11 High-Yielding Dividend Stocks That Are Wall Street’s Favorites for 2023

Investors love dividend stocks, but there are different ways to look at them, including various “quality” approaches. Today we focus on high yields.

A high dividend yield can be a warning that investors have lost faith in a company’s ability to maintain dividend payments. But there are always exceptions, some of which can be brought about by market events: Some investors remain skeptical about energy stocks, for example, after much pain before this year’s outstanding performance for the sector.

Below is a screenshot of stocks that have high dividend yields and are analyst favorites. The screen has no financial grade filters.

For investors who are interested in dividend stocks but want to focus on quality and total returns, this recent look at the S&P Dividend Aristocrats (companies that have consistently raised dividends for many years) might be of interest. For those seeking income but also concerned about dividend cuts, here is a list of stocks with dividend yields of at least 5% whose payouts should be well covered by free cash flow in 2023.

If you’re looking for higher returns with moderate risk, you should also be aware of funds that use covered call options strategies to boost income.

Removed filters for a high yield stock dividend screen

For a broad screen of high dividend yielding stocks that are preferred by analysts, we started with the S&P Composite 1500 SP1500 Index,
+1.51%,
which is composed of the S&P 500 SPX index,
+1.49%,
the S&P 400 Mid Cap MID index,
+1.76%,
and the S&P 600 Small Cap Index SML,
+1.55%.

S&P indices exclude energy partnerships, so we added the 15 stocks held by Alerian MLP ETF AMLP,
+1.55%
to the list. Energy partnerships tend to have high distribution yields, in part because they pass on the majority of earnings to investors. But they can also complicate your tax preparation. They can also be volatile such as CL00 oil,
+1.83%
CL00 and NG00 natural gas,
+1.97%
prices fluctuate.

The S&P indices also exclude business development companies, or BDCs, so we’ve expanded our home screen to include the 24 stocks held by the VanEck BDC income ETF BIZD,
+0.76%.
BDCs are specialized leveraged lenders that make loans with high interest rates, primarily to middle-market companies. They often take equity stakes in the companies they lend to, in a venture capital style of investing. The BDC space features several stocks with very high dividend yields, but is also notorious for volatility.

You have been warned: This particular stock screen focuses only on high yields and favorable valuations among analysts working for brokerage firms. There is no look back at dividend cuts and no cash flow analysis as described in other dividend articles. If you see something of interest resulting from the screen, you need to do your research to consider whether or not a long-term commitment to one or more of these companies is worth the risk as you seek high income.

The screen

Starting with the S&P Composite 1500 and the AMLP and BIZD components, there are 68 stocks with a dividend yield of at least 8%, according to data provided by FactSet.

Of the 68 companies, 55 took the first screen, because they were covered by at least five analysts interviewed by FactSet.

Among the 55 companies, 11 are rated “buy” or equivalent among at least 70% of analysts.

Here they are, ranked by the upside potential implied by analyst consensus price targets:

Agency

Tickers

Dividend yield

Share “buy” ratings.

Price December 20th

Consensus price target

Implied 12-month upside potential

LP energy transfer

ET,
+2.31%

9.08%

95%

$11.68

$16.24

39%

Enterprise Products Partners L.P

EPD,
+0.68%

8.12%

79%

$23.39

$31.69

35%

Baring BDC Inc.

BBCC,
-0.25%

11.67%

86%

$8.14

$10.75

32%

Redwood Trust Inc.

RWT,
+2.49%

13.45%

80%

$6.84

$8.92

30%

Crestwood Equity Partners L.P

CEQP,
+0.30%

9.75%

100%

$26.86

$35.00

30%

KKR Real Estate Finance Trust Inc.

KREF,
+1.73%

11.90%

71%

$14.45

$18.50

28%

Owl Rock Capital Corp.

ORCC,
+0.34%

11.21%

91%

$11.78

$14.73

25%

Sixth Street Specialty Lending Inc.

GRT,
+1.46%

10.48%

82%

$17.18

$20.90

22%

Oaktree Specialty Lending Corp.

OCSL,
-1.03%

9.97%

100%

$6.77

$7.75

14%

Ares Capital Corp.

ARCC,
+1.36%

10.45%

93%

$18.38

$20.87

14%

BlackRock TCP Capital Corp.

TCPC,
+1.76%

10.25%

71.43%

$12.49

$14.00

12%

Source: FactSet

One way to begin your search for any company listed here is to click on the ticker for more information.

You should also read Tomi Kilgore’s detailed guide to the wealth of information available for free on MarketWatch’s quote page.

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