5 High-Yield Dividend Stocks to Buy in May

Investing

Published: May 5, 2024 11:00 am

Investors are abuzz about whether or not Berkshire Hathaway (NYSE: BRK-B) will do a 180-turn and become a dividend-paying stock. But that could be a lot like Waiting for Godot and allowing opportunities to pass them by in dividend stocks. In the uncertain economic environment, passive income has become increasingly valuable for investors looking for steady checks in the mail.

While valuations are volatile, corporate America has been generating profits hand over fist and rewarding investors with cash distributions. According to Bloomberg, nearly 80% of companies in the S&P 500 that have reported earnings so far this season have exceeded Wall Street’s estimates.

Meanwhile, the S&P 500 has rallied by 20% in the seven months leading up to April and is currently trading at 20x future earnings. Investors are clearly optimistic about the rest of 2024. Whether you choose to reinvest or take the cash, here are five high-yield dividend stocks to buy in May that will position your portfolio for greater returns.

1.) Hasbro

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Quarterly Dividend: $0.70
Dividend Yield: 4.58%
Stock Price: $61.48

Hasbro (NYSE: HAS) has been a dividend-paying stock for decades even in changing market cycles. The Pawtucket, Rhode Island-based toy and game company last raised its dividend in 2022, when the payout went from $0.68 per share to $0.70, where it hovers today. While consumer spending has been a challenge in the high-inflation economy, Hasbro, which is in the midst of toy-focused turnaround, has been meeting its targets on a cost restructuring, and investors have rewarded the stock with a 20% gain year-to-date. Hasbro has targeted $750 million in cost savings by 2025, which they are on track to achieve.

With a market cap of $8.5 billion, Hasbro’s digital licensing and IP are bright spots and represent pockets of the portfolio where the company is flexing its muscle. CEO Chris Cocks recently described digital performance, which includes games like Monopoly Go on mobile, as “on fire.” The company is focused on innovation around games and toys for customers across age brackets. Despite expectations among Wall Street analysts for Hasbro to suspend its dividend while restructuring, the company has maintained its focus on shareholder value in a challenging economy. When market conditions turn around, and its overhaul is complete, Hasbro will have the wind at its back.

2.) Lazard

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Quarterly Dividend: $0.50
Dividend Yield: 5.12%
Stock Price: $39.05

Lazard (NYSE: LAZ) stock, which is a favorite among Wall Street analysts, has advanced 14.7% year to date. With a market cap of $3.5 billion, Lazard has been paying investors dividends for nearly two decades, including an annual rate of $2.00 in 2023 compared with $1.97 in 2022. This boutique investment bank’s business is split between asset management and financial advisory, both of which are needed more than ever as businesses look to reorganize their debts in the high interest rate climate.

In Q1, Lazard’s advisory business revenue reached an all-time high as companies across sectors and jurisdiction sought out advice. The firm saw a 42% jump in net revenue to a record $747 million, far exceeding consensus estimates and underscoring a recover in the M&A market. Lazard’s growth strategy involves doubling revenue by 2030 and for shareholder returns to average between 10% and 15% annually in that stretch, a good incentive for passive-investing seeking dividend investors.

3.) Xcel Energy

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Quarterly Dividend: $0.5475
Dividend Yield: 4%
Stock Price: $54.25

Minneapolis-based Xcel Energy (Nasdaq: XEL) in early 2024 raised its 2024 dividend from $0.52 to $0.5475 per share, resulting in an annual rate of $2.19 per share. Xcel has a track record of raising its dividend payout for 21 consecutive years, which CEO Bob Frenzel says is a “recognition of the importance of dividend growth” to shareholders. Xcel is one way to hedge economic uncertainty given its ability to generate profits in changing market cycles.

On the risk side, Xcel has been affected by the wildfires in the Texas Panhandle, the ignition of one – the Smokehouse Creek fires – appears to have involved its facilities. The company says it’s ramping up its fire mitigation efforts, shutting down power lines in anticipation of high winds and exploring underground power lines, etc. Meanwhile, lawsuits are beginning to pile up while Xcel “disputes claims that it acted negligently in maintaining and operating its infrastructure.” Most Wall Street analysts who cover the stock have a “buy” rating attached with an average price target of $62.18.

4.) LyondellBasell

Quarterly Dividend: $1.25
Dividend Yield: 5.04%
Stock Price: $99.12

If it’s cash distributions you’re looking for, LyondellBasell Industries (NYSE: LYB) has been delivering for over a decade. With a current quarterly dividend of $1.25, this chemicals producer currently pays an annual rate of $5 for a yield of 5.04%. The stock has a long history with hedge funds, including AQR Capital Management and Tudor Investment. LyondellBasell has returned $1.8 billion to investors over the past 12 months in the form of dividends and share buybacks.

LyondellBasell reported Q1 revenue of $473 million. Plastic margins benefited from a lower-cost environment for natural-gas, a trend that’s spilled over into Q2. The company holds $2.3 billion in cash and short-term investments as well as $6.5 billion in available liquidity. LyondellBasell expects its margins to also benefit from the upcoming summer-driving season. Wall Street analysts are mostly bullish on the stock, with an average price target of $107.75.

5.) Public Storage

Quarterly Dividend: $3.00
Dividend Yield: 4.52%
Stock Price: $256.76

With a market cap of $46.8 billion, Glendale, Calif.-based Public Storage (NYSE: PSA) is a REIT that pays a quarterly dividend of $3 for an annual dividend rate of $12. Public Storage is the storage company that started it all, with close to 3,000 facilities in the U.S. alone and millions of customers. Investors flock to Public Storage stock for its generous dividend, which the company has paid for over two decades running along with special dividends every so often.

As a REIT, public storage hasn’t been immune to the housing market downturn. The stock, which is a member of the S&P 500, is down nearly 15% year-to-date, which could present a buying opportunity for savvy dividend investors.

Public Storage is starting to see nice turnaround in major markets like San Francisco, New York and Chicago after a market slowdown in 2023 following a couple of record years during the pandemic. May marks the beginning of the peak leasing season, and Public Storage has been increasing rental rates. While the company got off to a slow start in Q1, it forecasts an upward trend in which conditions are improving month by month. Once the housing market begins its recovery and interest rates start easing, Public Storage is in a good position to benefit, and so too are investors.