Global growth forecasts are dropping dramatically, which makes picking stocks as difficult as ever. But investors looking for guaranteed income can still rely on high-yield dividend stocks.
Today, we'll show you two of our favorite dividend stocks...
Right now, money is pouring into the U.S. dollar, which has strengthened the currency. This has pushed debt security yields even lower, leading investors to look for higher yield investments, which often carry higher risk. In just the first two months of this year, these machinations have pushed the overall market higher.
In truth, these higher-risk trades don't make a lot of sense in the midst of the current market conditions. First, corporate earnings results in 2019 remain unclear. Analysts don't know if there will be meaningful growth here or stagnation.
Second, it's already been predicted that GDP is going to lag behind where it was last year.
Knowing these factors, how can stock prices be going up?
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The only plausible explanation is that there isn't any other place for available capital to go right now.
Investors that are looking for safe havens are buying stocks, but they shouldn't be indiscriminate with their choices. Instead, the most profitable and lower-risk ones are high-yield dividend stocks.
There is a mix of these to choose from, but the ones that we're going to discuss today are also real estate investment trusts, or REITs.
These are an excellent choice for several reasons.
REITs provide income to investors through share price gains, and the right ones will also have high-dividend yields.
Even better, the Money Morning Stock VQScore™ system has uncovered two REITs that are considered top picks. Not only are these investments that are poised for growth, but one also has a dividend yield that is over 12%.
These are the two best high-yield dividend stocks to buy now...
Best High-Yield Dividend Stocks to Buy Today, No. 2
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Sunstone Hotel Investors Inc. (NYSE: SHO) is an Irvine, Calif.--based REIT that focuses on the travel and lodging space.
This is a REIT that is not only going to deliver returns in the short term, but for long-term investors as well.
This REIT has investments in 22 hotels that are highly recognized brands. These include Hyatt, Hilton, and Marriott. Those recognized names will provide stability to Sunstone, even if there are troubles with the economy. People choose trusted brand names first.
Analysts expect Sunstone to generate revenue of $1.3 billion in 2019. This is an increase over the prior year, which would be an improvement over what was just reported.
The SHO share price dropped slightly over the past several months in anticipation of lower revenue for 2018. The company reported earnings on Feb. 14, which included $1.2 billion in revenue for 2018, a drop of 2.9% from the prior year.
Over the prior five years, average revenue growth was 3.5% per year. On the plus side, the company has had EPS growth of 21.3% per year on average for five years. The company's operating margin also improved in 2018, at 15.81% compared to 15.17% in 2017.
The high price target for SHO is $16, which represents a gain of 6.52% over today's price. But that only tells part of the story. Investors also get the benefit of a 4.58% dividend yield, which is significantly higher than the current yield on the 10-year Treasury.
This is a dividend stock that is worth owning in this current environment, but this next pick is even better.
Best High-Yield Dividend Stocks to Buy Today, No. 1
If you're looking for dividend-paying stocks to buy, don't miss New Residential Investment Corp. (NYSE: NRZ).
This might sound like a counterintuitive investment, considering the rumors that the Fed's normalizing actions will cause even higher interest rates in the bond markets.
While the idea is that fewer buyers will require borrowers to offer a higher rate, this might be too simplistic. The truth is that the central bank has been as involved in the credit markets since the Fed began reducing its balance sheet.
In other words, less buying activity has only led to an increase in other debt activity, which brings us to this REIT.
New Residential Investment is a New York--based REIT that invests in and manages residential mortgage-related assets across the United States.
As prices went up and yield plummeted in 2018, the assets that this firm manages became more valuable.
Even if the market assumes the opposite is going to happen in 2019, this creates a buying opportunity for investors. It's vital to remember that fear in the market isn't always based on facts.
On Feb. 12, the company announced quarterly earnings, which were $0.58 per share, beating the consensus estimate of $0.55 per share, or a 5.45% surprise. The company has beat earnings estimates over the past four quarters.
Even if the company misses an earnings estimate in the future, investors will still make money because it is a high-yield dividend stock. But analysts are expecting more.
The high price target for NRZ is $21, which would provide today's investor with potential gains of 26.88%. But there are other ways to earn money here.
This REIT also pays a massive 12.1% dividend yield, which is guaranteed income, and another reason to jump in for market-beating gains.
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