2 No-Brainer High Yield Stocks to Buy for $1,000 Right Now

If you like dividends, you’ll probably like owning a company that has paid dividends every year since 1833. Bank of Nova Scotia (NBS -0.25%) can make this claim. Or how about a company that has trademarked the nickname “The Monthly Dividend Company”? Exactly that Real estate income (A -0.71%) he did. Here’s why these are two high-yielding stocks to buy today if you have $1,000 (or more) to invest.

The Bank of Nova Scotia is working on this issue

To show the bad news first, Bank of Nova Scotia, often called Scotiabank, lagged its banking peers on key industry metrics such as earnings per share growth, noninterest income growth and return on equity. It’s not good, but the management is working on the problem. Specifically, they move their business to the best markets and away from the weakest.

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This will not be a quick fix as the review will take some time to complete. But investor concerns about lagging performance pushed Bank of Nova Scotia’s dividend yield up to a whopping 6.5 per cent, well above the bank’s average of about 2.5 per cent. You will be well paid to wait for Scotiabank to renew its business.

But there is another important factor here. Bank of Nova Scotia is a Canadian bank. Canadian banking regulations are very strict. The rules basically shield the country’s biggest players from competition. Scotiabank is one of the largest banks in the country, so it has an entrenched position in the industry at the core of its business.

The real issue is the company’s growth effort in South America, which hasn’t worked out as hoped. That’s where the big changes are happening, but since the bank’s foundation remains strong, the risk here is probably not as great as it might seem at first glance. For long-term income investors, the risk/reward tradeoff appears tilted in a favorable direction.

Real estate income is boring and that’s okay

Realty Income is the largest real estate investment trust (REIT) by a wide margin. (Net rents require tenants to pay most of the property’s operating costs.) In fact, with a market cap of $50 billion, it’s roughly four times the size of its closest peer. This gives real estate income valuable advantages.

For starters, Realty Income is so large that it can take on transactions that would simply be too large for smaller net lease REITs to handle. That includes acting as an industry consolidator, noting that the company has acquired two smaller REITs in the past decade. But there’s more to it because being so big gives this investment-grade REIT greater access to the capital markets. And that, in turn, generally gives it a very low cost of capital. Thus, it can also make profitable offers where higher-cost competitors cannot.

Overall, Realty Income is strongly positioned within the industry to support its attractive dividend yield of 5.2%. The payment has increased every year for nearly three decades. There are higher-yielding REITs you can buy, but few can match Realty Income’s consistency and none of its peers can match its size. Simply put, if you like to own the biggest and best income, Realty Income is the high-yield net lease REIT you’ll want to buy.

Two easy-to-love dividend stocks

Although Scotiabank comes with some warts, the high yielding bank remains a very well positioned player in the banking sector. It looks very likely to fumble in its recovery effort while continuing to reward investors well. Realty Income, meanwhile, offers an attractive yield and a sector-leading business. Even the most conservative of investors will likely find the fairly boring REIT appealing.