5 Interesting High Yield Stocks
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High yield stocks are interesting because they give you more income right now.
Today we’re looking at 5 stocks with yields of 4% or more.
Some investors think that high-yield stocks are risky, low-quality companies, but they’re wrong.
High-yield doesn’t always mean high risk.
Companies in the top 40% of dividend yields outperform the S&P 500 most often.
Another misconception about high yield stocks?
That they only pay big dividends because they’ve stopped growing.
Again, not true.
Many of the best high-yield companies actually pay out less than half of their profits, keeping plenty of cash on hand to keep growing the business.
When you have a growing company, and a high dividend yield, you can compound very quickly by reinvesting your dividends.
A High Yield Example.
Realty Income (O) runs a low-maintenance property model on a huge scale.
They own thousands of freestanding commercial properties under triple-net leases, which means the corporate tenants handle the taxes, insurance, and property maintenance.
All Realty Income does is collect the rent and pass it on to shareholders.
Realty Income is known as ‘The Monthly Dividend Company’ because they pay a high dividend every single month.
If you would have invested $10,000 25 years ago, and reinvested your monthly checks, that position would be worth over $172,000 today.
Better yet, that initial ten grand would now be handing you over $9,000 in purely passive dividend income every single year.
That’s a 90% (!) yield-on-cost.
That’s the magic of reinvesting high dividends.
Today, we’ll start with a screen of high yield candidates with growing businesses.
Then I’ll show you five high-yield companies from it that I think are interesting.
Our Screen
Today I’m going to start with a custom screen.
The Criteria
EBIT / Interest Expense: > 3.8
5-year Revenue CAGR: > 3%
5-year EPS CAGR: > 3%
Dividend Yield: > 4%
Payout Ratio: < 85%
5-year DPS CAGR: > 4%
The Result? 90 companies fit all these criteria.
Some interesting facts from the group:
Highest Yield: 26.6%
Highest DPS Growth: 169.2%
Average Dividend Yield: 6.05%
Average Payout Ratio: 51.85%
People on the VIP list already got the full list of results from this screener.
If you want them too, join the VIP list here.
Let’s Dive In!
Here are the 5 companies that I thought were the most interesting.
5. Coca-Cola FEMSA ($KOF)
How does the company make money?
Coca-Cola FEMSA is the largest franchise bottler of Coca-Cola products in the world by volume.
They buy syrup from the Coca-Cola Company, then handle the bottling, marketing, and distribution across Latin America.
Coca-Cola FEMSA owns the plants, relationships with retailers, and the distribution network that would cost billions to replace.
And because they sell Coca-Cola, just like the parent company, they have pricing power and brand dominance across Latin America.
What else makes Coke FEMSA interesting?
Consistent, high growth rates in revenue (9.8% 5-year CAGR) and earnings (16.1% 5-year EPS CAGR).
A solid payout ratio of 70.5%, giving the dividend plenty of safety and breathing room.
A history of consistently raising the dividend with a 9.0% 5-year DPS CAGR.
4. TotalEnergies SE ($TTE)
How does the company make money?
TotalEnergies is an integrated oil and gas company that’s focused on maintaining low-cost oil and gas production globally.
They’re also aggressively investing in a diversified portfolio of renewables.
What else makes TotalEnergies interesting?
Growing profits, with an EPS 5-year CAGR of 32.6%.
A 4.7% dividend yield and a conservative payout ratio of just 59.0%.
A disciplined capital allocator with a long history of increasing shareholder value.
3. Vinci SA ($DG.P)
How does the business make money?
If you like businesses with massive moats, you’ll love France’s Vinci.
It doesn’t get much better than owning toll roads, airports, and energy infrastructure.
Their concession model generates highly predictable, inflation-protected cash flow that funds a very healthy, growing dividend.
What else makes Vinci interesting?
Strong profit growth with a 31.5% 5-year EPS CAGR.
A 4.0% dividend yield backed by a low 57.1% payout ratio.
High historical dividend growth, increasing their payout by 19.6% annually over the last 5 years.
2. Genuit Group plc ($GEN.L)
How does the business make money?
Genuit Group is based in the UK, and they are a leading provider of sustainable water and climate management solutions for the construction industry (think piping systems, ventilation, and heating).
As environmental regulations tighten and infrastructure ages, their essential building products are seeing sustained demand.
This is a great ‘boring but beautiful’ business.
What else makes Genuit interesting?
A 5.1% dividend yield that is well-covered by a 71.0% payout ratio.
Solid top-line growth (8.6% Revenue 5-year CAGR) and an even higher 16.2% earnings growth.
A history of dividend growth, with a 21.9% 5-year DPS CAGR.
1. Comcast Corporation ($CMCSA)
How does the company make money?
Comcast is a global media and technology company.
Comcast is massive, spanning broadband, cable, NBCUniversal, and theme parks.
The important thing to remember about Comcast is that it generates a lot of free cash flow.
There are fears around cord-cutting fears, but its broadband infrastructure and theme park pricing power keep the cash rolling in.
What else makes Comcast interesting?
A 5.6% dividend yield with a low payout ratio of just 25.7%.
Strong historical earnings growth with a 15.2% 5-year EPS CAGR.
Management that continually shrinks the share count through buybacks while raising the dividend (7.0% 5-year DPS CAGR).
That’s it for today!
High-yield stocks can be high-quality companies that give you a lot of cash now and fuel compounding for the future. The 5 highlighted today were:
Coca-Cola FEMSA ($KOF): The world’s biggest Coca-Cola bottler with emerging-market growth.
TotalEnergies SE ($TTE.P): An energy giant balancing traditional fuels with a renewable future.
Vinci SA ($DG.P): An infrastructure company with massive moats and toll-road cash flows.
Genuit Group plc ($GEN.L): A building products manufacturer with the tailwind of sustainable infrastructure behind it
Comcast Corporation ($CMCSA): A broadband and media conglomerate offering a high yield with a low payout ratio.
One Dividend At A Time
-TJ
P.S.
On June 23rd, we are kicking off a series all about high yield investing.
If you want to maximize your portfolio’s income without sacrificing business quality, jump on the VIP Waitlist.
You’ll get behind-the-scenes updates and the very first invite to download our brand-new high-yield special reports the minute we go live.
Don’t forget that you’ll also get the following just for joining the VIP list:
My high-yield stock watchlist
A Checklist of Dividend Investing Mistakes
The Highest Yielding Dividend Aristocrats
Used sources
Interactive Brokers: Portfolio data and executing all transactions
Fiscal.ai: Financial data
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