Investing

3 High-Yield Dividend-Paying Stocks Bucking Today's Downward Trend

Gerelyn Terzo

Published: April 17, 2024 1:47 pm

Now that the Federal Reserve has thrown a potential wrench into the interest rate game plan, investors desire greater stability more than ever. Economists and prognosticators are all over the map on economic growth, inflation, and interest rates, making passive income even more appealing for patient investors who are fine with holding for a while. There’s good news and bad news.

According to The Wall Street Journal, the economy is no longer in danger of falling into a recession. The labor market remains strong, while consumer demand has been resilient, helping to offset headwinds like inflation and lofty rates. High rates have had less of a toll than expected on GDP growth, despite forecasts coming in below actual results of late. While economic expansion might prove to be slow for much of the year, the outlook for the full year is looking up, with much of the expansion expected in Q4.

On the flip side, investors have been experiencing a whipsaw effect in the markets of late, not least because of the Fed’s inability to get a handle on inflation. As a result, choppy trading activity is likely to continue for the foreseeable future.

Fortunately, investors are sometimes able to enjoy the best of both worlds – a steady stream of income and a rising stock price, and we found a few of those high-yield dividend stocks that are gaining ground in today’s market.

Real Estate Strategy

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Real estate might seem like a risky bet given the current high interest rate economy, but there are some dividend gems. Kennedy-Wilson Holdings (NYSE: KW), a commercial real estate investment firm with $25 billion in AUM, tops our list with a whopping annual dividend yield of nearly 12%. The stock is up over 1% in today’s trading, buttressed by some insider buying coupled with optimism around opportunistic real estate investing and consistency in the dividend payout.

According to the U.S. SEC Edgar database, Kennedy-Wilson executives and institutional investors were busy scooping up shares in Q1. Buyers included Minella Capital Management’s David Minella, who is also a Kennedy-Wilson board member, Trevor Bowen, a non-executive director at Kennedy-Wilson, and director Richard Aiden Hugh Boucher, among others. They acquired shares in February, when the stock price was hovering at approximately $10 compared with the $8 area today, suggesting they have reason to be bullish about how the rest of the year will play out, some bumps in the road notwithstanding.

One thing for sure is that Kennedy-Wilson has been aggressive about expanding its real estate debt investments, capitalizing on the market dislocation that has sent many property owners reeling. Its acquisition strategy includes the addition of a $4.1 billion loan portfolio from a regional bank last year, which helped catapult the company’s real estate debt investment platform to $7 billion with a robust pipeline of emerging opportunities ahead.

Kennedy-Wilson’s most recent quarterly dividend of $0.24 was payable earlier this month, while Q1 earnings are expected on May 8.

‘Bank’ for Your Buck

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Also making our list is Washington Trust Bancorp (Nasdaq: WASH), the nation’s oldest community bank and one that’s been holding its own throughout the industry turmoil. With an annual dividend yield of 9.21%, Washington Trust’s stock has advanced nearly 1% today as investors anticipate their next quarterly payout.

The company recently welcomed two new additions to its board of directors who are accounting and legal experts. Considering the rocky terrain for community banks over the past year, Washington Trust has provided some stability to investors who might otherwise shun the sector. Over two-thirds of Washington Trust’s shares are held by institutions, including asset management behemoths like BlackRock and Vanguard.

Not to be outdone, Washington Trust has also experienced some insider buying of late, including Chairman and CEO Edward Handy, CFO Ron Ohsberg, and HR executive Kristen DiSanto in March. Also last month, Washington Trust declared a Q1 dividend of $0.56 per share, which was distributed a week ago.  The company is expected to report its Q1 earnings results on April 22.

Telecom Play

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We would be remiss not to include any tech stocks in our roundup, and that’s where telecom play Telephone and Data Systems (NYSE: TDS) comes in. TDS is up modestly today, but it is also trading off its 52-week high of $21.75, suggesting it could have more runway for gains.

TDS, which operates subsidiary UScelluar, is a popular stock among hedge funds, including high-profile firms like Dan Loeb’s Third Point, Mario Gabelli’s GAMCO Investors, and Millennium Management, the latter of which recently increased its stake, according to Insider Monkey.

With an annual dividend yield of approximately 5%, TDS operates in a competitive environment for mobile subscribers and continues to invest in its USceullar arm including wireless towers to widen its reach.

Last month, TDS paid a Q1 dividend of $0.19 per common share. The distribution represents an increase of nearly 3% vs. Q4 levels.