Dividend stocks are an important part of every portfolio. Those dividend payments provide a regular income that can be spent, or re-invested. Ideally, you gain through the growing value of the stock as well.
Typically, companies that pay dividends to their shareholders tend to be very stable. They are less volatile than some high-growth stocks might be (even riding out events like a global pandemic), adding balance to your portfolio.
A higher dividend yield is a good thing, and these seven dividend stocks have been picked for that very reason.
- Arbor Realty Trust (NYSE:ABR)
- Ellington Financial (NYSE:EFC)
- Iron Mountain(NYSE:IRM)
- MFA Financial (NYSE:MFA)
- Oaktree Specialty Lending Corp (NASDAQ:OCSL)
- ONEOK (NYSE:OKE)
- Redwood Trust (NYSE:RWT)
While companies paying dividends are usually more reliable investments, that’s not always the case. Here’s an example of dividend stocks that should be avoided for now. But we’re not talking avoiding for this round, we’re looking at good choices. In addition to paying a dividend yield of over 4%, each of the stocks on today’s list has a solid rating in Dividend Grader, earning a “B” or higher. So you know it’s a high-quality pick.
Dividend Stocks to Buy: Arbor Realty Trust (ABR)
Arbor is a nationwide investment trust and lender specializing in commercial and multifamily property financing. Based in Uniondale New York, the company has been in business for 25 years. In the first quarter of 2021, Arbor’s agency business issued loans of $1.4 billion, with a servicing portfolio of $25.46 billion.
ABR stock has been in growth mode for the past 5 years. In particular, it has recovered nicely from the 2020 stock market crash and pandemic, passing 2019 levels in January. At this point, ABR stock has delivered a 143% return over the past 5 years. More importantly for this list of dividend stocks, it offers a 7.09% dividend yield.
At the time of publication, ABR stock earned an “A” Dividend Grader rating.
Ellington Financial (EFC)
Ellington Financial is primarily a mortgage finance company. Shares took a beating in the March 2020 stock market crash, but have been in steady recovery mode ever since. At this point, EFC stock is up 373% since the crash and has nearly reached its pre-pandemic levels.
In its second-quarter earnings report, the company’s CEO made it clear why dividend investors are very interested in EFC, which now boasts a 6.94% dividend yield: “Driven by our strong performance and earnings growth, we have now raised our monthly dividend a full 50% this year, to its current level of $0.15 per share.”
EFC stock is currently rated as a “B” in Dividend Grader.
Dividend Stocks to Buy: Iron Mountain (IRM)
If you’ve been anywhere near a big city downtown core, you’ve seen Iron Mountain trucks parked outside the office towers. Since 1951, companies have trusted Iron Mountain to safeguard their records and securely destroy sensitive documents and data. Iron Mountain has some 225,000 customers worldwide, including about 95% of the Fortune 1000.
While IRM stock had a volatile decade prior to 2020, in 2021 it has been on fire. So far this year, shares are up 64%. But that’s not why dividend investors like IRM. They’re more interested in Iron Mountain’s 5.34% dividend yield.
IRM stock currently earns a B-rating in Dividend Grader.
MFA Financial (MFA)
Investors don’t choose MFA stock for their portfolio for its growth performance. MFA Financial shares basically went nowhere in the decade prior to 2020. MFA has posted gains of 22% so far in 2021, but has yet to recover to pre-pandemic levels. A big part of that has been dealing with borrowers who have been unable to make loan payments.
The company’s CEO told shareholders that 2020 was “the worst year in our 22-year history.” The bad news included having to suspend dividend payments at the height of the crisis.
However, this real estate investment trust has been seeing progress starting in the second half of 2020. That’s led to the company upping its quarterly dividend in Q2 by 33% compared to Q1. That puts its dividend yield at 6.22%, marking a return to the high-yield dividend stocks club.
The current Dividend Grader rating for MFA stock is “B.”
Dividend Stocks to Buy: Oaktree Specialty Lending (OCSL)
Oaktree Specialty Lending is a finance company that caters to customers who may be unable to obtain financing through public capital markets. The company has $156 billion in assets under management. The nature of its business spelled trouble during the pandemic. In its 2020 annual report, Oaktree said as much: “Difficult market and economic conditions have, and may continue to, adversely impact the valuations of our and our funds’ investments.”
However, as the pandemic recovery takes hold, OCSL stock has bounced back and then kicked into growth mode. That includes a gain of 30% so far in 2021, and a share price that’s at 5-year highs. With a 6.35% dividend yield, OCSL is on the radar of investors looking to add dividend stocks to their portfolio.
Currently, OCSL stock earns an A-rating in Dividend Grader.
A year ago, natural gas companies like ONEOK saw their shares in free fall. Many factories temporarily shut down and people were working from home, reducing power demands for office towers. In addition, a surge toward green power was leaving natural gas behind along with other fossil fuels. Natural gas prices hit new record lows.
OKE stock plummeted in the March 2020 stock market crash, then fell hard again in June thanks to those low natural gas prices. Despite the challenges, ONEOK continued to pay its quarterly dividend through 2020.
This year has seen a dramatic improvement. Those record low natural gas prices have more than doubled through 2021, hitting levels not seen since 2018. Demand is up, exports are up, and months of reduced production has led to a storage deficit. OKE stock is up 43% so far in 2021 and its dividend yield has hit 6.95%.
At the time of publication, the Dividend Grader rating for OKE stock sits at “B.”
Dividend Stocks to Buy: Redwood Trust (RWT)
California’s Redwood Trust is a housing credit lender. RWT stock, which has bounced back from 2020’s losses with a 64% run so far this year, enjoys strong support among investment analysts. Those polled by the Wall Street Journal currently have RTW rated as a unanimous “Buy” and their average 12-month price target offers 14% upside.
More importantly from the perspective of its ranking among dividend stocks, Redwood Trust offers an attractive dividend yield of 4.98%.
That performance is sufficient to earn RWT stock a B-rating in Dividend Grader.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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