The previous Sure Dividend article covered the 10th through 6th highest yielding Sure Dividend stocks. This article covers the 5th through 1st highest yielding stocks in the Sure Dividend database. All stocks in the Sure Dividend databases have 25+ years of dividend payments without a reduction. Without further ado, the highest yielding stocks in the Sure Dividend database are analyzed below.

#5 – Old Republic International (ORI)

Old Republic International is true to the ‘old’ in its name. The company has been around since 1887. Old Republic International is one of the larger commercial underwriters in the U.S. The company has a market cap of $3.9 billion and a dividend yield of 4.9%.   The company has paid dividends for an impressive 73 consecutive years, and has increased its dividend for over 25 consecutive years.

Despite its impressive history, Old Republic’s growth has stalled. The company has grown revenue at just 0.61% a year over the last decade. This anemic growth is below inflation. In addition to sluggish growth, Old Republic International also has a payout ratio of 88%; nearly all the money the company generates goes straight to paying its dividend, leaving little for growth.

#4 – Universal Health Realty Trust (UHT)

Universal Health Realty Trust is a publicly traded REIT with a dividend yield of 5%. UHT was founded in 1986, and now has 61 investments in 18 states in the US. The company’s investments include hospitals, medical office buildings, behavioral healthcare facilities, and childcare centers. The bulk of the company’s properties are medical offices and clinics.

Universal Health Realty Trust’s 5% dividend yield is appealing. Unfortunately, the company has done little to grow its dividend over the last decade. UHT’s dividend has grown at a compound rate of just 2.5% a year. Additionally, the company’s stock price has a higher than average standard deviation. UHT’s exposure to the health care industry does help insulate it from recessions, as health care tends to be less effected than many other industries.

#3 – R.R. Donnelley (RRD)

R.R. Donnelley is the world’s largest commercial printer. The company generates about 75% of its revenue in the U.S., with 25% coming internationally. The company has a high dividend yield of 5.3% and a market cap of $3.85 billion. R.R. Donnelley has not reduced its dividend payments since it started paying dividends in 1985. The company’s long streak of continuous dividends is impressive. What is less impressive, however, is that R.R. Donnelley has not increased its dividend payments since 2004. Over a decade of no growth is not a good sign for the company.

Earnings-per-share are lower than they were in 1998 for R.R. Donnelley. The printing industry is in a slow decline due to the rise of the internet and the ease of online communication. R.R. Donnelley offers investors a high dividend yield and little else. The company’s payout ratio has steadily risen over the last decade as earnings-per-share have slowly declined and the dividend has remained constant. With a payout ratio around 63%, the dividend is not in immediate danger. With that said, no dividend growth in over a decade is troubling.

#2 – HCP Inc. (HCP)

Like UHT, HCP is a publicly traded Health Care REIT. The stock has a 5.4% dividend yield combined and trades for about 13 times annual funds from operations. HCP has increased its dividend payments for 30 consecutive years. It is the only REIT in the exclusive Dividend Aristocrats Index.

HCP focuses exclusively in health care real estate. The company further specializes in senior housing and post acute care facilities. Together, these two types of facilities make up about two-thirds of the companies operating income.

Over the last decade, HCP has grown its dividends per share at just 3.3% a year. The company will likely to continue to grow at around 3% to 4% a year. HCP is benefiting from the rising elderly population in the U.S. The more the elderly population grows, the higher the demand for senior housing. As the 3rd largest health care REIT, HCP is well positioned to take advantage of this trend. With that said, HCP’s relatively slow growth makes it more appealing for income oriented investors than true dividend growth investors.

#1 – AT&T (T)

AT&T is the highest yielding stock in the Sure Dividend database. The company currently has a robust 5.5% dividend yield. Unlike the other stocks with the top 5 highest dividend yields, AT&T has decent growth prospects.

The company has grown dividends per share at about 4% a year over the last decade. While not overly impressive, 4% growth combined with a 5%+ dividend yield offers investors a total return of 9%, before any changes in valuation multiples.

AT&T may well grow faster over the coming decade than the last decade. The company has successfully transitioned to being one of the two leading wireless carriers (the other being Verizon). In addition to a consolidated wireless carrier industry, AT&T also has growth prospects from its planned acquisition of DirecTV. The DirecTV acquisition will help AT&T expand its digital content distribution and give the company a foothold in South America.

In addition to AT&T’s high dividend yield and decent growth, the company has a low stock price standard deviation of just 22% and a price-to-earnings ratio of just 13.6. The company has traded at an average P/E ratio of around 15 for much of its history; AT&T appears somewhat undervalued at current levels and could see gains from valuation multiple increases in the future.

Final Thoughts

AT&T stands out among the 5 highest yielding stocks in the Sure Dividend database. The company offers a nice mix of high yield, growth, and low price-to-earnings ratio. The rankings of each of these stocks using The 8 Rules of Dividend Investing are shown below:

• Old Republic International – 135th out of 155
• Universal Health Realty Trust – 112th out of 155
• R. Donnelley – 113th out of 155
• HCP Inc. – 109th out of 155
• AT&T – 23rd out of 155