11 Highest Paying Dividend Stocks | Ultimate 2022 Dividend List

hey bowtie nation joseph holger and stock market volatility is back after nearly a year without a correction we've had three big sell-offs since february and two just in the past two months 2022 looks like it could be a dangerous one for investors in fact morgan stanley has set a 2022 target for the s p 500 of just 4 400. that's more than 5 percent lower than where the market is right now that could mean negative returns on stocks for the entire year it's one of the reasons why i love dividend investing because even if stock prices fall that dividend payment will always be a positive return in this video i'll help you create a dividend stocks portfolio that will guarantee you have returns to book in 2022 no matter what price is due we'll create the dividend stocks list with the highest paying stock in each sector giving you a diversified portfolio safe from a market crash stick around because i'll also show you how to find more dividend stocks and how to analyze dividend paying companies so you only invest in the very best you know we can't get started though without that special shout out to all you out there in the nation thank you for spending a part of your day to be here if you're not part of that community yet just click that little red subscribe button it's free and you'll never miss an episode now we're going to get started with the highest paying tech stocks but i want to explain why i'm picking a dividend stock from each sector why not just invest in the highest paying dividend stocks period and the reason is to create a list of dividend stocks that's going to protect your portfolio from a crash in any single sector with this dividend portfolio i want to give you a diversified list of stocks that are going to pay your bills regardless of which sector of the economy outperforms next year so let's get into that list and i'll show you the stock screener i used and how to find these in a minute first though the highest paying dividend stock in the tech sector international business machines ticker ibm with its 5.1 dividend yield now i'm going to take you through some of the fundamentals some of the things i look for in dividend stocks here just to make sure that this is the kind of stock that you want in your portfolio at that 5.1 dividend yield is very strong the highest in the tech sector but we want to check the payout ratio as well and uh for those of you that don't know the payout ratio is the percentage of its net income so the percentage of profits the company is paying out to cover that dividend and this is very important uh here we see it's 126 percent so we would want to check that but what that means is it is paying out the dividend more more dividends than it is making in profits uh so obviously that's not something that's sustainable we would have to see earnings increase at ibm to be able to just uh just to sustain that dividend so this is a warning sign for a dividend cut anytime a company is paying out a higher payout ratio uh higher than 100 percent so we would want to check that out and double check but generally uh ibm can cover its dividends what we would want to do is go to the uh we go to this historical datas tab change this time period to five years and then to show dividends and we can see the dividend history of this stock and what we want to look for is not only the this has a high dividend yield but it's increasing that dividend payment okay it's got a good trend good momentum in that dividend payment and we can see that uh it just increased the dividend payment to 1.64 per share here in november of 2021 and it's got a good history of of increasing that dividend all the way from 1.33 in per share in 2017. so even though that payout ratio is high it is over 100 i would not worry about the dividend uh you know right here especially since they just increased their increase their dividend the board of directors the company would not have increased that dividend if they were not confident that they could uh they could pay that dividend in the future so that's just something you want to check out with the payout ratio and the dividend growth history we'll also look at some of the valuation measures here so we'll look at a price to sales 1.5 times on a price to sales basis that is in value territory in fact i usually like to see that under one times but you know 1.5 times on a price to sales basis is not bad it's not it's not too expensive we would also want to look at some of these other things that we talk about here on the channel this operating margin for all you out there in the bowtie nation you know this is my favorite my single favorite ratio this operating margin this is the core profitability of the company and how effective management is at turning those sales into operating profits so 12 here and what we would want to do is check this against other large tech companies you know in ibm's industry just to see how well it's doing making sure that we're investing in truly the best management out there so 12 operating margin is actually pretty good for a a mature company in its industry we can also look at some other things here the balance sheet now obviously ibm is a very strong cash flow company is has operating cash flow of 16 billion dollars a year so i'm not really worried about the debt here it does have eight billion dollars in cash on the balance sheet against 59 billion dollars in debt that it owes so a huge debt a huge huge debt owed on this company but i'm not worried about that because it is making so much cash every single year that it's going to be able to service that debt and not have a problem and we can go up here and just kind of check out the what analysts are are estimating for the stock we can look at this one-year target estimate so now yahoo finance surveys the analysts covering the stock averages out their target estimates and here you get a 145 dollar per share uh target price for international business machines for ibm trading right now at about a hundred and thirty dollars per share so that's not a huge uh that's not a huge upside as far as price 145 divided by 130 is about a 11 and a half percent upside to the target price but remember that's still on top of the 5.1 percent dividend uh dividend yield okay you've got a stock with a strong dividend growth history strong dividend yield right now and a potential eleven and a half percent return just on that average target estimate so a very good a very good stock in the tech sector for dividends