In recent years, many conservative investors relying on fixed-income securities for their income needs have found their buying power cut anywhere from 15% to over 100% on some items, due to inflation. A 5% yield on a bond delivers $500 at par, but when inflation reaches 6%, that yield is actually -1% in terms of what that $500 can actually buy. As such, these investors might wish to consider swapping at least some of their portfolios into other assets with upside potential, like precious metals or high dividend stocks.

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• Risk averse investors whose net yields are shrinking due to inflation might need to switch from certain fixed-income assets to precious metals or dividend stocks, which also have capital appreciation potential.
• The additional passive income from dividend stocks can come in handy for bills or for holiday season gift purchases.
• Passive income is simple- own quality dividends that pay you for doing nothing. Don’t miss out on our brand-new “7 Things I Demand in a Dividend Stock” report. It includes 2 A++ dividend stocks and how to spot future dividend winners that can put your returns on hyperdrive.

Why Dividend Stocks?

In addition to their potential for capital appreciation, dividend stocks with yields a few hundred basis points over inflation are usually not interest rate sensitive, and their dividends are predicated more on their overall business success and board decisions. Their breadth of industry, risk tolerance/volatility, lower cost of admission (versus bonds), and liquidity are all elements in their favor for both sophisticated and neophyte investors alike.

24/7 Wall Street has amassed an enormous database of dividend stocks that have been showcased amply in various configurations to give our readers a range of perspectives. A $12,000 investment split between the following 9 sample stocks would return an annual $1,287,84, based on market prices at the time of this writing. The average cumulative yield on this portfolio would be 10.73%, considerably above inflation for the time being. 

Invesco Mortgage Capital Inc.

Stock: Invesco Mortgage Capital Inc. (NYSE: IVR)

Yield: 17.82%

Shares for $1,200: 133.6

Annual Dividend Amount: $213.84

Invesco Mortgage Capital, Inc. is a Real Estate Investment Trust (REIT) that eschews ownership of brick and mortar properties, instead focusing on investments in mortgage backed securities and other types of real estate collateralized debt instruments. Operating out of Atlanta, GA, Invesco Mortgage Capital was founded in 2008. Publicly traded REITs are required to remit 90% of profits to shareholders, so this has been a strong income stock for years.

Western Asset High Income Fund II Inc.

Stock: Western Asset High Income Fund II Inc. (NYSE: HIX)

Yield: 14.40%

Shares for $1,200: 270.8

Annual Dividend Amount: $172.80

Western Asset High Income Fund II is a closed-end bond fund that gets its fundamental and quantitative analysis edge from its parent, mutual fund behemoth Franklin Templeton. Its offices are in the heart of New York City, right on Park Ave.

The Western Asset High Income Fund II’s $599 billion portfolio holds bonds from transportation. telecom, leisure and midstream energy sectors, as well as sovereign nations. While roughly half of its bonds are from US companies, the rest hail from the UK and Western Europe, as well as from Mexico, Brazil, South Africa, Argentina, Indonesia, Qatar, and the Philippines, to name a few. 

NextEra Energy Partners

Stock: NextEra Energy Partners (NYSE: NEP)

Yield: 12.45%

 Shares for $1,200: 44.6

Annual Dividend Amount: $149.40

Renewable and clean energy sources have expanded globally over the past two decades, supported by green energy initiatives and government subsidies. Juno Beach, FL based NextEra Energy Partners LP acquires, owns, and manages a portfolio of clean energy assets, such as:

• Windmills
• Solar Panels
• Solar energy storage 
• Standalone rechargeable batteries
• Natural gas pipeline assets 

For dividend minded investors, NextEra Energy Partners LP has a 10 year unbroken streak of quarterly dividend payments, and increased its dividend in July, 2024. It also added 3,000 MW of new projects in Q2 2024.

Virtus Convertible & Income Fund

Stock: Virtus Convertible & Income Fund (NYSE: NCV)

Yield: 12.48%

Shares for $1,200: 346.8

Annual Dividend Amount: $149.76

With steadily higher prevailing interest rates, convertible bonds are a popular tool which can act as a hedge to give the owner the option to exercise a conversion to common stock.  If the stock price rises above the strike price to where there is a substantive intrinsic profit, the investor can maximize gains above and beyond the anticipated coupon yield earnings from the bond. 

Such is the strategic premise behind the NY based Virtus Convertible & Income Fund.  Managed by insurer and asset manager Allianz, the fund invests almost exclusively in convertible bonds and, to a lesser extent, high yield bonds. 

Black Stone Minerals, L.P.

