There’s no such thing as a free meal — but having a ready source of passive income might be the next best thing. If you’re interested in pocketing more cash without time or effort on your part, it’s time to invest in a dividend-paying company or real estate investment trust (REIT).
Not all companies pay dividends, but those that do can make a fantastic addition to your portfolio. If you’re interested in diversifying your investments and establishing a reliable source of cash flow during a tricky economic time, check out these three high-yield dividend stocks.
1. Hanesbrands (NYSE: HBI)
If you’ve ever visited a big-box store that sells clothing staples — anywhere from Walgreens to Walmart and Target to the Dollar Store — you’ve certainly seen rows upon rows of Hanes’ socks, hosiery, and t-shirts. The company also owns the Champion brand, which manufactures athletic and leisurewear, and a host of other clothing brands.
But Hanes has more to offer than durable, affordable clothes. Through its quarterly dividend program, Hanes has given more than $1 billion back to its investors. Hanes’ shareholder dividend program was instituted by the company in 2013, which means its investors have been paid dividends for 37 quarters in a row.
In May 2022, Hanes paid its stockholders $0.15 per share. That makes its current dividend yield a whopping 6.7%, much higher than the S&P’s typical dividend average of 2% to 5%.
Plus, even though Hanes suffered some of the same losses as most other companies in this summer’s economic slowdown, demand for its products is still fairly stable. After all, Hanes is a low-cost manufacturer of clothing staples, so it’s been able to stay fairly popular with consumers. The company also did better than Wall Street had predicted in the first half of the year, ending with a better bottom line than anticipated.
2. Omega Healthcare Investors (NYSE: OHI)
Omega Healthcare Investors is a REIT, or real estate investment trust. These types of companies own or invest in real estate properties to turn a steady income. Publicly traded REITs as a whole own 500,000 revenue-producing properties across the globe.
Anyone building a portfolio can invest in a REIT and start reaping solid returns on real estate — all without having to manage or renovate the property they invest in.
Omega Healthcare Investors has been publicly traded on the New York Stock Exchange since 1990, and it’s paid dividends to investors for the last 17 years in a row. As the name suggests, Omega Healthcare invests in healthcare properties, specifically senior care centers and skilled nursing facilities. All told, the company has invested over $9 billion in healthcare properties across both the U.S. and U.K.
At 8.3%, Omega Healthcare Investors’ dividend yield is even higher than Hanes’. That high dividend yield is particularly notable given how much Omega Healthcare struggled during the COVID-19 pandemic. (Nursing homes were hit incredibly hard during the crisis).
But even in a troubled housing (and stock) market, Omega Healthcare has been able to do much better than predicted in 2022. Even though it has a few hurdles to get over, its stock is expected to continue rising in the short-term, making it a solid buy as of September 2022.
3. Dow (NYSE: DOW)
Dow Inc. is a materials science production company specializing in chemical manufacturing. And if you’re wondering, no, Dow Inc. is not the same thing as Dow Jones. (Dow Jones is the fiscal news company responsible for the Dow Jones Industrial Average — often referred to as simply the Dow.) It’s also worth noting that Dow Inc. is a subsidiary of DowDuPont, which split into three separate publicly traded companies three years ago.
As a leading producer of plastics, silicone, and agricultural materials like pesticides, Dow Inc. is a vital contributor to dozens of industries worldwide — from medical and healthcare facilities to industrial engineering. The company recently celebrated its 125th birthday, though it only started selling products directly to consumers after WWII.
Dow Inc. (including its affiliate companies and subsidiaries) has paid dividends to investors for 444 consecutive quarters — so every year since 1912. Its most recent quarterly dividend payment was $0.70 per share, which is a dividend yield of 5.8%.
Some financial analysts (most notably Zacks) are calling out Dow Inc. as a currently undervalued stock and are recommending investors buy now in expectation of a higher performance later in the year.
A recession may or may not be in the near future — frankly, no matter what you read in the news, there’s literally no way to be sure of a recession until one happens. Still, there’s never been a better time than now to get your financial ducks in a row. Adding one of these dividend-paying companies to your portfolio for an additional source of passive income might be a good idea depending on your risk tolerance and investment goals, no matter what happens with next year’s economy.
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