here next year the highest dividend yield in the communication services sector is a stock i recently invested fourteen thousand dollars in it for 400 shares at t ticker t for its 8.7 dividend yield and now all you out there in the nation you know i have not always been a fan of at t in fact a couple of years ago i did a dividend cuts video warning people that this dividend the dividend for the stock could be cut was in danger of being cut i didn't like the acquisition strategy it was using some of the companies it was buying and i warned investors against it of course we can zoom out here on the stock price and see what it's done over the past few years that was a 2018 video the shares were at about 32 dollars around that time and have since fallen to 24 but this stock is now in deep value territory it's paying a very strong dividend uh they have warned that uh it could cut that dividend or or bring that down a little bit but eight and a half percent current dividend even if they cut it by uh by half that's still a four and a quarter percent dividend yield as well as some very strong upside uh price potential i think in these shares so we'll go through and look at some of these again eight and a half percent dividend yield uh now now it may be cut that might be cut we don't know when but uh but still eight and a half percent while well before it's cut and then you know it's still going to be a high i bet it's still going to be at least five percent dividend yield even after they cut it we can look at the statistics and look at the payout ratio here now the payout ratio okay 1600 that is obviously not correct so what we would want to do is uh go through and actually double check this and this is something you have to do a lot of times on some of this data just to make sure that they're measuring it right so you can go here to the financials the financial statements you can go to the cash flow statement and this is going to show you how much the company is paying out in dividends so if you look at financing cash flow that's uh that's got the dividends in there and then you can look so cash flow from financing activities uh there's net issuance of stock net common stock preferred cash dividends paid okay so the company paid out in the last year it has paid out 15 billion dollars in dividends so it's paid out 15 billion dollars in dividends we can come come here to the uh income statement and look at what the earnings were okay because remember that payout ratio is the dividends paid divided by net income okay how much of those how much is that dividend relative to the profits of the company how much of profits is going to pay that dividend to meet that dividend uh commitment so we had uh 15 billion dollars and we do see that uh that net income to common shareholders net income to common shareholders that's your earnings that's your that's your profit for the company that was just under a billion dollars over the last year so they are paying out 16 billion or 50 was that 15 billion dollars in dividends against 1 billion dollars in uh you know in that so 15 billion yep so we had we did have 15 times 15 billion dollars in dividends paid out over a billion dollars in earnings as 15 times so that is extremely high that is obviously you know why they're talking about a dividend cut and to protect that that cash flow so i would not be surprised at all if we did get a dividend cut in a t but at this point you know you see you see the stock chart you see how much these the stock price has fallen it is building in that that possibility that probability of a dividend cut so i think even one once we do get a dividend cut you're not going to see the stock price fall that much because it's really already priced into that we can look at the uh the dividend growth history and what it's done so we can look at five years of dividend history here and see that they uh you know they've kept the dividend at 52 cents a share since since the beginning of 2020 okay so really you know keeping that dividend where it was to protect cash flow over this pandemic years i really that uncertainty during the pandemic but before that we did have fairly fairly good dividend growth history you know fairly stable dividend growth history from 2017 of 49 cents per share each quarter uh and up to you know 52 cents now so in the past a strong dividend growth it's probably going to cut a little bit just to protect cash flow over the next couple years till it gets back on its feet but i think after that after a year or so it should get back up back into that dividend growth now what i'm looking at here is really the valuation of this company price to sales of 0.95 times okay so it is trading for less than the annual sales the company is booking you know it's got very strong fundamentals operating margin of 18.6 percent okay so uh management is doing what it needs to do to convert those sales into operating profits revenue growth was weak revenue growth was negative five percent on a year-over-year basis in the last quarter so i would want to check that i can go here to financials and i can look at the total revenue so the income statement and the total revenue we can see it was and sixty billion dollars in 2017 and that has actually risen fairly stable stably 160 billion in 2017 all the way up to 181 billion in 2019 it did take a big hit last year during the pandemic to 171 billion but has since rebounded it's since 173 and a half billion dollars over the last 12 months so it is seeing that increase in uh you know in in sales and what i really like about uh about att where where i think it can really improve on these uh you know on these numbers and really surprise the market is if you look at uh some of these fundamentals at these financial statements you'll see a big reason why their earnings were so low over this last year is because it paid out so much money to acquire that bandwidth for 5g those auctions uh that bandwidth license for 5g auctions was extremely expensive on these telecom companies so it had artificially low earnings because it had to pay out all that all that expense right well that's not going to happen that's not going to happen going forward it's already bought those at those auction prices it's already bought those bandwidths and those licenses and uh you know so it's not going to have the capital expenditures and the expense going forward it's going to have the revenue from 5g as that builds so i think you start seeing the 5g the the revenue from 5g the sales for at t start heading higher