging portfolio while reducing its exposure to more cyclical industrial end markets with acquisitions. In 2022 Sonoco acquired Ball Metalpack for about $1.4 billion, and then in 2024 acquired Eviosys for roughly $3.9 billion. Both acquisitions will increase the company's exposure to the valuable metal food packaging industry. Another positive for income investors is that much of the company's sales are under contracts that include price escalators and help stabilize margins and indirectly drive dividends.

Competing digitally

Target (NYSE: TGT), serving as the nation's seventh-largest retailer, has built itself on a strategy to deliver a more gratifying in-store shopping experience with a wide range of apparel, home goods, and other household essentials that appeals to a more affluent customer base. What some investors aren't aware of, however, is the company's long history with dividends: This year's fourth quarter dividend will be Target's 233rd consecutive dividend paid since 1967 when it went public. The dividend also sits at a robust 5.1% dividend yield.

Image source: Getty Images.

One reason for investors to be optimistic about Target's future is its recent past. One of the largest concerns facing investors has been Target's ability to combat digital retailers such as Amazon and omnichannel giants like Walmart. Target's investments in its stores and its digital prowess proved hugely important during the pandemic, helping power the company's sales from 2019 through 2022, as you can see in the chart below.

TGT data by YCharts

Target will have to keep investing in cost-saving initiatives, product innovation, and store renovations to keep up with the competition, both in-store and online. But its performance during the pandemic proves the company is capable of driving growth and its iconic brand combined with a better in-store experience should continue driving recurring foot traffic.

What they offer

Both Sonoco and Target are excellent options for income investors. They both offer a long, consistent history of delivering dividends, and both are finding ways to expand through acquisitions or organic and digital growth.

Daniel Miller has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Target, and Walmart. The Motley Fool has a disclosure policy.