As the Federal Reserve embarks on a new rate-cutting cycle, dividend stocks are shining brighter than ever. The recent 50 basis point cut, a surprise to many expecting a more modest 25 basis point reduction, makes dividend-paying stocks even more appealing to income-focused investors. In this low-interest environment, investors are eager to secure solid returns, and dividend stocks with above-average yields are attracting significant attention. Here’s a closer look at three high-yielding dividend stocks that are too good to ignore:
AT&T: A Strong 5.2% Dividend Yield for Income Investors
AT&T Inc. (T) is a telecommunications powerhouse, recognized as the largest globally by revenue and the third-largest mobile communications operator in the U.S. The company operates through two core segments, AT&T Communications and AT&T Latin America, providing a wide range of telecommunications, media, and technical services worldwide. Despite industry challenges, AT&T has impressed investors this year, with its stock surging 27.2%, outperforming the broader market. This impressive performance is further enhanced by a hefty 5.2% dividend yield, making it even more attractive. This combination of share price appreciation and a high yield translates into solid overall returns for investors. Additionally, AT&T appears undervalued, with a P/E ratio of just 11.48, placing it squarely in value territory. While the company faces modest earnings and revenue growth expectations, analysts still see potential, with a consensus price target of $22.31. This suggests a further 5% upside on top of its already appealing yield.
ARCC: A 9.25% Dividend Yield Paired With Attractive Valuation
Ares Capital Corporation (ARCC) is a specialty finance company dedicated to providing customized financing solutions for small and mid-sized businesses. ARCC focuses on industries like software, healthcare services, and diversified financials, offering a range of financing options, from senior secured debt to equity capital. The company generates both current income and capital appreciation through its diversified debt and equity investments, aiming for risk-adjusted returns across different economic cycles. While ARCC’s year-to-date performance has been modest, with a gain of just over 3%, its dividend yield stands out. At an impressive 9.25%, the stock offers one of the highest returns among its peers, complemented by an annualized 3-year dividend growth rate of 6.27%. ARCC also boasts a strong payout ratio of 65.75%, signifying sustainability in its high payouts. Moreover, ARCC has an attractive valuation with a P/E of just 7.11, making it an enticing option for value-seeking income investors. Analysts remain optimistic about the stock, assigning it a Moderate Buy rating and projecting a 5% upside. If ARCC manages to break through its long-standing resistance levels around $21.50 to $22.00, investors could also see capital appreciation, potentially adding another layer of returns on top of the high yield.
VICI Properties: Strong Earnings Growth and 5.06% Dividend Yield
VICI Properties (VICI) is a real estate investment trust (REIT) specializing in owning, acquiring, and developing gaming, hospitality, and entertainment properties. As a leading player in this niche real estate space, VICI has demonstrated robust financial performance, consistently growing its revenue and maintaining net margins of around 45%. The company continues to impress investors with its ability to deliver earnings growth. In its most recent earnings report, VICI reported earnings per share of $0.71, exceeding estimates of $0.67, and revenue of $957 million, slightly surpassing expectations. Despite its strong performance, VICI remains fairly valued, with a P/E of 12.97 and a dividend yield of 5.06%. The stock has recently pulled back more than 4% from its 52-week highs, presenting an attractive entry point for investors seeking income and value. VICI is currently on an upward trend after breaking above its 200-day moving average in July, and with momentum building, the stock is up almost 3% year-to-date, making it a strong candidate for long-term growth and income.