you start seeing those expenses those annual expenses come down and you're going to start seeing better profitability and and earnings on this company and if you look at the you look at the the one-year target estimate just 30 on the share so you know uh and maybe analysts haven't caught on to that that idea uh 30 divided by 24 that is still a 25 upside potential on the shares right now but i think this one goes even higher as we start seeing those earnings improve you know as 5g builds and they don't have those expenses so again you know a dividend cut is possible is probable but i think this is still going to be a good 5 dividend yield at least as well as upside price potential we're just getting started on our dividends list but i want to show you how i found these stocks and here i'll be using the screener on morningstar but you can do this on any investing app first i'm going to filter for only companies above a billion dollar market cap now that's the size of the company it's not a hard fast rule but i want to filter out those smaller penny stocks just leaving the dividend-paying companies with the size to survive whatever 2022 brings next i'm also going to filter only for domestic companies and this is one you can play around with but but i'm just focusing here on us-based companies for this list finally here we'll go to the stock sector criteria and start with the first one here only those companies in basic materials now you can see that leaves us with 79 companies in this sector and if we sort this by the dividend yield column we see the highest paying is southern copper corporation with a 5.4 percent dividend and we can always double check that number by clicking through to the stock page now you can play around with these filters here and later i'll show you how to narrow your dividend list but the focus here is going to be in finding those highest yielding stocks in each sector for that diversified portfolio back to our list though and the top dividend stock in real estate is two harbors investment ticker two with an eleven point four percent dividend yield now two harbors is a mortgage reit an em rate which means it borrows on short-term rates it borrows money on short-term rates levers that up four and five percent and then buys mortgage investments uh at those longer term rates so what you're going to see with a lot of these is it is very sensitive to interest rates and can get hurt during it with interest rates you'll see here this chart of the year it is it has suffered this year as those interest rates on the short term uh you know on the short term part of the yield curve have gone up because what happens is if interest rates on the short end of the curve you know those those month uh month-to-month interest rates the two-year the three-year interest rates if those go up more than those long-term rates then it's borrowing costs is going up but it's it's uh it's the money it makes on those longer-term loans that it buys that it invests in is are not going up quite as much okay so it has profitability has come down for these but this is still a very good long-term stock 11.4 dividend yield and and you'll see that in a lot of these statistics it is very strong cash flow company is a little bit smaller at just 2.8 2.08 billion dollars but very strong operating margins 77 operating margin and again you want to compare that against other emirates against other other companies within its sector within its industry uh operating cash flow of 633 million dollars so it is very strong positive operating cash flow so i wouldn't worry too much about debt and some of these other some of those other statistics now the payout ratio for this uh if we can find okay so payout ratio is just 57 so that obviously it has it has a much more room to increase that before it starts getting into into trouble before we start seeing more of that income going to the the dividend yield so that 11.4 uh dividend is safe we can check the dividend history here and change this to five years look at the dividends only so we can see that it has uh it has increased its dividend just recently just uh just december of last year to 17 cents a share that's paid on a quarterly basis uh it did decrease back in 2019 so you know after or it increa decreased in april of 2020 during the pandemic uh the management did decrease the the dividend to protect cash flow but here it looks like it's going on the way back up and here we can check out the one-year target estimate as six dollars and fifty-four cents average target from analysts so if we take that divided by the 596 uh it's only nine point seven percent upside potential to that average target analyst or that average target estimate not a huge upside return but again with a lot of these very high yield dividend stocks that's what you're going to see you're not going to see a ton of price appreciation in the stock because they're paying out so much in dividend yield you know these reits these real estate investment trusts they pay out 90 of their income in that dividend so they're not holding a whole lot back for growth that's why you only see this 10 upside potential to that average target asked average target estimate but you still get that 11.4 dividend yield in the material sector is the copper miner a theme i think could really take off on growth in electric vehicles and here is southern copper corporation took our scco with its 6.75 dividend yield now as a copper miner it's a got a lot of its a a lot of its assets in mexico and uh and chile not the most stable jurisdictions but you're going to see that for a lot of miners especially copper miners it's mostly in latin america and that kind of thing what i really like about copper miners though and all of these minerals and metals that are going into electric vehicles we could see a supply deficit i did a video on this just a couple of weeks ago we could see a supply deficit in copper over the next couple of years because there is three times more copper used in electric vehicles than there is used in the traditional combustion engine vehicles okay so we're going to see a huge demand spike in copper demand just for these electric vehicles being produced over the next few years and that's going to that's going to increase copper prices and could make these these copper miners just take off we can look at some of the statistics here yield of 6.8 percent almost so very strong yield among among copper price copper miners we can look at the payout ratio so how much is it paying it's only paying 66 