Dividend Stocks

7 High-Yield Dividend Stock Heroes for Robust Passive Income

While growth-centric ideas – particularly in the technology sector – generally attract the most attention, investors should pay attention to passive income opportunities. They’re not nearly as exciting as wagering on the next big thing. However, high-yield dividend stocks can keep your holdings elevated while you navigate the market’s ebb and flow.

Fundamentally, dividend-paying companies give you a chance to come out ahead consistently. Picking winners and losers in the market is exactly what it sounds like – guesswork. Sometimes, you’ll flip heads and other times you’ll flip tails. However, when it comes to passive income, companies that provide it typically have stable and/or predictable businesses. There’s less guessing involved and more profiting.

To be sure, even dividend-offering enterprises carry risks. Sometimes, when the yield gets too high, it’s that way for a reason and usually not a good one. Fortunately, the below ideas are backed by Wall Street’s experts and also align with relevant businesses. On that note, below are high-yield dividend stocks to consider.

Dow (DOW)

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Based in Midland, Michigan, Dow (NYSE:DOW) falls under the basic materials sector, specifically operating in the chemicals industry. Per its public profile, Dow engages in the provision of various material science solutions for packaging, infrastructure, mobility and consumer applications. At the moment, analysts rate DOW stock as a moderate buy with an average price target of $61.42.

For fiscal 2024, experts anticipate that Dow will see an increase of about 34% in earnings per share to hit $3. On the top line, sales might dip half-a-percent to $44.41 billion. Still, the high-side target calls for $45.5 billion. Also, it’s possible that in fiscal 2025, revenue may rise to $46.83 billion. If so, that would imply a 5.4% growth rate.

As for the passive income, Dow offers a forward dividend yield of 5.07%. That’s well above the material sector’s average yield of 2.82%. Further, the payout ratio – while elevated at 65.68% – isn’t too bad considering what you’re getting. Overall, DOW ranks among the high-yield dividend stocks to buy.

Simon Property Group (SPG)

building facade of simon property group (SPG)

Source: Jonathan Weiss / Shutterstock.com

Headquartered in Indianapolis, Indiana, Simon Property Group (NYSE:SPG) presents a higher-risk case among high-yield dividend stocks. Structured as a real estate investment trust or REIT, Simon focuses on the ownership of premiere shopping, dining, entertainment and mixed-use destinations. With the constant noise that the nation’s malls are fading away, SPG seems an odd idea.

However, amid the present K-shaped economic recovery, wealthy consumers are continuing to open their wallets. Further, analysts rate SPG stock as a consensus moderate buy with an average price target of $165.45. Interestingly, the most optimistic price target calls for $190. I doubt that analysts will risk their reputations if they don’t believe in the enterprise.

For passive income, Simon offers a forward yield of 5.42%. That’s noticeably above the average for REITs, which is already lofty at 4.46%. Still, investors should watch the super-hot payout ratio. REITs do run higher-than-average payout ratios but even with this context, SPG is up there.

Still, with experts projecting slow and steady growth for fiscal 2024 and 2025, SPG is worth a look among high-yield dividend stocks.

Kinder Morgan (KMI)

kinder morgan (KMI) sign on grass

Source: JHVEPhoto/Shutterstock.com

Calling Houston, Texas home, Kinder Morgan (NYSE:KMI) specializes in the oil and gas midstream segment of the hydrocarbon value chain. This category connects the upstream (exploration and production) component with the downstream (refining and marketing); thus, Kinder Morgan primarily focuses on storage and transportation of energy commodities. Of course, the benefit here is sustained relevance.

The world still runs on oil and may do so for quite some time. With that in mind, analysts have pegged KMI as a consensus moderate buy. Their average price target comes in at $21, with the high side rising to $24. Not surprisingly, for fiscal 2024, experts believe that EPS may increase by 14.2% to hit $1.21. On the top line, sales may expand by 10.4% from the prior year to reach $16.73 billion.

Turning to passive income, the midstream operator offers a forward yield of 5.85%. That’s conspicuously above the energy sector’s average yield of 4.24%, which is already quite generous. The company also features eight years of consecutive annual payout increases.

Now, the thing to watch is the payout ratio of 92.42%, which is very high. Still, for the underlying relevance, KMI is one of the high-yield dividend stocks to consider.

KeyCorp (KEY)

KeyBank storefront logo

Source: JHVEPhoto / Shutterstock.com

Based in Cleveland, Ohio, KeyCorp (NYSE:KEY) falls under the regional banking sector. As a disclaimer, KEY stock presents a greater risk profile compared to many other high-yield dividend stocks. After all, the financial services firm suffered amid the 2023 regional bank crisis. That said, shares have been moving higher over the past 52 weeks.

