7 Stocks With the Highest (Sustainable) Dividend Yields in 2024

Stocks to buy

If you are looking for stocks with the highest yields, look no further! First, I would make it clear that the stocks in this list are not necessarily the ones with the “highest yields.” For example, if you screen for dividend stocks with only the yield in mind, you will find lots of stocks with triple-digit yields. The drawback is that they are all unsustainable, and you are unlikely to profit from them. If it looks too good to be true, it probably is.

That is why you should always keep the payout ratio in mind and look at the broader picture. A business needs to have a sustainable payout ratio and sustainable profitability. These are the only dividend stocks worth holding in the long run.

With that in mind, we’ll be looking at seven of the highest dividend yield stocks — but sustainable.

SFL Corporation (SFL)

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SFL Corporation (NYSE:SFL) is a maritime infrastructure company that owns and charters a diversified fleet of vessels and rigs. I am quite bullish on SFL and tanker companies in general for the long run, as they have benefited from the dramatic shift in global logistics since the war started in 2022.

The company reported total charter revenues of $236 million in Q1 2024, up 13% from the previous quarter, primarily due to the delivery of new car carriers and increased revenues from the drilling rig Hercules. SFL’s EBITDA equivalent cash flow in the quarter was approximately $152 million, significantly higher than the previous quarter, and over the last 12 months, it has been an impressive $523 million.

The company’s net income came in at around $45 million or 36 cents per share. SFL is committed to returning value to shareholders and has increased its quarterly dividend to 27 cents per share. With a robust and increasing charter backlog of approximately $3.6 billion, SFL is well-positioned to continue its impressive dividend track record.

The stock is up 49% in the past year and still offers an attractive dividend yield of nearly 8%. I believe the longer trade routes resulting from geopolitical tensions and volatility work in favor of tanker companies like SFL, making them far from boring plays in the current environment.

Ares Capital (ARCC)

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Ares Capital (NASDAQ:ARCC) is a leading business development company that provides financing solutions to middle-market companies. Despite the tough lending environment, ARCC posted solid Q1 results with core EPS of 59 cents, up 3.5% year-over-year (YOY) and beating its regular dividend. The stock trades at an attractive 9.3% yield and has delivered a steady 14% price appreciation over the past year.

I believe ARCC is poised to benefit from several tailwinds ahead. The thawing of frozen credit markets is spurring more M&A activity, as evidenced by ARCC’s robust $1.2 billion in new commitments closed just in April. While competition is heating up, ARCC has navigated similar environments skillfully before. Its direct origination platform spanning the middle market should help it source high-quality deals others miss.

I will admit that BDCs often get unfairly punished during downturns. However, ARCC’s strong underwriting and portfolio management have allowed it to outperform across cycles. I think it should recover quickly from any future recessions and keep compounding in the long run.

Sixth Street Specialty Lending (TSLX)

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Sixth Street Specialty Lending (NYSE:TSLX) provides financing solutions to middle-market companies and private equity sponsors. Despite challenging economic conditions impacting its portfolio companies, I believe TSLX remains well-positioned to deliver attractive risk-adjusted returns and a sustainable high dividend yield to shareholders.

In Q1 2024, TSLX reported adjusted net investment income of 58 cents per share, representing an annualized return on equity of 13.6%. While net investment income has benefited from higher interest rates, management noted the first modest decline in eight quarters of 5 basis points in the weighted average reference rate resets on debt and income-producing securities.

However, the strength of recent economic data and the higher for longer interest rate environment should continue to support TSLX’s earnings power. The stock has recovered considerably from its lows but still trades about 11% below its peak, likely due to its exposure to fast-growing businesses that have slowed in recent quarters.

As the credit cycle turns and the growth outlook improves, I expect TSLX’s portfolio and stock price to benefit.

Most appealingly, TSLX offers a 9.9% dividend yield that looks well-covered by recurring earnings.