uh you know of its income to satisfy that dividend so again what you want to do with a lot of these is you want to compare them against other others in their industry so i would want to go to other minor stocks compare that payout ratio see what they're doing somebody paying a very low payout ratio 66 percent it's holding 30 34 of its net income back for growth so it could be growing the company uh well it could be growing that stock price or it just could be leaving room to uh to increase that dividend what we would want to do here is check the dividend growth rate to see really that it comes its commitment to that dividend and to the dividend growth so we change that to five years apply and look so it's recently just in november of 2021 just last month it has increased the dividend to a dollar per share right and that is paid out on a quarterly basis and you can see this is this has really really increased the dividend i mean if you go back to five years it was only paying out an 8 cents per share dividend and it has grown that to a dollar per share so huge dividend growth in this stock it's only still only paying out 66 percent of its net income of its earnings to satisfy that dividend so there is a lot more dividend growth on the way for this stock and as well as those uh those those higher copper prices and the sales growth in this company we can take a look at some of the other valuation metrics uh only trading at 4.5 times on a price to sales basis so a little bit higher than i usually like to see trailing p e of almost 15 times on a price to earnings basis again we would want to check that against other miners and and other stocks a 53.8 operating margin though that is superb that is excellent to be able to produce operating profits of a 53 percent of of revenue so management is doing a very good job here turning those sales into operating profits and into net income we can see here quarterly revenue growth in the last quarter it booked 25.9 so 26 almost 26 revenue growth on a year-over-year basis and that is a lot of that that higher copper prices because we're seeing that demand already come through for those electric vehicles we're seeing that demand growth and we're seeing those higher copper prices so revenue for these copper miners is taking off and i think that only improves over the over the next several years we can take a look here at the the year target price estimate now here 61.87 per share is the average analyst target estimate that is only a couple of percent over the 59 per share target or a stock price right now so you know either analysts don't think that this stock is going up much more or they just haven't caught on to the idea that copper prices are going to stay higher for longer and this company is going to uh going to just keep on increasing that dividend i think it's going to do the latter there i think it's going to is going to keep on increasing that dividend i think the the environment is very good for these copper companies and uh and i think this this one-year target estimate this target price for the shares should be much higher than that 62 per share we've got seven more dividend stocks left but first i want to personally invite you to get the weekly bow tie our free weekly newsletter with all the stock market news trends and strategies you need to know about it's absolutely free just something i like to do for everyone out there in the community so so look for that sign up link in the video description below next on our dividend stocks list is kind of a different one in the industrial sector we have icon enterprises ticker iep for a 16 uh dividend yield and icon enterprise is obviously the the brainchild of carl icon doing a lot of that that buyout and acquisitions but it also does run its own businesses especially in the energy space so it's kind of that conglomerate energy company we can check out some of the uh we can check out the yields 16 dividend yield which i think that's probably going to be fairly volatile i think this company is paying out a lot of its income a lot of its earnings from quarter to quarter so it's not holding much back for growth and you know it's probably going to be decreasing and increasing the the dividend as those earnings come in and we can check that out we can check that out with the historical data here to see what kind of earnings growth or dividends growth we've seen dividends and then apply so you can see it's you see it's actually held a two dollar per share dividend uh since 2019. so that is a very positive sign that it didn't have to decrease that dividend during the pandemic it uh it felt confident enough in its cash flow and we can see that it has increased the dividend actually it's increased it from a dollar fifty a share on a quarterly basis there in 2017 increased it up to two dollars and the fact that it has not increased the dividend since march of 2019 tells me that uh there could be a dividend increase uh coming in the future you know um it's gone uh it's gone almost three years two years uh without a dividend increase in the past it increased it much more frequently and increased it each year so that dividend is uh you know 16 dividend yield very high already uh but it could actually be uh could actually be boosted here in the near future we can look at the statistics here and look at the payout ratio so the payout ratio is actually quite high so maybe we're not getting that dividend that dividend increase we would want to look at the financials here look to see what is happening with the earnings and with the the sales so we do see that it has come down sales have come down from 19 billion in 2017 uh you know all the way down to 7 billion last year but it has rebounded from the pandemic from last year from 7.4 billion dollars up to almost 10 billion over the last uh 12 months over the last year it has come up to 12 or 10 billion so it is rebounding there i would want to check to see why it came down so much from 19 billion in 2017 down to 10 billion in 2019 uh probably a lot of divestitures i imagine they were probably selling a lot of those businesses i mean icon isn't generally known for managing businesses on a long term basis he's going to want to raid those companies turn them around and then sell them off again so a lot of times these sales are going to be inconsistent but if you look here at the net income available to common stockholders so this is the earnings and this is where you see that problem this is where you see the uh you know the earnings problem it's paying