Finding high dividend yielders with steady and growing payouts

Published Mon, Jun 27 202212:11 PM EDT

There are times in bear markets when the better part of valor is to collect some income and get paid to wait things out. Dividend investing has paid off on a relative basis this year, outperforming the 17.3% slump in the S & P 500 on a total return basis, including reinvested dividends, through Friday. The iShares Select Dividend ETF lost less than 2% on a total return basis in the year through Friday, while the Vanguard High Dividend Yield Index ETF dropped a little more than 6%. Analysts at Barclays, in their weekly Global Portfolio Manager's Digest, went on the hunt for individual stocks that pay decent dividends and especially payouts that have a history or are forecast to expand. Safety is key. There's no point in clipping the dividend if the stock falls off a cliff at the same time. First, Barclays only chose stocks from among those it rates the equivalent of a buy. Then the bank screened for companies whose three-year average dividend yield was more than 3%, and whose dividend yield is expected to grow or at least remain stable through 2023, based on Barclays' own estimates. The resulting list of 27 names came from eight of the S & P 500's 11 industry groups. Source: Barclays The two highest-yielding stocks were both in energy. NuStar Energy is forecast to yield 12% this year and next, while Viper Energy Partners is pegged at 11.4% both years. Real estate stood out as offering above-average dividends, accounting for 10 of the 27 stocks making Barclays' cut. SL Green Realty is forecast to pay 7.9% through the end of next year, while Medical Properties Trust yields 7.9% in 2022 but is forecast to expand to 8.1% in 2023. Restaurant Brands International, with a 2022 yield of 4.5%, growing to 4.8% in 2023, caught the bank's attention among consumer discretionary stocks. The company is the parent of Burger King and Tim Hortons. The highest-yielding stocks in other sectors included Energizer Holdings (4.5%) in consumer staples, Fidelity National Financial (4.9%) among financials, and Cisco Systems (3.4% in 2022 and rising to 3.6% in 2023) in tech. Barclays also highlighted Ardagh Metal Packaging (6.6% in 2022 and 6.8% in 2023) in materials and Sempra Energy (3.4% this year and 3.7% in 2023) among utilities.