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Dividend stocks offer investors reliability and steady income. Plus, high-yield dividend stocks tend to hold up better than other stocks during turbulent times. And stocks with high dividend yields are especially advantageous when interest rates are falling (like they are right now).
With that in mind, we've put together a list of three of the best high-yield dividend stock options out there. All three of these high-paying dividend stocks have yields of 4% or better. They also have plenty of room for growth, allowing you to benefit from both capital gains and the high dividend yield.
Stocks like these could deliver returns to help you grow richer year after year.
So let's get right to it. Here are the best high-yield dividend stocks for your portfolio…
Best High-Yield Dividend Stocks, No. 3: Algonquin Power & Utilities Corp. (4.01%)
Alternative energy is in a major growth phase. According to the Center for Climate and Energy Solutions, renewable energy in the United States is expected to jump from a 17.1% share in 2018 to a 24% share by 2020.
Not only are renewable energy sources such as hydroelectric, wind, geothermal, and solar cleaner and more efficient than fossil fuels, they are now often cheaper too.
In a 2018 bidding round, for example, Xcel Energy Inc. (NASDAQ: XEL) found that it was cheaper to build new solar and wind plants than keeping existing coal plants running in 74% of the country.
A great pick to capitalize on the renewable energy revolution is Algonquin Power & Utilities Corp. (NYSE: AQN), which has a diversified portfolio including hydroelectric, wind, geothermal, and solar energy facilities.
Through its subsidiaries, Liberty Power and Liberty Utilities, AQN covers both power generation and utility distribution.
On the energy production side, Algonquin runs 35 energy production facilities, including…
- 200-MW wind farms in both Minnesota and Illinois, each of which can power nearly 80,000 homes
- A 70-MW facility in Windsor Locks, Conn., that combines natural gas and geothermal energy
- A 20-MW solar farm in Bakersfield, Calif., consisting of 80,000 photovoltaic cells and contracted to run through 2035
On the utilities side, Liberty Utilities provides electricity, water and wastewater treatment, and natural gas for more than 758,000 Americans in 12 states.
AQN's 4.01% dividend yield hasn't stopped it from being a solid growth stock, either. The share price is up 69.6% over the last five years, outperforming the S&P 500 in that time. The company has also raised its dividend by at least 5% for 11 straight years, including a 10% boost in 2019.
With the continued rise of alternative energy, you can add this one to your portfolio and hold onto it for a long, long time.
Best High-Yield Dividend Stocks, No. 2: HanesBrands Inc. (4.07%)
North Carolina-based HanesBrands Inc. (NYSE: HBI) was founded in 1901 and has been a leader in clothing essentials for decades.
It has done that by sticking to its values rather than chasing short-term trends. Rather than contract its manufacturing processes out to operations with questionable business practices, for example, Hanesbrands manufactures more than 90% of its apparel in house.
In addition to the familiar Hanes brand, the company also owns Champion, Playtex, L'eggs, Barely There, and a number of other popular lines.
With nearly 75,000 employees in 45 countries, Hanesbrands has a No. 1 or No. 2 market share in at least one clothing segment in 12 different countries. That includes a leading share in the United States in men's and kids' underwear, socks, hosiery, and t-shirts. It's also No. 1 in men's underwear in Mexico, France, Australia, Spain, New Zealand, and the Philippines.
The company's commitment to socially responsible production earned it an A- grade – the best in its industry – by the 2018 CDP Climate Change Report. That followed a 10-year period in which Hanesbrands achieved 21% energy reduction, 28% fewer carbon emissions, 30% less water used, and an 84% diversion rate (i.e., waste that doesn't go into a landfill).
That's a critical factor in the company's fastest-growing segment: activewear.
The younger generation of consumers buying athletic clothing places a high priority on the kind of good stewardship Hanesbrands has consistently demonstrated. A 2015 Nielsen poll showed that almost three in four Snake People are willing to spend more for a product made with sustainable practices.
In addition to its 4.07% dividend yield, Hanesbrands is also drastically undervalued compared to its peers.
The stock's forward and trailing price/earnings (PE) ratios both come in at about 30% of the industry average. Thanks to the market's oversight, if you grab HBI now, you can both lock in the current yield and look forward to a potential tripling in share price.