British American Tobacco and Verizon are two steady dividend stocks in defensive industries.
Realty Income and AGNC are two high-yield REITs that are solid buys after recent pullbacks.
Energy Transfer is one of the best high-yield stocks in the energy sector.
Investors looking for solid dividend-paying stocks with high yields can find them in a variety of industries. Let's look at five you can buy right now.
British American Tobacco (NYSE: BTI) is a high-yield stock in the defensive tobacco industry that is starting to gain momentum. Its smokeless portfolio is becoming a larger part of its business, now representing more than 18% of its overall revenue, as its Velo Plus nicotine pouches are seeing extraordinary growth.
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Its cigarette business continues to see volume declines, but strong pricing power continues to deliver overall revenue growth. At the same time, the company is in the process of deleveraging its balance sheet and is on track to reduce its leverage to between 2 to 2.5 times by the end of the year. This makes it a solid dividend stock to own.
Verizon (NYSE: VZ) is another solid dividend-paying stock with a high yield in the defensive telecom industry. The company is shifting its focus from being more technology-driven to more customer service- and value-driven, which should help it reduce churn and drive growth. It produces strong free cash flow and has a solid balance sheet, all of which help support its dividend and allow it to grow. The company is also in the midst of a $25 billion stock buyback.
Verizon also has a big opportunity following the close of its acquisition of Frontier Communications. With Frontier, Verizon will be able to better bundle wireless and broadband services, which should drive growth.
Realty Income (NYSE: O) is one of the steadiest high-yield dividend stocks out there, having raised its dividend for more than 30 straight years. The real estate investment trust's (REIT's) core business is leasing out properties to recession-resistant retailers, like grocers and home improvement stores, using long-term triple net leases with 10- to 20-year initial terms and rent escalation clauses. However, it has been expanding into data centers, U.S. gaming, and industrial, as well as into Europe, to diversify and increase its total addressable market.
Realty Income is just a consistent operator that has the added bonus of paying its dividend on a monthly basis. As interest rates and cap rates go down, its real estate portfolio value should increase, adding a potential upside catalyst down the line.
Energy Transfer (NYSE: ET) comes with a bit of a higher yield than the stocks previously mentioned, as well as ample growth opportunities. The master limited partnership (MLP) operates one of the largest midstream systems in North America, with a very extensive natural gas pipeline network. The company has several large growth projects in the works tied to rising natural gas demand stemming from the huge energy needs associated with AI data centers that should drive strong growth.
The company's distribution is well covered by its distributable cash flow, and it is looking to continue to grow its payout at a 3% to 5% pace moving forward. This is one of the best high-yielding stocks in the energy patch, in my view.
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If you're looking for a very high-yield stock, look no further than AGNC Investment (NASDAQ: AGNC). The mortgage REIT (mREIT) has seen its stock struggle this year due to a flight to safety into Treasury bonds caused by the current war with Iran and concerns over inflation. This has led to a widening of the spread between mortgage-backed securities (MBS) and Treasuries. This hurts the mREIT's tangible book value, which is essentially the value of its MBS portfolio.
That said, this environment should provide AGNC with a good opportunity to buy more MBS at attractive prices. I'd also expect this situation to be temporary and improve once the war is over. It could also lead to the Fed cutting rates more aggressively. AGNC is a bit riskier, but it has been navigating a tough MBS environment for a few years now while maintaining its dividend.
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Geoffrey Seiler has positions in Energy Transfer. The Motley Fool has positions in and recommends Realty Income. The Motley Fool recommends British American Tobacco P.l.c. and Verizon Communications. The Motley Fool has a disclosure policy.