Three High-Yield Dividend Shares Ideal for Long-Term Investment Over a Decade
Discovering lucrative high-dividend stocks isn't for the faint-hearted, often requiring a dive into more choppy waters. However, by being selective with your company choices (avoiding blindly buying the highest-yielding stocks), you can unearth some genuine treasures hidden beneath. Currently, Wall Street might be underestimating the potential of W.P. Carey (WPC -0.52%), Bank of Nova Scotia (BNS 0.02%), and Innovative Industrial Properties (IIPR -1.92%). Here's why you might want to buy these high-yielders and hold on for a decade, or even longer.
W.P. Carey's New Beginnings
In an unusual turn of events, W.P. Carey began 2024 with a misstep. The real estate investment trust (REIT) reduced its dividend following 24 consecutive annual increases. This might appear disheartening, but there's an intriguing twist. The dividend started to increase once more in the subsequent quarter and continued to rise in each subsequent quarter, effectively restoring the quarterly increase frequency that existed prior to the reduction. Essentially, the reduction was a reset.
Towards the end of 2023, W.P. Carey announced its decision to abandon the office sector, which then accounted for around 16% of its rents. Given the sector's challenges, this strategic move made sense. Instead of enduring the drag of a struggling industry for years, management opted for a clean break, even if it meant resetting the dividend. This bold decision, interestingly, left W.P. Carey with extra capital to invest for future growth. Consequently, this choice has, in many ways, strengthened the REIT's long-term position, which was management's primary goal.
Regardless, Wall Street has adopted a wait-and-see position, and the REIT's dividend yield lingers at a sizable 6.2%. Capitalizing on this alluring yield now could result in significant benefits once W.P. Carey demonstrates that this was a shrewd strategic choice by successfully investing the amassed capital, leading to a higher growth rate in the future.
Bank of Nova Scotia's Transformation
Speaking of drastic strategic shifts, Bank of Nova Scotia, often known as Scotiabank, is embarking on a multi-year transformation. At one point, the bank harbored aspirations to expand into Latin America. However, the region's economic volatility left the bank trailing its counterparts. As a result, Scotiabank is now focusing on leaving less appealing Latin American markets and refocusing on more promising ones. It's also aiming to enhance its presence in the U.S. market, a sector it had previously overlooked under its previous approach.
Parenthetically, executing this transformation won't happen overnight, even though Scotiabank recently acquired a substantial 15% stake in KeyCorp (KEY -0.54%), significantly boosting its U.S. exposure. Wall Street's skepticism is justified given the risks associated with this transition. Nevertheless, cautious dividend investors seeking high-yield stocks may find the risk associated with Scotiabank worthwhile. The bank has maintained its dividend streak annually since it began distributing dividends in 1833 (you read that correctly!).
If you're comfortable netting an impressive 5.6% dividend yield from a reliable payer, Bank of Nova Scotia might be an excellent addition to your portfolio, as Wall Street grapples with its shift towards a slightly altered business approach.
Innovative Industrial Properties' Distinct Offerings
Innovative Industrial Properties is offering investors a tantalizing 7.4% dividend yield. The dividend has been increased yearly for seven years (interestingly, the REIT only became publicly traded in 2016). And the unique market Innovative Industrial serves is anticipated to double in size by 2028 versus its 2023 levels!
There seems to be a missing piece in this puzzle - the fact that Innovative Industrial Properties possesses marijuana-related assets, with a considerable emphasis on grow houses. The drive towards legalization is positive, but it's not a smooth or straightforward process. Some investors may shy away due to the regulatory and political complexities. However, if you have the stomach for uncertainty, the longer-term trend clearly points towards marijuana as a growth industry – and Innovative Industrial Properties serves as an appealing, high-yield method to capitalize on this trend.
Generous Yields, not Additional Risks
Clearly, W.P. Carey, Scotiabank, and Innovative Industrial Properties all present additional risks in tandem with their high yields. Nevertheless, the discerning dividend investor will likely recognize that the accompanying risk is being adequately remunerated through the generous dividends these companies deliver. Even though it may take several years for each of these stories to unfold, investing now grants you the opportunity to harvest substantial income streams (possibly for decades to come) if you secure the stocks while Wall Street is still evaluating them.
After the dividend reduction and subsequent increase, W.P. Carey's reduced dividend yield of 6.2% might attract investors seeking high yields, offering the potential for significant benefits if the company demonstrates successful investing with its extra capital and increases its growth rate.
Bank of Nova Scotia's ambitious transformation towards refocusing on promising markets and enhancing its U.S. presence might seem risky to some, but its long-standing history of annual dividend payments since 1833 and a current yield of 5.6% could make it an attractive option for cautious dividend investors seeking high-yield stocks.