out so much in dividends it probably does have a very good cash reserve to cover the dividends right now but i would want to be making sure that this uh this net income or this this net income to available to common stockholders does start to go up so it does it can uh you know so it can cover that that that dividend if we look here at the balance sheet just for uh just for proof of that it's got two billion dollars in cash on the balance sheet so that is obviously going to give it some stability there it's going to be able to cover that dividend for quite some time before it has to either cut or or do something about that if we go up here to uh the target estimate now we do see that analysts don't have a target estimate for this stock just yet or or yahoo finance is not uh is not surveying any analysts that have a target estimate but uh fifty dollars per share sixteen percent dividend yield is is one you wanna watch our top dividend stock in utilities is going to be ppl corporation ticker ppl and it's 5.6 dividend yield now utilities are always very high dividend payers and just actually very strong stable cash flow companies and with ppl you get a little bit more diversity a little bit more geographic diversification than you get with other utilities ppl actually does have business in the united kingdom it has utilities regulated utilities there in the uk as well as in kentucky and the eastern you know the eastern side of the us so you get a little bit more diversification as far as geography than you do with with most uh most utilities which only operate maybe here in the united states or in one region of the united states uh it does have a 5.6 percent dividend yield which is higher than most uh most utility stocks we can check the payout ratio to see how much of its income it's paying out now this says it's paying out 146 percent of the income to cover that dividend so again that's something we would want to check anything paying out more than a hundred percent of its income to to cover that dividend obviously something that cannot be sustained uh for a long time so now if we do look at this income statement the financials look at the income statement and we come down here the net income to common shareholders we can see that over the past year it has produced a negative 1.3 billion dollars in uh in earnings in in net income so that is definitely a warning sign that is definitely something we would want to look into why is it uh reporting negative earnings especially as this sales number as this top line is actually looking pretty strong it was seven and a half billion in 2017 uh went up to 7.7 billion before the pandemic came down just very slightly to 7.6 billion in 2020 and then over the last 12 months is rebounded up to 7.8 billion so sales are there it has increased its sales at that top line but what i think we'll see here probably is cost of revenue did jump quite a bit you know cost of revenue is up to 3.4 billion uh and then the operating expenses is uh quite a bit higher 1.6 billion you know versus 1.3 billion in 2017. so costs have gone up quite a bit it hasn't been able to pass those costs on to on to customers and that has resulted in that that lower operating income we would want to look at some of these others net net non-operating income so this this is what's really been hurting them here is this uh interest expense so the interest expense on the debt has increased to 1.3 billion dollars that's what's hurting them that's what's keeping these uh these uh this earnings down so we would want to look at the balance sheet we would want to look at how much debt the company has and if it is cash flowing well enough to be able to pay off that debt so we can look at the statistics here we can come down here now normally we wouldn't be too worried about debt for a utilities company because it is a has a monopoly in that regulated market you know the the the local jurisdictions the regions where it operates they set the prices they tell them okay how much profit you can make and it is is basically a monopoly in that area so they're strong cash flow companies you can see here that uh the company has produced 2.5 billion dollars in operating cash flow over the last year that is core operational cash flow and that is that is extremely strong uh enough to to pay this 11.2 billion dollars it's got 4.7 billion dollars in cash so i'm not so quite so concerned about the debt you know the the interest on that debt is uh is getting a little high and is is turning into those negative earnings but i think it can i think it can turn that around with that that operating cash flow if we go here to see uh just what analysts are looking at again like we saw with that last stock only a thirty one dollar thirty one dollars and twenty three cents average target estimate on a twenty nine dollar stock so maybe about a three percent return uh expectation on that stock on top of the five point six percent dividend yield but but for utility companies these are going to be your safety stocks your stocks that you go to when um you know maybe when the rest of the market is looking a little wobbly you're still going to get that 5.6 dividend yield you're going to get some upside price appreciation and i think you're going to do well with with ppl i'm highlighting one of my favorite sectors next but i want to open this up and get your feedback tech and growth stocks have worked really well over the past two years like ridiculously well with the 2022 stock market looking a little wobbly though i'm shifting to those dividend stocks for those safer returns but but what do you think will growth continue to outperform or will it be value in those dividend stocks for the win so scroll down and let me know in the comments dividend versus growth in 2022. healthcare is one of my favorite sectors for the next few years and we have here healthcare services group ticker hcsg with its 5.1 dividend yield now healthcare services a lot of these hospitals these healthcare facilities have really taken a hit on the pandemic they've been in crisis mode just serving the their coveted patients and i've had to come back pull back on a lot of these elective surgeries these elective procedures that are actually higher profit margin procedures so profitability margins have come down for these facilities and that's hit this healthcare services group because they provide a lot of the environmental services for these company for these hospitals they provide janitors they provide cleaning and supplies other you know