While the sector received a black eye more than one year ago, analysts are willing to give another chance to KeyCorp. Presently, they rate shares a consensus moderate buy with an average price target of $16.58. Further, the high-side target calls for $18. So far, two analysts have reiterated a buy rating on KEY while another is stuck with a hold.

Moving over to the passive income discussion, KeyCorp offers a forward yield of 6.05%. That’s a significant leap from the financial sector’s average yield of 3.18%. Also, the company has been increasing its payout annually for the past 13 years.

On a closing note, the financial firm’s payout ratio comes in at 50.13%. That’s very reasonable for what you’re getting.

Verizon (VZ)

Verizon Retail Location. Verizon delivers wireless, high-capacity fiber optics and 5G communications. VZ stock

Source: RAMAN SHAUNIA / Shutterstock.com

Headquartered in New York City, Verizon (NYSE:VZ) represents one of the biggest firms in the communication services sector. As a powerhouse in telecom, Verizon benefits from what I would term permanent relevance. Analysts seem to agree, pegging shares a consensus moderate buy. Moreover, their average price target lands at $44.62, with the blue-sky target calling for $52.

For fiscal 2024, analysts admittedly see some challenges ahead. EPS may dip 2.5% to $4.59 while sales may only rise modestly to $134.35 billion. That said, the most optimistic forecast calls for earnings of $4.67 per share on sales of $136.15 billion. Circumstances may improve broadly in fiscal 2025, though, with the consensus estimate implying EPS of $4.71 on revenue of $137.03 billion.

Regarding passive income, Verizon offers a forward yield of 6.74%. That’s a country mile above the communication sector’s average yield of 2.62%. Also, it’s worth pointing out that Verizon enjoys 19 years of consecutive payout increases. Finally, the payout ratio sits at 56.47%, implying confidence toward income sustainability. Thus, it’s one of the high-yield dividend stocks to consider.

Gaming and Leisure (GLPI)

REITs to buy Real estate investment trust REIT on an office desk.

Source: Vitalii Vodolazskyi / Shutterstock

Hailing from Wyomissing, Pennsylvania, Gaming and Leisure (NASDAQ:GLPI) is structured as a specialty REIT. Per its corporate profile, GLPI focuses on the acquisition, financing and ownership of properties to be leased to gaming operators. With the post-pandemic travel boom still going strong, Gaming and Leisure could be an enticing idea for high-yield dividend stocks.

Analysts appreciate the prospect, rating shares a consensus moderate buy. Further, their average price target stands at a robust $61, with the high-side target reaching $188. Therefore, it’s possible to see GLPI providing a hearty mixture of income and capital gains. Financially, experts overall anticipate modest growth, with EPS hitting $2.86 on sales of $1.51 billion. Last year, earnings reached $2.77 per share on revenue of $1.44 billion.

Right now, GLPI offers a very generous yield of 6.96%. Again, that’s well above the real estate sector’s average yield of 4.46%. However, the enterprise can only boast of two years of consecutive payouts. Plus, the payout ratio is sky high at 102.58%.

Nevertheless, the travel boom is a fundamental catalyst to consider. If you can handle the risk, GLPI could be tempting.

Ambev (ABEV)

website image for ambev

Source: Anton Garin / Shutterstock.com

Based in Brazil, Ambev (NYSE:ABEV) falls under the consumer defensive sector, specifically operating in the brewery segment. According to its public profile, Ambev engages in the production, distribution and sale of beer, carbonated soft drinks and other alcoholic beverages. Analysts peg shares a consensus moderate buy with a $2.80 price target. The high-side target rises to $3.10.

For fiscal 2024, profitability may take a slight dip, with EPS falling 5.3% to 18 cents. On the top line, sales may rise 2.9% to reach $16.43 billion. However, circumstances are projected to improve in the following year. That’s when earnings may rise to 19 cents per share while revenue can move up to $17.43 billion.

Regarding passive income, Ambev is the most generous name on this list of high-yield dividend stocks, with a forward yield of 7.08%. That’s a massive gulf from the consumer staple sector’s average yield of 1.89%. However, the payout ratio is a bit elevated at 75.27%.

Still, it’s worth mentioning that ABEV stock trades at 2.22X trailing-year sales. While not particularly undervalued, a year ago, the metric averaged nearly 3X. So, it could be a relatively good deal.

On the date of publication, Josh Enomoto did not have (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.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.

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