7 High-Yield Dividend Stocks That Can More Than Cover Their Dividend Payments

 

These dividend stocks have yields at least 4.5% or greater

 

Many high-yield dividend stocks don’t have enough firepower to cover their dividend payments. Or else they barely have the earnings to cover the dividend. This could be one reason why the stocks have a high yield.

 

Often these stocks either have to borrow money, sell assets, issue equity or debt just to be able to afford the dividends or “distributions.”

 

In fact, many REITs (real estate investment trusts) are in this situation. They sometimes camouflage their inability to finance their dividends out of net income earned by relying on sources other than net income.

 

I wanted to find seven stocks (no preferreds) that have very clean dividend cover. The company does not have to rely on some sort of financing arrangement in order to pay its dividends.

 

So I sought out seven large market cap stocks, whose net income earnings can more than cover their dividends out of net income earned by at least 2 times. This is on a forward estimated earnings and forecast dividend basis.

 

This filter eliminates many high-yield stocks, almost all partnerships, REITs and pipelines and other assorted stocks (including foreign stocks where we can’t easily project earnings).

 

In addition, the dividend yield has to be equal to or greater than 4.5%. Given the 2x cover requirement and the 4.5% yield filter, this implies the market is severely undervaluing these stocks.

 

 

Lastly, the market cap has to be greater than $1 billion. This eliminates any iffy situations with smaller-cap stocks that might have had one good year. These high-yield, well-covered stocks are:

 

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