other services that go into uh to help these hospitals operate so obviously you know if a hospital is seeing its profitability come down it's gonna pull back a little bit on those services it's gonna try getting uh you know try lowering what it's paying for those services and maybe lower the amount of services it uses so obviously a a tough environment for these kinds of healthcare facilities stocks but again you know once we get back to some sense of normal once we get back to just that trend in a higher health care services demand okay aging demographic more people getting older more people are going to be using hospitals and using healthcare services i think there's a lot of revenue growth uh left in these companies 5.1 percent dividend yield one of the highest among uh you know among stocks definitely the highest in that that healthcare sector and we can look here at the the payout ratio to see how much is paying pay ratio is just 87 so it is it is in that safe zone under 100 uh within within uh you know its net income we can look here at the dividend growth go here to change five years and the dividends okay and so we do see that it just increased the dividend to 21 cents a share that's on a quarterly basis paid out four times a year 21 cents a share in november and if you scroll down here you can see it's been fairly consistent actually uh in in fact uh increasing its dividend almost every quarter so i see it's it's increased its dividend every quarter over the last five years from 2017 it was paying 18.6 cents per share every four quarters uh all the way to 21 cents so not increasing it a lot but increasing it regularly every single quarter that's a great sign a great commitment to their dividend we can look at some of these other uh you know uh price to sales of just 0.76 percent or 0.76 times on a price to sales basis so definitely within that value stock territory as well this balance sheet looks very strong to me it's got 205 million dollars in cash cash reserves on the balance sheet and just 18 million dollars in debt so 180 million dollars in net cash on the on the balance sheet covering it for you know as long as the pandemic lasts and and its revenue growth maybe not not quite as as strong as we'd like to see uh so just 200 205 million dollars in cash against just 18 million dollars in debt uh revenue growth has been slow as negative over the last year and we can take a look at that we can go here the financials look at this income statement and it has come down it came down from 1.8 billion dollars in 2017 up to 2 billion 2018 back down to 1.8 billion so it was a little bit a little bit weaker there even before the pandemic got hit further in the pandemic 1.7 billion dollars last year and uh and has fallen further as that pandemic keeps on going and as those those facilities really have to pull back on the services that they pay for 106 or 1.6 billion dollars over the last uh 12 months in in revenue but we do see that it is still producing uh positive earnings positive net income so that's always a good sign that it is still it is still net income positive it's a 5.1 operating margin 15 return on equity so management's doing a great job of turning those sales even though though that revenue those sales are decreased decreasing management is still doing a great job of turning that into operating profits and and net income for investors we can go back up here and check out the price the price target from analysts and analysts here have an average price target of 23 dollars per share that's six dollars over the current price so that's going to be that's going to be a fairly strong uh here we go six divided by 17. there's a 35 percent upside upside price potential to that average target from analysts in the energy space the top paying dividend stock usa compression partners ticker usac and a 14.1 dividend yield now usac is actually in one of the parts of the energy market that has been a little weaker over the past year even despite those surging energy prices up to 72 dollars a barrel for oil prices recently despite that a lot of companies are pulling back on that uh you know on that capital expenditure on those investment in their fields they're they're looking out further they're seeing that oil demand is going to come down in the future with renewables with the electric vehicles with all these other alternatives and so they're not investing quite as much in the kind of the kind of compression services the kind of equipment and uh and things that is provided by companies like u.s compression partners so revenue growth is probably going to be a little bit lower but it's still very very good cash flow company uh 14.1 percent dividend yield is something you just can't ignore and you got to look further into it let's go to the dividend growth history first here and we'll go to five years and we'll see that it it is held really stable at 52. or 52 cents uh per share all the way back to 2017 so it does have that commitment to holding the shares the dividend at that uh 52 cents per share we can go to see how much of the how much of the income it's paying out now it says an n a for payout ratio that probably means the income is negative so we want to check that we can scroll down here on the on the home page and see that it has been reporting negative earnings okay so negative income i had actually missed earnings expectations last quarter and for three of the last four quarters it has missed earnings expectations so i imagine that that is weighing on the stock that is holding the stock price down and really contributing to that that dividend yield uh because the dividend hasn't moved even though the stock price has come down a little bit so it is negative earnings we would want to check out uh to see you know in that in that market but even though companies are pulling back on their spending in their fields this is still this is still going to be a fairly strong uh growth you know growth uh in revenues for this company i think because you know they still need those compression services for those fields so even if they're not trying to grow their production a lot of these oil companies they're still going to be paying for these compression services so i don't think that this is a quite as dire as as maybe those earnings those earnings look we can check out the balance sheet which obviously any company that that is having that earnings problem that that earnings weakness you always want to check out the balance sheet to make sure they have the cash on hand to