Morgan Stanley (MS)
The financial sector has made a strong comeback after being hit hard by the pandemic. And banks are rewarding shareholders with major “pay raises.”
Case in point: Financial giant Morgan Stanley announced a 100% increase to its quarterly dividend rate last summer. It also unveiled a new share repurchase program, planning to buy back up to $12 billion of its own shares through June 2022.
In 2021, revenue increased by 23% from the year-ago period while net income grew 37%.
The investment bank currently sports an annual dividend yield of 3.1%, higher than what’s being offered by other big financial stocks like Bank of America (1.9%), Goldman Sachs (2.4%), and JPMorgan Chase (2.8%).
After a solid bull run in 2020 and 2021, Morgan Stanley shares seem to be taking a break lately. The stock is down 8.7% year to date, which could give contrarian investors something to think about.
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Verizon Communications (VZ)
Moving up the yield ladder, we have telecom giant and household name Verizon.
The company’s 4G LTE network covers 99% of the U.S. population. It’s also one of the first to deploy 5G in the country.
In Q4 of 2021, Verizon’s consumer segment had 115.4 million retail connections, 91.5 million of which were postpaid.
With customers paying Verizon every single month, the company is able to deliver a healthy stream of recurring dividends to investors.
In September, Verizon boosted its quarterly payout to 64 cents per share, which translates to an annual dividend yield of 5%.
That’s higher than arch rival AT&T’s yield of 4.6%.
The telecom sector hasn’t been a market favorite over the past year, but bulls still see plenty of upside ahead. Goldman Sachs, for instance, reiterated a Buy rating on Verizon earlier this month. Its price target of $61 per share is roughly 19% above the current levels.
Ellington Residential Mortgage REIT (EARN)
For dividend investors who really crave high yields, check out Ellington Residential Mortgage REIT.
Structured as a real estate investment trust, it invests and manages residential mortgage and real estate-related assets.
Ellington has a unique focus: mortgage-backed securities for which the principal and interest payments are guaranteed by a U.S. government agency.
In June 2021, Ellington Residential raised its quarterly dividend rate from 28 cents per share to 30 cents per share.
In October, management decided to switch to a monthly distribution schedule. The company started paying monthly dividends of $0.10 per share in November.
“By shifting to a monthly dividend,” CEO Laurence Penn says, “we are further aligning our distribution practices with the interests and expectations of income-oriented shareholders."
At the current share price, the REIT offers a mouth-watering dividend yield of 11.9%.
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