4 of my best dividend stocks with yields over 4%
Share prices have been falling this year, which means that dividend yields have been going up. As a result, I have a number of dividend stocks in my portfolio that are offering yields above 4%.
If I had money to invest right now, I’d be happy buying any of these stocks at today’s prices. I think they represent great value and could provide solid returns over time.
My first stock is Kraft Heinz. It’s one of Warren Buffett’s biggest investments and I think that it’s one of the most misunderstood.
It’s easy to write off this stock. Shares in Kraft Heinz are down more than 50% over the past five years and the company’s revenue growth has been almost non-existent over the past decade.
In my view, the underlying business has been making significant improvements recently. The company’s long-term debt has reduced by 25%.
As I see it, the market hasn’t yet picked up on this one. That’s why I’ve been buying the shares for my portfolio and anticipate continuing to do so.
Another Buffett stock in my portfolio is Citigroup. The stock has fallen by over 27% since the start of the year.
As a result, the shares currently have a 4.5% dividend yield. And the shareholder returns don’t stop there.
Over the last five years, the company has been repurchasing 6% of its shares per year. That’s a welcome boost for me as an investor.
A prolonged economic downturn might prove challenging for Citigroup. But I think it’s priced to reflect this, so I expect to reinvest the dividend that I’ll receive this month.
Aviva 8 ⅜ PF 8 ⅜ CUM IRRD PRF #1
I’m also attracted to Aviva 8 ⅜ PF 8 ⅜ CUM IRRD PRF #1. The complicated-sounding security is preferred stock in Aviva.
It pays a fixed dividend, which makes it a bit more predictable than the common stock. At today’s prices it offers a return of 7.5%.
The risk with the preferred stock is that it isn’t traded as much as other common shares. If I change my mind about owning it, I might find it difficult to sell.
But I don’t buy shares to sell them again quickly. My plan with Aviva’s this is to just sit back and collect dividends.
Realty Income is a comparatively simple stock to understand. The company owns retail properties and rents them out to tenants.
As a Real Estate Investment Trust (REIT), it distributes 90% of its rental income to its shareholders via dividends. At the moment, it has a yield of 4.78%.
It’s down around 12.5% this year due to rising interest rates. While I don’t think investors are missing anything obvious with this one, I’d buy it at today’s prices.
Rising interest rates are a headwind for Realty Income on two fronts. They make the cost of debt more expensive and drive down the value of property prices.
None of this worries me, though. Realty Income has increased its dividend quarterly for the past 25 years, which tells me the company has seen rising interest rates before and come through ok.
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Citigroup is an advertising partner of The Ascent, a Motley Fool company. Stephen Wright has positions in AVIVA 8 3/8% PF 8 3/8% CUM IRRD PRF #1, Citigroup, Realty Income, and The Kraft Heinz Company. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.