survive those that near-term economic pain okay so if we come down here to the balance sheet it has 250 000 in cash so a little low it's only a one and a half billion dollar company so 250 000 probably will uh will hold it for quite a while it is still a positive operating cash flow and positive levered free cash flow so it is still producing you know 270 million dollars in free cash flow every year so not quite too worried about this 250 000 in cash uh on the balance sheet i would like to see it have more cash reserves just to uh you know just to just to be a little bit more stable a little bit more uncert or a little bit more certain there but since it is a positive operating cash flow positive free cash flow company i'm not quite as worried about that it does have two billion dollars in debt uh so so i would like to see them pay down some of that as well quarterly revenue growth is weak one point nine percent like i said a lot of these energy companies they completely stopped uh you know spending on these equipment service and services in during the pandemic when oil prices fell off a cliff and they haven't really gotten back to that level of uh you know of spending just quite yet either so we can look at the total revenue and actually total revenue has done pretty well you know revenue was up from 280 million dollars in 2017 boomed up to 700 million dollars in 2019 it did fall off last year as we saw with the uh the pandemic and it has fallen still further a little bit to 630 million dollars in the last 12 months but uh still very strong three-year revenue growth four-year revenue growth you know since 2017. we can look at the average analyst target and for a for a stock paying a 14 percent dividend yield i wouldn't expect much much upside price appreciation but we still have a one-year target estimate for 17 a share over the 15 share price so that's going to be a 13 upside uh upside potential on the stock so 13 upside potential along with that 14.1 dividend yield we've still got three of the highest paying dividend stocks in our list but i want to give you a little more in that how to analyze these for your portfolio now understand we're just using the very basic dividend screener for this list but basically just looking for the highest yield in each sector of the economy now that doesn't necessarily make it the best stock to buy though those of you in the nation know we do a lot of that fundamental analysis to pick the best stocks here on the channel but for this i want to make it really easy on you and get back to our list so instead of digging into the payout ratio the sales growth and all the other things that you can do to look at these types of stocks i just want to focus on two factors to narrow down your dividend stocks first is to make sure the company has increased its dividend payment regularly in the past for this you can look here on yahoo finance and go to the historical data tab for the stock here you can change the time frame to five years and then change this to show dividends only and looking over the dividend history you'll be able to see how regularly the dividend has been increased and by how much and next is another easy one making sure the stock price hasn't fallen too much and wiped out your dividend returns and for this it's just a matter of looking at the price chart now granted even some of the high yielding stocks in this list haven't seen the price do that much but but ideally you don't want to be losing money on the stock while you hold the shares a sector i think could do really well over the next year financials and the top dividend stock here is fskr capital ticker fsk and it's 12 dividend yield now fsk is a business development corporation which means it kind of acts as a banker to a lot of small and mid-sized companies companies that are too large to go to just their their small local community bank or regional bank for money but not quite large enough to tap the capital markets with a share issuance or or something like that so it acts as a acts as a banker and equity investor in a lot of these mid-size companies pays out a great dividend uh dividend yield and uh and and really we'll check the the historical data the dividend growth here and usually these pay out uh very strong dividends and very have a strong commitment to those dividends which is always really important for dividend stocks so you can see it did decrease the dividend uh just this last uh in december uh from 65 cents paid out in december in september to 62 cents paid out in december that's a quarterly dividend and what you'll find with a lot of these business development corporations is they pay out almost all their net income as a dividend so each each quarter they they pay out almost all of the the income the profits that they've made as that dividend so that results in a very kind of a volatile dividend okay uh you know one quarter might be excellent profits very high uh high net income and they they're going to pay out most of that as the dividend the dividend yield shoots up they have a very strong dividend payment the next quarter net income and earnings might not be quite as high so they have do have to cut that dividend marginally and you can see here that it has cut so it cut from 89 cents in 2017 down to 76 cents it's since cut it to a 65 cents a share but still 62 cents a share on a quarterly basis for this stock is still a strong 12 dividend yield uh one year target estimate of twenty two dollar twenty two dollars a share is about ten percent over the current share price so not only are you looking at a twelve percent dividend yield but also a ten percent upside on the shares we can look at some of these other statistics here as far as the um the debt and the uh you know and the and the price to sales price to sales ratio of 2.4 times on a price to sales basis now for these financial companies since they do uh they do operate a little bit differently you can't really look at you know the debt and the and the cash on hand um because it's just it's it's accounted for differently than you're used to seeing on a lot of those other those other companies but it did have negative operating cash flow over this last 12 months so that is something that we would want to check out one thing you always want to look at for these bdcs these business development corporations is the average weighted portfolio yield okay that's going to be found in any of the financial statements uh from the company that's the average yield the average interest rate it's collecting on