Investors love dividend stocks because they provide dependable income and give investors a great opportunity for solid total return. Total return includes interest, capital gains, dividends, and distributions realized over time. In other words, the total return on an investment or a portfolio consists of income and stock appreciation.
At 247 Wall St., we always remind our readers about the impact total return has on portfolios because it is one of the best ways to improve the chances of overall investing success. Again, total return is the combined increase in a stock’s value plus dividends.
For instance, if you buy a stock at $20 that pays a 3% dividend, and it goes up to $22 in a year, your total return is 13%. That is, 10% for the increase in stock price and 3% for the dividends paid.
Quality stocks with consistent and dependable passive income are the ticket to success if you want a portfolio with significant total returns. So we screened our 24/7 Wall St. high-yield dividend stock research universe, looking for companies with big payouts that investors can buy now and hold forever. Five companies make the grade; all are rated Buy on Wall Street.
Altria
This tobacco company offers value investors a great entry point and a rich 9.59% dividend. Altria Group Inc. (NYSE: MO) manufactures and sells smokable and oral tobacco products in the United States through its subsidiaries.
The company provides cigarettes primarily under the Marlboro brand:
- Cigars and pipe tobacco, principally under the Black & Mild brand
- Moist smokeless tobacco and snus products under the Copenhagen, Skoal, Red Seal, and Husky brands
- on! Oral nicotine pouches
It sells its tobacco products primarily to wholesalers, including distributors and large retail organizations, such as chain stores.
Altria owns over 10% of Anheuser-Busch InBev S.A./N.V. (NYSE: BUD), the world’s largest brewer. In March 2008, it spun off its international cigarette business to shareholders.
Ares Capital
The company specializes in financing solutions for the middle market.
This high-yielding business development company (BDC) pays a massive 9.49% dividend. Ares Capital Corp. (NASDAQ: ARCC) specializes in acquisition, recapitalization, mezzanine debt, restructurings, rescue financing, and leveraged buyout transactions of middle-market companies.
It also makes growth capital and general refinancing. It prefers to invest in companies engaged in basic and growth manufacturing, business services, consumer products, health care products and services, and information technology service sectors.
The fund will also consider investments in industries such as:
- Restaurants
- Retail
- Oil and gas
- Technology
It focuses on investments in the Northeast, Mid-Atlantic, Southeast, and Southwest regions from its New York office, the Midwest region from the Chicago office, and the Western region from the Los Angeles office.
The fund typically invests between $20 million and $200 million and a maximum of $400 million in companies with an EBITDA between $10 million and $250 million. It makes debt investments between $10 million and $100 million.
The fund invests through:
- Revolvers,
- First-lien loans
- Warrants
- Unitranche structures
- Second-lien loans
- Mezzanine debt
- Private high yield
- Junior capital
- Subordinated debt
- Non-control preferred and common equity
The fund also selectively considers third-party-led senior and subordinated debt financings and opportunistically finds the purchase of stressed and discounted debt positions.
Ares Capital prefers to be an agent and lead the transactions in which it invests. The fund also seeks board representation in its portfolio companies.
British American Tobacco
This is the largest tobacco company in the world based on net sales.
This European giant continues to print money, has a vast product line, and pays a massive 9.98% dividend.
British American Tobacco PLC (NYSE: BTI) offers:
- Vapor
- Tobacco heating
- Modern oral nicotine products
- Combustible cigarettes
- Traditional oral products, such as snus and moist snuff
The company offers its products under:
- Vuse
- Glo
- Velo
- Grizzly
- Kodiak
- Dunhill
- Kent
- Lucky Strike
- Pall Mall
- Rothmans
- Camel
- Natural American Spirit
- Newport
- Vogue
- Viceroy
- Kool
- Peter Stuyvesant
- Craven A
- State Express 555
- Shuang Xi brands
Frontline
Frontline is the world’s fourth-largest oil tanker shipping company.
While off the radar of most investors, this shipping company could explode higher and pay a massive 12.71% dividend. Frontline PLC (NYSE: FRO) engages in the seaborne transportation of crude oil and oil products worldwide. It owns and operates oil and product tankers.
In a press release earlier this year, the company announced it would sell its five oldest VLCCs (huge crude carriers), built in 2009 and 2010, for an aggregate net sale price of $290 million.
The vessels are expected to be delivered to the new owner during the first quarter of 2024. After repaying existing debt on the vessels, the transaction is expected to generate approximately $207 million in net cash proceeds.
The company expects to record a gain of roughly $68 million to $76 million in the first quarter of 2024, depending on the delivery date of each vessel to the new owner. According to industry standards, the sale is subject to certain closing conditions.
Following the transaction and the completion of the delivery of all 24 VLCCs acquired from Euronav, Frontline’s fleet will consist of:
- 84 vessels comprised of 41 VLCCs
- 25 Suezmax tankers
- 18 LR2/Aframax tankers
MPLX
This company is one of the top holdings in the Alerian MLP energy exchange-traded fund, paying shareholders a strong 8.72% dividend. MPLX L.P. (NYSE: MPLX) is primarily engaged in transporting crude oil and refined products and terminating in the U.S. Midwest and Gulf Coast regions and natural gas gathering and processing in the northeast. Independent US refiner Marathon Petroleum Corp. (NYSE: MPC) formed MPLX.
The company’s assets include:
- Network of crude oil and refined product pipelines
- Inland marine business
- Light-product terminals
- Storage caverns
- Refinery tanks
- Docks,
- Loading racks and associated piping
- Crude and light-product marine terminals
MPLX also owns crude oil and natural gas gathering systems, pipelines, and natural gas and NGL processing and fractionation facilities in key U.S. supply basins.
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