SA Asks: What are the best dividend stocks right now?

[Dividends concept. Stack of dollars and calculator.]
designer491

What are the best dividend stocks right now for investors?

Seeking Alpha analysts Roberts Berzins [https://seekingalpha.com/author/roberts-berzins-cfa] and David Alton Clark [https://seekingalpha.com/author/david-alton-clark] gave us their picks.

Roberts Berzins [https://seekingalpha.com/author/roberts-berzins-cfa]: There are multiple ways to play in the dividend stock space. The one that I follow is about getting the highest yield possible without entering the NAV decay zone. Let's call it the "high yield, no income growth, and durable NAV" approach.

Here I see high-quality business development companies, or BDCs, as the most attractive area to search for durable double-digit yields.

BDCs (BIZD [https://seekingalpha.com/symbol/BIZD]), on average, are trading ~20% below their NAV mostly because of very loud headlines (e.g., “cockroaches,” liquidity gating, wider spread-driven markdowns), which have little bearing on the underlying fundamentals.

Kayne Anderson BDC (KBDC [https://seekingalpha.com/symbol/KBDC]) and Blue Owl Technology Finance (OTF [https://seekingalpha.com/symbol/OTF]) (10.8% and 12.8% yielding, respectively) are among the babies that have been thrown out with the bathwater. They have robust balance sheets, below-average non-accruals, and robust portfolios, i.e., the right fundamentals to deliver durable income.

David Alton Clark [https://seekingalpha.com/author/david-alton-clark]: For our SA investing group Retirement Investment Warrior, we have three separate income portfolio “sleeves” regarding quality dividend stocks, each with differing levels of risk and yield.

The lowest-risk Super SWAN portfolio averages a 5% yield. The objective of this sleeve is twofold: capital preservation coupled with safe, durable income. The anchor holding for this portfolio is Realty Income (O [https://seekingalpha.com/symbol/O]), with a 5.2% yield.

Realty Income checks all the boxes when it comes to size, scale, credit rating, diversification, payout history, and growth potential. Once I finally reach my retirement age and make the leap from accumulation to distribution, I want to have the majority of my wealth invested in securities like Realty Income.

The slightly higher risk SWAN portfolio has an average yield of 8%. This sleeve is focused on what I call "income optimization." These holdings pay a higher yield yet still have some "Sleep Well at Night" characteristics.

The Alerian MLP ETF (AMLP [https://seekingalpha.com/symbol/AMLP]), with a 7.3% yield, is the anchor holding for this portfolio. AMLP has a substantial yield and is backed by dependable real cash flow businesses. What's more, AMLP provides a hedge against inflation and geopolitical risks.

The highest risk is the Quality High-Yield portfolio, with an average yield of 11%. The objective of this sleeve is to enhance the overall portfolio yield while accepting higher beta exposure.

Starwood Property Trust (STWD [https://seekingalpha.com/symbol/STWD]), with an 11.2% yield, is the anchor stock for this portfolio. STWD is run by Barry Sternlicht. I consider Sternlicht one of the "best of the best" commercial real estate operators in the business. Sternlicht is truly elite compared to other mREIT operators. STWD has paid the dividend every quarter faithfully since its inception in 2009.

The stock is trading at the lower end of its historical price range due to the current narrative that there could be issues with commercial real estate. I see this as a "contrarian income opportunity." A "point of max pessimism" buy. You are provided the opportunity to lock in an 11% yield in a company with an elite operator due to the fact many see the commercial real estate market as presently distressed.

The fact of the matter is, it is times such as these that Barry Sternlicht tends to shine even brighter. He made his name buying up distressed properties during the savings and loan debacle in the late '80s/early '90s.

STWD (STWD [https://seekingalpha.com/symbol/STWD]) has a fortress balance sheet and plenty of liquidity to cover the dividend without question. Moreover, Sternlicht has expressed many times over he is dedicated to paying the dividend come hell or high water. STWD is one of the very few mREITs that has never cut, suspended, or completely eliminated the dividend.

_David Alton Clark is the leader of the SA investing group Retirement Income Warrior [https://seekingalpha.com/checkout/mp_1156]._

* Top Dividend Stocks [https://seekingalpha.com/screeners/9679329c-Top-Dividend-Stocks]
* Top High Dividend Yield Stocks [https://seekingalpha.com/screeners/9679329d-High-Dividend-Yield-Stocks]

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