24/7 Insights

• Dividend stocks historically make up one-third of S&P 500 total returns.
• Stocks that pay dividends outperform non-dividend payers.
• Access 2 legendary, high-yield dividend stocks Wall Street loves.

Since 1926, dividends have contributed approximately 32% of the total return for the S&P 500, while capital appreciations have contributed 68%. Therefore, sustainable dividend income and capital appreciation potential are essential for total return expectations.

A recent study from Hartford Funds, in collaboration with Ned Davis Research, found that dividend stocks delivered an annualized return of 9.18% over the past half-century (1973-2023). Over the same timeline, this was more than double the annualized return for non-payers (3.95%).

For younger investors or those on a tight budget, investing to generate consistent passive income can be daunting because many top dividend stocks trade anywhere from $25 to over $100 per share. Realizing any significant return on investment can be challenging with a small investing capital base of $1,500.

We screened our 24/7 Wall St. dividend income database, looking for solid, lower-priced stocks that pay dependable dividends that investors can purchase and start to generate positive total returns.

Why are we covering this?

Investing at any age requires a starting point, and many individuals have limited funds to dedicate to the stock market at the beginning of their investment journey. If that is true, looking for stocks that have consistently paid dividends over the years but are lower priced than large-cap blue-chip companies makes sense.

Arbor Realty Trust

This company trades at a ridiculous eight times estimated 2024 earnings and pays a massive 13.40% dividend which was raised twice in 2023. Arbor Realty Trust (NYSE: ABR) invests in a diversified portfolio of structured finance assets in the multifamily, single-family rental, and commercial real estate markets in the United States.

The company operates in two segments:

• Structured Business 
• Agency Business

Arbor Realty Trust primarily invests in:

• Bridge and mezzanine loans, including junior participating interests in first mortgages
• Preferred and direct equity and real estate-related joint ventures
• Real estate-related notes
• Various mortgage-related securities

The company offers:

• Bridge financing products to borrowers who seek short-term capital to be used in an acquisition of property;
• Financing by making preferred equity investments in entities that directly or indirectly own real property;
• Mezzanine financing in the form of loans that are subordinate to a conventional first mortgage loan and senior to the borrower’s equity in a transaction;
• Junior participation financing in the form of a junior participating interest in the senior debt and
• Financing products to borrowers seeking conventional, workforce, and affordable single-family housing.

Further, it underwrites, originates, sells, and services multifamily mortgage loans through conduit/commercial mortgage-backed securities programs.

Barings BDC

This business development company is an industry leader and pays a massive 10.86% dividend. Barings BDC Inc. (NYSE: BBDC) is a publicly traded, externally managed investment company elected to be treated as a business development company under the Investment Company Act 1940.

It seeks to invest primarily in senior secured loans, first lien debt, unitranche, second lien debt, subordinated debt, equity co-investments, and senior secured private debt investments in private middle-market companies operating across various industries.

It specializes in :

• Mezzanine
• Leveraged buyouts
• Management buyouts
• ESOPs
• Change of control transactions
• Acquisition financings
• Growth financing
• Recapitalizations in lower-middle market, mature, and later-stage companies

It invests in manufacturing and distribution, business services and technology, transportation and logistics, and consumer products and services. It invests in the United States. It invests in companies with EBITDA of $10 million to $75 million, typically in private equity sponsor-backed.

Energy Transfer

The top master limited partnership is a safe way for investors looking for energy exposure and income, as the company pays a massive 7.83% distribution. Energy Transfer L.P. (NYSE: ET) owns and operates one of the largest and most diversified portfolios of energy assets in the United States, with a strategic footprint in all of the major domestic production basins.

The company is a publicly traded limited partnership with core operations that include:

• Complementary natural gas midstream, intrastate, and interstate transportation and storage assets
• Crude oil, natural gas liquids (NGL), and refined product transportation and terminalling assets
• NGL fractionation
• Various acquisition and marketing assets

After purchasing Enable Partners in December 2021, Energy Transfer owns and operates more than 114,000 miles of pipelines and related assets in 41 states, covering all of the major U.S. producing regions and markets. This further solidifies its leadership position in the midstream sector.

Through its ownership of Energy Transfer Operating, L.P., formerly known as Energy Transfer Partners, L.P., the company also owns Lake Charles LNG Company, as well as the general partner interests, the incentive distribution rights, and 28.5 million standard units of Sunoco L.P. (NYSE: SUN), and the public partner interests and 39.7 million standard units of USA Compression Partners L.P. (NYSE: USAC).

Healthcare Realty Trust

This Medical REIT offers investors a strong 8.08% dividend. Healthcare Realty Trust Inc. (NYSE: HR) is a real estate investment trust (REIT) that owns and operates medical outpatient buildings primarily around market-leading hospital campuses.

The company selectively grows its portfolio through property acquisition and development. As the first and largest REIT specializing in medical outpatient buildings, Healthcare Realty’s portfolio includes over 700 properties totaling over 40 million square feet concentrated in 15 growth markets.

The company’s board of directors recently authorized the repurchase of up to $500.0 million of outstanding shares of the Company’s common stock. In April, the company repurchased 3.0 million shares totaling $41.7 million at an average price of $14.07 per share.

In addition, Healthcare Realty Trust announced a $383 million joint venture deal with KKR at a 6.6% cap rate with expected proceeds of $300 million.

TFS Financial

This under-the-radar financial stock holds immense potential for total returns and offers a robust 8.73% dividend. As a retail consumer banking services provider in the United States, TFS Financial Corp. (NASDAQ: TFSL) is a very promising investment opportunity.

Its deposit products include:

• Savings
• Money market
• Checking
• Individual retirement, and other qualified plan accounts
• Certificates of deposit

The company also provides:

• Residential real estate mortgage loans
• Residential construction loans
• Home equity loans
• Lines of credit
• Purchase mortgages
• First mortgage refinance loans

In addition, it offers escrow and settlement services. The company provides its products and services through its main office in Cleveland, Ohio, and multiple full-service branches and loan production offices throughout Ohio and Florida.

Vale

This excellent commodity play pays investors a stellar 13.94% dividend. Vale S.A. (NYSE: VALE) and its subsidiaries produce and sell iron ore and iron ore pellets as raw materials in steelmaking in Brazil and internationally.

The company operates through the Iron Solutions and Energy Transition Materials segments.

The Iron Solutions segment produces and extracts iron ore, pellets, manganese, and other ferrous products and provides related logistic services.

The Energy Transition Materials segment produces and extracts nickel, which is used to produce stainless steel, electric vehicles, and metal alloys, and its by-products, such as gold, silver, cobalt, precious metals, platinum, and others.

It also produces and extracts copper, which is used in the construction sector to produce pipes and electrical wires.

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