its portfolio of loans it's debt that it's loaning to these mid-size companies you want to make sure that that is over this dividend yield that is more than the dividend yield so you would want to go to kkr capital corporation the the financial statements look for that average weighted portfolio yield and make sure that's over 12 basically you want that dividend yield to be less than the yield they're collecting on their loans just as a sign of dividend stability another stock here i own i have big stake and actually over fifty thousand dollars in this one in the consumer staples altria group ticker mo and it's 7.7 dividend yield obviously altria is a big name in the tobacco segment a very stable cash flow cash flowing business so it obviously pays out a very stable dividend yield and we can check on the the historical payments on that it is very good stock for increasing that dividend and for consistency in payments so we can check this out over the last five years it has increased the dividend from just 61 cents a share that is a quarterly dividend goes out four times a year increased it from 61 cents a share all the way up to 90 cents a share so great dividend growth story on that one we can look at some of these other statistics we can see the payout ratio so how much is it paying it's it says it's paying out 233 of income as uh as a dividend so we would want to check and check on that that is a little high obviously i i don't think management would pay out you know 200 of uh of net income as the dividend uh because it just isn't sustainable you know and this is obviously a company that cares very much about sustaining its dividend growing its dividend we could see that it it had 2.7 billion dollars in net income over the last year um to that 2.7 billion dollars in earnings we can see that it's been it's been pretty volatile it's come down quite a bit over the last few years as well as uh took a big hit there in 2019 just on a lot of those legal expenses but 2.7 billion dollars in uh in net income and we can go over here to see how much is paying out in dividends uh if we go down there financing cash flow again in the income in the cash flow statement and we can see cash dividends paid of 6.3 billion dollars so it is paying 6.3 billion dollars uh to cover those dividends against just uh just 2.7 billion dollars in in net income in earnings so that is something that is unsustainable is something that's going to have to uh going to have to change obviously the management thinks uh it believes that it's going to be able to turn that that sales and earnings picture around uh to be able to sustain that dividend because you know alter a group is like we saw is one of the best for uh you know for increasing its dividends if we look here at the uh the one-year target estimate analysts have a dollars and 61 cents per share average target estimate over the next year that is 46.88 that is 14 over the current stock price so again like most of these stocks you're not going to get that huge growth in the price uh or the expected growth in the price just 14 here but that's on that 7.7 dividend yield that despite that payout ratio despite the the hard or the weak earnings environment that it's in right now i think that dividend is safe i think it keeps on growing into the future and you keep on getting that 7.7 dividend yield a solid company here in the consumer discretionary sector h r block ticker hrb pays a 4.6 dividend yield and obviously this one is coming into its prime earnings season here with tax time coming up um we can look at see how well it's uh increased its dividend or in the past so what kind of dividend history it has if we change this we can see that it has increased its dividend it has increased its dividend over the last five years from 22 cents a share that is another quarterly dividend payment so that goes out four times a year it's increased it from 22 cents a share in 2017 to 27 cents a share in 2021 so it does have a history of increasing the dividend pretty much every single year it didn't increase it quite as much here in uh 2019 2020 be trying to protect that cash flow during the pandemic but it has since returned to increasing uh the dividend every year so that's obviously a positive sign we check this payout ratio it's only paying out 33 of its net income of its earnings to cover that dividend so that is obviously you know that is the lowest payout ratio of any of the stocks in our list obviously means that h r block is keeping a lot of its earnings set aside for growth reinvesting in the business so you're actually going to see your you're either going to see a higher share price or more opportunities to increase that dividend if it's only paying out 33 so a third of its earnings as a dividend it can increase that to 50 or 60 percent easily and still be able to grow the company so i think you see larger dividend increases in the future on this one if we look at the balance sheet it does have a 900 million dollars in cash on the balance sheet against two almost two and a half billion dollars in debt uh this is a strong cash flow company so i wouldn't be quite too too worried about that uh the operating margin 25 here operating margin on the company so management is doing a great job of converting those sales into operating profits and we can check here on the other one-year target estimate only 25 and 80 cents analysts have that have that average target price on the stock that is just that is just 10 above the current stock price so analysts really don't think much of the the the upside potential on the stock just 10 over the next year on top of that 4.6 dividend yield but uh but i think this is one analysts might be underestimating here i think with that that uh that growth in uh you know in in its revenue in its uh and the strong operating profits the strong payout ratio i think this one could go higher than just that 10 click on the video to the right for the cheapest stocks in each sector 11 of the best value stocks in the market don't forget to join the let's talk money community by tapping that subscribe button and clicking the bell notification

Channel: Let's Talk Money! with Joseph Hogue, CFA

Views: 218,348

Keywords: dividend stocks, dividend investing, highest paying dividend stocks, highest yielding dividend stocks, high yield dividend stocks, high dividend stocks, top dividend stocks, best dividend stocks, best paying dividend stocks, dividend stocks to buy

Id: RLFMMuvS7uI

Length: 52min 16sec (3136 seconds)

Published: Thu Jan 06 2022