Stock: Black Stone Minerals, L.P. (NYSE: BSM)

Yield: 10.04%

Shares for $1,200: 80.10

Annual Dividend Amount:  $120.48

For nearly 150 years, Houston, TX based Black Stone Minerals, L.P. has been in the natural resources business. The company’s origins were focused on the lumber business, but it would subsequently expand to include mineral royalties, along with oil and gas drilling, in the 1960s. By 1998, Black Stone Minerals, L.P. had divested itself of timber, oil, and gas to focus on mineral rights and land acquisitions. It is presently one of the largest mineral rights companies in the US.

Clough Global Opportunities Fund

Stock:  Clough Global Opportunities Fund (NYSE: GLO)

Yield: 10.79%

Shares for $1,200: 224.7

Annual Dividend Amount: $129.48

The Clough Global Opportunities Fund is a closed end fund with $375 million AUM, using quantitative and fundamental analysis for its equity selections (70%) and risk management analysis for its fixed-income picks (5-10%), both investment grade as well as “junk” bonds. Headquartered in Boston, MA, Clough Capital Partners, LP is an asset management firm with closed end funds, ETFs, and hedge fund subsidiaries.

CrossAmerica Partners LP

Stock: CrossAmerica Partners LP (NYSE: CAPL)

Yield: 10.03% 

Shares for $1,200:  57.5

Annual Dividend Amount:  $120.36

CrossAmerica Partners LP is a midstream limited partnership engaged specializing in the wholesale and retail distribution of motor oil products, such as fuel, solvents, lubricants, etc. 

As a wholesaler, CrossAmerica Partners supplies wholesale gasoline to 1,800 stations in the US that are under various brands, including: Exxon, Shell, BP, Citgo, Valero, Sunoco, and others.  

Additionally, CrossAmerica Partners supply fuel, food, car washes, and other convenience products and services to 250 US outlets under retail brands, like Joe’s Kwik Marts, Uni-Mart, One Stop, Zoomerz, and others. The company also has partnerships with individual Dunkin’ Donuts, Arby’s and Subway locations.  

Starwood Property Trust, Inc.

Stock: Starwood Property Trust, Inc. (NYSE: STWD)

Yield: 9.21%

Shares for $1,200: 57.5

Annual Dividend Amount: $110.52

Headquartered in Greenwich, CT, Starwood Property Trust is a REIT with several divisions. 

• #1 is a property segment that acquires and manages commercial and multifamily residential properties. 
• #2 is a lending segment that underwrites, acquires, and manages a variety of mortgage types for commercial and residential properties, as well as for infrastructure. 
• #3 is an investing segment that acquires and manages sub-prime mortgages and real estate related debt for potential re-securitization (which is then sold to Freddie Mac, Fannie Mae, or other third parties).

In recognition of the growth of cloud computing and Artificial Intelligence, Starwood made a deal earlier this year to invest $850 million into Echelon Data Centres. This was added to their $8 billion portfolio in cumulative global data centers. With potential total capacity of up to 1.5 gigawatts, the addition of Echelon makes Starwood one of the largest data center private owners and developers in North America and Europe.  

Delek Logistics Partners, LP

Stock: Delek Logistics Partners, LP (NYSE: DKL)

Yield: 10.10%

Shares for $1,200: 27.3

Annual Dividend Amount: $121.20

Delek Logistics Partners, LP  provides midstream services primarily for its parent, Delek US Holdings, via its network of pipeline access, tankers, trucks, storage facilities and other equipment platforms in Texas, Arkansas, and Tennessee. Delek’s operations are separated into three  departments:

• Gathering and Processing – this division handles pipelines, tankers, recycling, and transport of crude oil and natural gas.
• Wholesale Marketing and Terminaling – this division sells refined products and provides terminal services for third parties for delivery.
• Storage and Transportation – this segment covers tankers, storage facilities, offloading facilities and transportation of crude oil, intermediate, and refined products.

For investors, the company has an unbroken streak of 46 consecutive quarters of dividend payments. 

Name	Yield	Annual Dividend
Invesco Mortgage Capital Inc. (NYSE: IVR)	17.82%	$213.84
Western Asset High Income Fund II Inc. (NYSE: HIX)	14.40%	$172.80
NextEra Energy Partners (NYSE: NEP)	12.45%	$149.40
Virtus Convertible & Income Fund (NYSE: NCV)	12.48%	$149.76
Black Stone Minerals, L.P. (NYSE: BSM)	10.04%	$120.48
Clough Global Opportunities Fund (NYSE: GLO)	10.79%	$129.48
CrossAmerica Partners LP (NYSE: CAPL)	10.03%	$120.36
Starwood Property Trust, Inc. (NYSE: STWD)	9.21%	$110.52
Delek Logistics Partners, LP (NYSE: DKL)	10.10%	$121.20
Annual Dividend Passive Income		$1,287.84

 

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