Back to top

Image: Bigstock

5 High-Yield Dividend Stocks for Steady Income Stream in 2021

Read MoreHide Full Article

With the curtains rolling down gradually over an eventful year, the world is eagerly awaiting a fresh beginning. The year 2020 can be rightfully called annus horribilis with the global economy enduring one of the worst possible hits due to the coronavirus pandemic. It has seen the loss of countless lives and businesses due to the virus. Stringent lockdown restrictions have virtually crippled business operations and brought various economies to a standstill.

As the corporate sector scrambles for cash to weed off the liquidity crisis through furloughs, layoffs and cost-cutting measures driven by a reduction in discretionary expenses, various firms are looking beyond other short-term funding avenues, such as revolving lines of bank credit, to bridge temporary cash shortfalls. One of the most common and widely followed trend to perk up the liquidity position during the recessionary conditions is dividend cut or suspension of dividend payment until the overall situation improves. Although a bulk of the firms across diverse sectors has increasingly followed the drift, a handful has chosen to swim against the tide and continue rewarding shareholders with healthy dividend yields.

Screening Parameters

With the help of the Zacks Stock Screener, we have selected Zacks Rank #1 (Strong Buy) or #2 (Buy) stocks that have dividend yield of more than 5%. These stocks have a market capital in excess of $100 million and have a 5-year average dividend yield of more than 5%. In order to narrow down the list, we have taken those stocks which have VGM Score of A or B. Moreover, these stocks have a solid Zacks Industry Rank and are placed within the top 50% of more than 250 Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.

Added to the intrinsic value proposition of these stocks, a healthy dividend yield satiates the appetite of risk-averse investors. The facts that these stocks have the potential to outperform the market, while also historically providing a decent dividend yield, have made them prized assets. Let us have a broad overview of five such stocks for a steady income stream in 2021.

Top 5 Picks

AGNC Investment Corp. (AGNC - Free Report) : This real estate investment trust (REIT) focuses on leveraged investments in Agency MBS (mortgage-backed securities), including residential mortgage pass-through securities and collateralized mortgage obligations. Continued purchases by the Federal Reserve to strengthen the Agency MBS market to inject liquidity in the mortgage sector have stabilized the broader mortgage market and improved Agency MBS outlook. Robust demand for high-quality collateral like Agency MBS has also resulted in significant repricing in the repo market. The company appears to be a solid pick with a VGM Score of B, Zacks Industry Rank #105 (top 41%) and a dividend yield of 9.3%. AGNC Investment carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

DCP Midstream Partners, LP (DCP - Free Report) : Headquartered in Denver, CO, DCP owns and operates a portfolio of midstream energy assets. Focused attempts to de-lever the balance sheet through prudent cost and capital management initiatives have helped the company to beat the COVID-19 blues. In addition, consolidation in the midstream sector through opportunistic merger and acquisition strategies has enabled it to consolidate its market position. The company appears to be an enticing pick with a VGM Score of B, Zacks Industry Rank #70 (top 27%) and a dividend yield of 8.2%. DCP sports a Zacks Rank #1.

Canadian Imperial Bank of Commerce (CM - Free Report) : Headquartered in Toronto, Canada, this leading financial institution offers a full range of products and services through its comprehensive electronic banking network, branches and offices across Canada, United States and around the world. With a relatively high weightage to domestic retail mortgage sector, the company appears to better placed than its competitors. Diligent execution of operational plans and a conservative balance sheet management remain additional tailwinds. The company appears to be a solid pick with a VGM Score of B, Zacks Industry Rank #102 (top 40%) and a dividend yield of 5.1%. Canadian Imperial Bank carries a Zacks Rank #2.

China Petroleum & Chemical Corporation (SNP - Free Report) : With its head office in Beijing, China, it is one of the largest petroleum and petrochemical companies in Asia. The company is the second largest crude oil and natural gas producer, and the largest refiner and marketer of refined petroleum products in China. The company is also the largest producer and distributor of petrochemicals in the nation. China’s economy is recovering faster than the rest of the world and is reportedly the only country that has survived the coronavirus-induced recession. China Petroleum & Chemical Corporation is relatively better placed than its rivals to capitalize on this with attractive and economically viable oil and natural gas reserves and a strong balance sheet. This company appears to be an enticing pick with a VGM Score of A, Zacks Industry Rank #43 (top 17%) and a dividend yield of 7.4%. It sports a Zacks Rank #1.

Vodafone Group Plc (VOD - Free Report) : Headquartered in Newbury, the United Kingdom, Vodafone offers telecommunication services in Europe and internationally. The company is benefiting from huge investments to upgrade its legacy network to cater to demand upsurge. Notably, Vodafone is recording a healthy subscriber and revenue growth in emerging markets like Egypt, Turkey and Northern Africa. Improving quality metrics in the domestic market and cost-management efforts are also aiding the company. The stock appears to be a solid pick with a VGM Score of A, Zacks Industry Rank #118 (top 46%) and a dividend yield of 6.1%. Vodafone carries a Zacks Rank #2.

Zacks Top 10 Stocks for 2021

In addition to the stocks discussed above, would you like to know about our 10 top tickers for the entirety of 2021?

These 10 are painstakingly hand-picked from over 4,000 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Start Your Access to the New Zacks Top 10 Stocks >>