High-yield dividend stocks make stock investing sound like a boring but in many cases highly lucrative business. Here is nothing wrong with that. The economic conditions have changed in 2022 and there are some signs the U.S. economy may slow down and even face soon a recession.
The secret to successful stock investing is to be always vigilant, flexible, and ready to change the investment strategy not by reading what some social media forums say but according to facts and data.
Even if you only consider yourself as an active investor, receiving frequent passive income does not look bad. When this regular passive income is also very attractive, enough to beat inflation in most cases and pay bills or fund some of your aspirations then high-dividend stocks deserve a place in your stock portfolio.
Nobody should complain about getting lazily and passively additional income. Here are the top seven high-yield dividend stocks to buy in July.
| WLKP | Westlake Chemical Partners | $24.85 |
| OCSL | Oaktree Specialty Lending | $6.55 |
| PFLT | PennantPark Floating Rate Capital | $11.43 |
| OHI | Omega Healthcare Investors | $28.3 |
| OKE | ONEOK | $55.07 |
| BBDC | Barings BDC | $9.31 |
| ET | Energy Transfer LP | $9.93 |
Westlake Chemical Partners (WLKP)
Westlake Chemical Partners (NYSE:WLKP) operates “three ethylene production facilities in Calvert City, Kentucky, and Lake Charles, Louisiana, with an annual capacity of approximately 3.7 billion pounds and a 200-mile ethylene pipeline.”
The forward dividend yield is 7.44% and the 1-year target estimate is $42.71 which could mean a further upside potential of 82%. The forward payout ratio of 85.99% is high but this does not mean there is not any more room for further increases.
Notably, It is notable that WLKP stock dividend yield beats the material dividend stocks’ average yield of 2.82%.
The shares of Westlake Chemical Partners are on discount now as they have losses of approximately 12% in 2022. The firm has excellent profitability and in 2021 net income grew 24.76% to $82.55 million. Having a solid free cash trend the dividend yield seems very safe now.
Oaktree Specialty Lending (OCSL)
Oaktree Specialty Lending (NASDAQ:OCSL) is a specialty finance company offering credit solutions to companies that have limited access to either public or syndicated capital markets. The types of loans provided include first and second lien loans, unsecured and mezzanine loans, and preferred equity providing both income and capital appreciation for Oaktree Specialty Lending.
The shares have a forward dividend yield of 10.19% and are cheap as they trade at a PE Ratio (TTM) of 9.49.
The forward payout ratio of 89.78% is high and the good news is that the firm beats the average financial firm’s dividend yield of 3.18%.
The sales growth is robust and net income growth was 504.88% in 2021 to $237.26 million. The 1-year target of $8.14 represents a nice potential return of approximately 28%.
PennantPark Floating Rate Capital (PFLT)
PennantPark Floating Rate Capital (NYSE:PFLT) is a financial services company that primarily invests in U.S. companies that have a form of competitive advantages such as a competitive market position, growth potential, and strong cash flow trend.
The shares of PennantPark Floating Rate Capital have losses of nearly 15% in 2022 and have a forward dividend yield of 10.02%.
They are also cheap as they trade at a PE Ratio (TTM) of 11.15. This business has several high-quality features. The sales growth is relatively stable when at the same time the profitability has become stronger in the past two consecutive years. In 2021 the firm reported a net income growth of 206.93% to $56.52 million.
This stock has a 1-year target of $13.40 for possible capital gains of about 23%. Not bad at all, as if we add the dividend yield the total return could be nearly 33%.
Omega Healthcare Investors (OHI)
Omega Healthcare Investors (NYSE:OHI) is a healthcare REIT that has consistently increased its dividend as of 2003. This is very positive news for investors that need not only regular income as cash dividends but growth in them to beat inflation. With that said the forward payout ratio of 175.74% is too high and could lead to a dividend cut.
The stock has a forward dividend yield of 9.19% which beats the recent inflation figure of 8.6%.On top of that, the average real estate stock dividend yield is 4.46% another beat for Omega Healthcare Investors. For REITS the key metric to analyze and monitor is Funds from Operations (FFO).
The firm is doing very well as in the past three years it accelerated its FFO figures. After a surge of 893.88% in 2019 to $686.71 million, FFO increased 8.44% and 12.0% in 2020 and 2021 respectively. This trend is highly positive.
ONEOK (OKE)
ONEOK (NYSE:OKE) is a midstream service provider that transports and markets natural gas. The soaring energy prices in 2022 have not as expected a very positive impact on the stock price performance of ONEOK as the shares have losses of nearly 8% year-to-date. Could this be a great contrarian play now? I believe so.
The OKE stock has a forward dividend yield of 6.56% and a 1-year target of 72.06%. This would be a nice return of 34% if materialized.
The forward payout ratio of 86.13% is high with further increases being likely.
The business model of this firm is highly effective and profitable. The sales growth of 104.24% in 2021 was very robust and the profitability is outstanding. Net income grew 144.73% in 2021 to $1.5 billion.
As long as high energy prices persist in 2022 the shares of ONEOK should rebound while now their dividend yield compensates to a large degree to be patient and wait for this rebound while they mitigate high inflationary pressures too.
Barings BDC (BBDC)
Barings BDC (NYSE:BBDC) “is a closed-end, non-diversified investment company. The Company’s investment objective is to generate income by investing directly in privately held middle-market companies to help companies fund acquisitions, growth, or refinancing”.
It primarily invests in fixed-income securities such as bonds and syndicated senior secured loans. The shares of Barings BDC have a forward dividend yield of 10.30% and are cheap as they trade at a PE Ratio (TTM) of 8.58. The analysts have a 1-year target of $12.11 which represents a return of 29%.
The forward payout ratio of 96.55% is considered high but this does not necessarily mean it cannot continue to move slightly higher.
The firm seeks to have found an edge in its business model in the past three consecutive years. In 2018 it reported a net loss but ever since 2019, 2020, and 2021 it reported profits. In 2021 the net income growth was remarkable at 850.07% to $77.69 million.
Keep an eye on this stock as it is on sale now after having losses of nearly 15% in 2022.
Energy Transfer LP (ET)
Energy Transfer LP (NYSE:ET) transports and stores natural gas, crude oil, refined products, and liquid natural gas. The shares are up nearly 22% in 2022 which can be explained by soaring energy prices.
The forward dividend yield is 7.71% and even though the stock has rallied year-to-date it remains cheap trading at a PE Ratio (TTM) of 9.38.
This firm has a very conservative forward payout ratio of 53.34%. A lot of room exists for dividend hikes and special cash dividends.
The profitability of Energy Transfer LP is excellent. In 2021 net income grew 944.51%. The company is also generating tons of positive free cash flow, the fuel to higher stock price valuation and to higher cash dividends. It is no wonder that analysts have a 1-year target of $15.47 or a 56% potential increase.
On the date of publication, Stavros Georgiadis, CFA did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.