Best High-Yield Dividend Stocks Worth to Buy in June

Investing in high-yield stocks is a strategy many investors use to secure a steady income stream. High-yield stocks offer significant dividend payouts, making them an attractive option for those looking to maximize their returns. June is a crucial month for evaluating and purchasing high-yield stocks as companies announce their dividends and financial performance for the year. In this article, we will explore the best high-yield stocks worth buying in June, providing detailed insights into their performance, potential, and why they make a solid investment choice.

2 High-Yield Stocks That Are Screaming Buys

A dividend yield is calculated by dividing the annualized dividend by the current stock price. If the stock price falls while the dividend remains unchanged, the yield increases.

This concept makes Bank of Nova Scotia (BNS) and Agree Realty (ADC) particularly compelling. If you're searching for high-yield dividend stocks, here's why these two companies should be on your radar this June.

Scotiabank is Working

The Bank of Nova Scotia, commonly known as Scotiabank, is one of the largest banks in Canada. The highly regulated Canadian banking sector has allowed industry giants like Scotiabank to secure strong, entrenched positions. This regulatory environment has fostered a conservative approach among the country’s largest banks, forming the foundation upon which Scotiabank has paid uninterrupted dividends since 1833.

However, Scotiabank has adopted a unique growth strategy compared to its peers. While most major Canadian banks have expanded into the U.S. market, Scotiabank has focused on South America. This higher-risk decision has not yielded the expected results, despite the long-term growth potential of emerging markets compared to developed ones. Consequently, Scotiabank lags behind its competitors in key metrics such as earnings growth and return on equity.

Recognizing these challenges, Scotiabank is now charting a new course. The bank is prioritizing markets with strong growth prospects, like Mexico, and reducing its focus on less appealing markets, such as Colombia. This strategic shift is a multi-year process, but Scotiabank remains committed to maintaining its dividend throughout. Although there is no planned dividend increase for 2024, a hike in 2025 seems highly likely.

So, why consider buying now? The current uncertainty has left Scotiabank with an impressive 6.5% dividend yield, significantly higher than the average yield of around 3% for U.S. banks. This offers a substantial yield boost with only a modest increase in risk.

Agree Reality Maintains Strong Growth

Agree Realty's yield isn't as high as some, but at around 5%, it remains very attractive. Impressively, the dividend has been increased annually for about a decade, with dividend growth averaging roughly 6% per year over the past 10 years. These figures are compelling for what is essentially a stable real estate investment trust (REIT).

Agree Realty is a net lease REIT, meaning its tenants are responsible for most property-level operating costs for the assets they occupy. The company focuses on the retail sector, owning similar assets that are relatively easy to buy, sell, and lease. Finding new tenants, should a vacancy occur, is not particularly challenging either.

There is some risk because net lease properties are single-tenant locations, but with around 2,100 properties, the risk posed by any single tenant or property is quite low. The stock is currently down about 25% from its 2022 highs, making it particularly interesting now. This drop is largely due to rising interest rates, which increase costs for property owners like REITs.

While this is a legitimate concern, property markets will eventually adjust to the new rate environment, as they have many times before. When that happens, this REIT will be well-positioned to resume growing its business more quickly.

How large could Agree Realty become? Net lease REIT giant Realty Income owns over 15,400 properties. With Agree's significant growth potential, income investors should consider this fast-growing REIT while the market sentiment remains pessimistic.

Why Invest in High-Yield Stocks?

Investing in high-yield stocks offers numerous advantages, particularly for those seeking income stability and growth potential.

Income Generation: High-yield stocks are an excellent source of passive income. Investors receive regular dividend payments, which can be a reliable income source, especially in retirement.

Stability: Companies that consistently pay high dividends often have stable business models and strong cash flows, providing a measure of safety for investors.

Compounding Effects: Reinvesting dividends can significantly boost returns over time. This compounding effect can lead to substantial portfolio growth, especially when dividends are reinvested in the same high-yield stocks.

Use Intellectia.AI to Leverage Your Advantage

While there's probably no rush to buy either Scotiabank or Agree Realty, you don't want to overlook these opportunities. Eventually, investors will likely recognize their favorable risk/reward profiles. Use Intellectia.AI as your powerful assistant to navigate the stock market and make informed decisions.