In general, investors who park their capital in dividend stocks tend to be more conservative with their money. They tend to like the dependable dividends paid from their stock holdings, often used as income. Accordingly, such investors often purchase dividend stocks that come with yields in the 2-4% range traditionally considered a healthy range.
Of course, there are plenty of dividend stocks that provide yields outside of this range. For investors with higher risk tolerance levels, high-yielding dividend stocks may be the preferred choice. These are companies with much more robust risk profiles, but which can often provide outsized gains (if the individual investor knows what they’re doing).
Here are seven such high-yielding dividend stocks I think is worth a look. That’s despite warnings from the Federal Reserve that interest rates may have to go higher throughout 2023 than initially projected.
|ZIM Integrated Shipping
|Great Elm Capital
|Global Medical REIT
ZIM Integrated Shipping (ZIM)
ZIM Integrated Shipping (NYSE:ZIM) is one of the highest-yield dividend stocks on this list and one of the highest-yield dividend stocks, period. That makes the shipping and logistics firm inherently interesting to income investors right now. The Israeli company has provided a long stretch of dividends that provide intrigue for investors looking for ways to play the supply chain sector.
ZIM Integrated Shipping’s business dates back to 1945, and the company began operating shipping container logistics in the early 1970s. However, the company’s dividend only stretches back to the late summer of 2021. In those six periods, the company has paid massive dividends that truly impress. Most recently, the company paid a $2.95 dividend in November. Over the last year, it has paid a whopping $27.55 of dividends, higher than its current $20.25 share price.
That’s probably unsustainable given that one of those dividends was worth $17. But $2.95 on a $20.25 share price is still a very high 14.56% yield. That was what the company paid most recently, and is very much in line with previous payments.
Great Elm Capital (GECC)
Great Elm Capital (NASDAQ:GECC) is a company that invests in the debt of middle-market firms, and derives income from those investments. In turn, investors who purchase its stock to fund those investments receive high-yield dividends for their trouble. Currently, that yield is approaching 20%. Indeed, GECC stock certainly isn’t for the faint of heart, but it can provide a substantial additional return for those seeking yield.
The company is currently beefing up its investment in the healthcare space. It closed on the purchase of three healthcare asset-based loans in December. Further, the company formed Great Elm Healthcare Finance in cooperation with an affiliate of Berkadia Commercial Mortgage. Healthcare is a relatively stable sector due to the truism that demand for healthcare is relatively inelastic. People need to see doctors regularly. That lends credibility to the idea that the company is steadier than it may seem at first glance.
The downside is that GECC stock may already be fully-priced at these levels. Still, its dividend alone is likely to produce double-digit returns for investors willing to place a bet on this stock right now.
Rithm Capital (RITM)
Investors willing to bet that the mortgage market is okay should also consider Rithm Capital (NYSE:RITM) stock. It is a real estate investment trust that focuses on the mortgage sector. That will be off-putting to investors who worry that we may already be in the midst of another bubble, similar in magnitude to the subprime mortgage crisis.
Yet, at the same time, Rithm Capital’s financial statements don’t suggest trouble at all. Its revenue and net income figures improved in 2022 over 2021. The company’s recent results showed bottom-line net income of $983,285 in 2022. Thus, it is not a large company, nor does it boast massive profits. Some investors simply overlook this stock due to its size and lack of great assets.
That said, I think this is a stock with obvious upside, at least according to analysts. Additionally, the company’s dividends have been continually increasing since mid-2020. Finally, Rithm Capital is a REIT, so investors will receive 90% of company profits by law.
The risk is clear: further rate hikes could negatively affect the already wobbly mortgage market and Rithm Capital by extension. But those willing to take accept this risk could earn substantial returns from here.
LyondellBasell Industries (LYB)
LyondellBasell Industries (NYSE:LYB) is a much less risky stock than prior equities on this list. Its 5.24% yield is still considered ‘risky’ but it’s substantially lower than the aforementioned names on this list. That lower risk is primarily due to the company’s core business, in plastic resin and chemical production. Generally-speaking, its a much more predictable industry than those of the previously mentioned names.
Furthermore, investors with a penchant for ESG stocks might also like LyondellBasell Industries. It boasts all kinds of achievements in its latest earnings report. Most notably, the company received an EcoVadis Gold Medal for sustainability performance, ranking in the 91st percentile among 7,500 firms surveyed.
The company’s revenues slipped slightly on a year-over-year basis in Q4. That said, overall 2022 revenues increased to $50.45 million from $46.13 million a year earlier. The firm’s stock has roughly $7 of upside beyond its current $91 price. When combined with its dividend, the returns with LYB stock quickly become very attractive.
Devon Energy (DVN)
Let’s start with Devon Energy’s (NYSE:DVN) dividend in discussing it as an investment. Just a few weeks ago, Devon Energy reported 2022 full-year results. The news was good: fixed dividends were increased by 11%. Indeed, 2022 was a strong year for the energy sector. The results were positive for Devon Energy as well, leading to a dividend payment during the year that more than doubled to $5.17.
Let’s move to the macroeconomic catalysts that could benefit the company more generally. Investors are unsure of what to expect from the energy sector in 2023. That’s where the risk is for the company. If a recession officially begins or some new variant of Covid-19 emerges the economy will falter. In short, demand would quickly weaken and prices would fall.
Yet, that isn’t what Wall Street is expecting from the company. Instead, analysts see substantial upside for investors over the coming 12-18 months. The company hasn’t reduced its dividend since 2017 so that should only add to the potential upside with this stock..
Philip Morris (PM)
I’ve focused on Philip Morris (NYSE:PM) stock for its dividend and positive catalysts a few times over the past months. It bears repeating – while cigarette sales have been declining for some time, Philip Morris is the best-placed large tobacco company. Its smokeless tobacco strategy and portfolio make it very noteworthy. Its 5.13% dividend only makes it that much more interesting.
Philip Morris’ IQOS tobacco e-cigarette and vape products are garnering a lot of attention from analysts who like that the company is finding ways to replace cigarette revenues better than its competitors. The firm’s Swedish Match purchase, a company that produces snus, nicotine pouches, and lighters, has proven beneficial with strong overall growth.
In short, Philip Morris is a so-called sin stock that many perceive to be past its best days. However, it is arguably in the middle of an impressive pivot. And that pivot has all kinds of upside that could reward investors.
Global Medical REIT (GMRE)
Global Medical REIT (NYSE:GMRE) is investment grade for several of the same reasons as Green Elm Capital above. For one, REITs are obligated to reward investors with 90% of profits. Of course, that only truly matters if those profits are growing.
Fortunately, they are. In 2022, the company’s net income reached $13.32 million, up from $11.8 million in 2021. And revenues continue to grow in both the most recent quarter and the throughout 2022.
Global Medical REIT leases medical facilities to healthcare providers. It is currently in the process of buying a property for $6.7 million. And it has two properties under contract to be sold for a total of $11.6 million.
The company’s portfolio of properties was 96.5% occupied at the end of 2022 and projects a base rent of $114.5 million. Again, healthcare real estate tends to be more stable than many other subsectors, adding weight to the argument that favors the company and its high-yield dividend.
On the date of publication, Alex Sirois 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.