The 3 Best Dividend Stocks Pay Over 6% Now

The best dividend stocks can anchor your portfolio during stormy times in the market. But not every high dividend-paying stock is safe or worth owning. 

I'm going to show you three that are, and they all come from one of my favorite sectors of the market.

Bank stocks have been out of favor since the market collapsed back in March.

It is one sector of the market that did not recover when the rest of the market began to rally.

The SPDR S&P Regional Banking ETF (NYSEARCA: KRE) is still off a whopping 28% in 2020, as investors have favored flashy technology stocks over boring old banks.

There have been concerns about loan losses from the dramatic decline in GDP in the second quarter. That has not happened as the U.S. Federal Reserve has acted swiftly to ensure the banking system could withstand any shocks.

PPP and other lending programs, along with unemployment extensions, helped people keep their bills paid, so we have not seen the type of defaults that traders feared.

There was a genuine fear that the Fed would not let banks pay out more in dividends than it earned. In fact, some banks have had to cut or even eliminate dividends.

But that has not been a problem for most regional and community banks. These banks are far more profitable than the headline banks, and in addition to dividends, some of them have been given the regulatory green light to start buying back stock again. That's great for shareholders.

What investors did not take into account was the fact that the banking system was better capitalized than ever before when the crisis hit. They had more than enough capital to deal with the problems caused by the pandemic.

It looks as if investors are starting to realize that the regional banks are in much better shape than initially feared.

The regional bank indexes have bounced sharply this month and price crossed back over the 200-day moving average earlier this month.

That is an excellent indication that a new bull market in regional banks is underway.

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Disclosure: None.

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