Some things just belong together. Batman and Robin. Peanut Butter and Jelly. Kermit and Miss Piggy.
However, there are also things that some think belong together that aren’t necessarily connected at the hip. I would put the combination of high dividend yields and high risk in this category.
Sure, there are plenty of examples of very risky stocks that offer great returns, but that’s not always the case. Here are five of the safest high-yield dividend stocks in the world.
1. State Properties in the East
I can’t think of a safer high-yield stock Eastern Government Properties ( DRUG DETECTION -0.75% ). The company’s dividend yield is currently over 5%, which certainly places it in the high-yield group. But why is Easter safe? The company’s name gives a big clue.
Easterly is a real estate investment trust (REIT) specializing in leasing real estate to US federal agencies. There’s probably no safer tenant in the world than Uncle Sam.
Federal agencies are also likely to rent more real estate than own buildings in the future due to tight budgets than they do now. While there are other REITs in this space, Easterly has a secure place among the market leaders.
2. Verizon Communications
Verizon Communications (vz -0.36% ) has increased its dividend payout for 15 consecutive years. The dividend yield is just under 4.8%. The company’s payout ratio is a healthy 47.7%.
Sure, the telecom business is highly competitive. However, there are also major barriers to entry. Verizon is unlikely to be unseated anytime soon.
Instead, the company should have significant growth opportunities. In particular, the increasing adoption of 5G networks should serve as a major tailwind for Verizon in the years to come.
IBM (IBM -0.31% ) could reasonably be considered a great dividend stock. Big Blue is considered a Dividend Aristocrat with 26 consecutive years of dividend increases. It’s been paying a dividend every quarter since 1916 and currently offers a whopping 5.3% yield.
Granted, the stock’s performance over the past few years hasn’t been anything special. But IBM is dirt cheap now, with shares trading at little more than 12 times forward earnings.
Don’t write off IBM’s growth prospects. The company’s hybrid cloud and consulting businesses continue to gain momentum. IBM also has a large cash position and strong cash flow, allowing it to invest in future growth opportunities.
4. Enterprise Products Partners
Partner for Enterprise Products (EPD -1.25% ) isn’t just a high-yield stock — it is one Ultra-High-yield stock with a dividend yield of nearly 7.4%. The midstream energy company has also increased its dividend payout for 23 straight years.
But is any stock linked to fossil fuels safe? I think this is Enterprise. Current market dynamics, which serve as a tailwind for the company, could result in increased demand for the oil, natural gas, and petrochemicals flowing through Enterprise’s pipelines.
The company’s dividends alone could more than double your money over the next 10 years. And that’s at current payout levels with no stock appreciation. I expect more sales increases and more growth from Enterprise in the coming years.
5. Trust for Medicinal Properties
Like eastern government real estate, Medicinal Properties Trust (MPW -2.23% ) is a REIT with an attractive dividend. MPT’s dividend currently yields 5.7%. The company has increased its dividend for eight straight years.
MPT owns approximately 440 properties in nine countries, including the United States. Most of these properties are acute care hospitals. The Company also owns behavioral health facilities, inpatient rehabilitation facilities, long-term acute care hospitals, and freestanding emergency rooms and emergency care facilities.
Demand for healthcare services is expected to increase as the demographic ages. MPT has also diversified its tenant base and now leases properties to 53 hospital operators. The company’s largest single property accounts for less than 3% of the total portfolio.
This article represents the opinion of the author, who may disagree with the “official” endorsement position of a Motley Fool premium advisory service. We are colourful! Challenging an investment thesis — including one of our own — helps us all think critically about investing and make decisions that help us be smarter, happier, and wealthier.