Altria Group (MO)

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Altria Group (NYSE:MO) manufactures and sells smokable and oral tobacco products. I believe Altria is one of the most compelling dividend stocks you can buy in this market. In Q1 2024, Altria delivered adjusted EPS of $1.15 on revenue of $4.72 billion. While revenue declined 0.84% YOY, the company is making strong progress with its smoke-free NJOY e-vapor product. NJOY expanded its distribution to over 80,000 stores in Q1, and management expects it to reach 100,000 stores by the end of the year. Retail share of NJOY consumables grew to an impressive 4.3% in the quarter.

Yes, tobacco stocks get a bad rap, and smoking rates are declining. But the pace of decline is often overstated. Altria has consistently demonstrated strong pricing power to grow earnings steadily in the face of volume declines.

With an 8.4% dividend yield, Altria is an income investor’s dream. The stock may not soar, but with that kind of cash payout, it doesn’t have to. For yield-starved investors, Altria is a must-own.

Sinclair (SBGI)

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Sinclair (NASDAQ:SBGI) is a diversified media company that operates local TV broadcasting stations across the United States. While mainstream media companies have faced headwinds recently from the rise of independent journalists, I believe these challenges are overstated. Media giants still wield immense influence and are wisely pivoting to digital platforms to stay competitive.

Sinclair’s deep affiliations with major networks like FOX (NASDAQ:FOX), ABC, CBS and NBC provide a powerful moat, allowing them to broadcast top shows while inserting local content and ads. Yes, SBGI stock has tumbled 78% over the past five years, but the decline has moderated and I think the worst is priced in at this point.

With a towering 8.5% dividend yield and a record-breaking $350M+ in political ad revenue expected for 2024, Sinclair offers a compelling risk/reward at these levels. The stock seems unlikely to fall much further, and the hefty dividend provides solid downside protection while we await a potential recovery. We are in an election year, so I think this could spark a recovery.

Highwoods Properties (HIW)

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Highwoods Properties (NYSE:HIW) is a real estate investment trust that owns, develops and manages office properties. The future looks bright for HIW despite economic headwinds buffeting the real estate sector. In Q1, they signed an impressive 922,000 square feet of second-generation leases, including over 400,000 square feet of new leases. This leasing momentum should continue as HIW’s markets generate outsized population and job growth. People and companies are attracted to the high quality of life and business-friendly environments in which HIW operates.

While rising interest rates have cooled home buying demand, the rental market remains robust. That bodes well for office REITs like HIW. Contrary to some expectations, work-from-home hasn’t gained as much lasting traction post-pandemic. Companies still value in-person collaboration. HIW’s occupancy dipped modestly to 88.5% in Q1, but I believe this is a short-term blip.

With $40 million of incremental NOI expected from its development pipeline and a strong balance sheet, HIW is well-positioned to deliver sustainable dividends and long-term growth for shareholders.

The stock is down nearly 50% from its pre-pandemic prices and is on a rebound. The dividend yield here is 7.58%.

Western Union (WU)

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Western Union (NYSE:WU) provides global money transfer and payment services. The stock has been one of the worst performers in the post-pandemic era, down 55% from its peak. However, I believe it’s starting to bottom out and looks like a good long-term bet at these levels.

The company had a solid Q1, beating revenue estimates by a hefty 3.82%. Consumer money transfer transactions grew 6%, the third consecutive quarter of 5%+ growth. Branded digital revenue accelerated to 9% growth, the best since Q3 2021.

While Western Union has struggled to adapt as many financial services went digital and competition from fintechs and crypto increased, management’s Evolve 2025 strategy seems to be gaining traction. The company is focusing on returning the digital business to double-digit growth and stabilizing the retail business.

It is also maintaining industry-leading 19% to 21% adjusted margins and returning capital to shareholders, with $1.5 billion in buybacks and dividends since late 2021.

With the stock beaten down and a hefty 7.58% dividend yield, Western Union looks like an attractive contrarian pick for income investors willing to be patient.

On the date of publication, Omor Ibne Ehsan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Omor Ibne Ehsan is a writer at InvestorPlace. He is a self-taught investor with a focus on growth and cyclical stocks that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as cryptocurrencies and penny stocks. You can follow him on LinkedIn.

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