The 3 Best High-Yield Dividend Stocks to Buy in September

Stocks with high dividend yields catch my eye more than ever these days. But dividends are not my only consideration. I also focus on solid core businesses and growth prospects. There are plenty of good investment alternatives on the market, but a few stand out in particular.

Here are my top three high-yielding dividend stocks to buy in September.

1. Dominion Energy

Utility stocks might seem boring to many investors. However, boredom is beautiful in some cases. I think that’s the case with Dominion Energy (D 0.81%).

Dominion’s stock chart over the past two months could be described as beautiful. The company’s share price has risen since the beginning of July. A big catalyst: Investor anticipation of interest rate cuts. I fully expect Dominion Energy stock to continue its momentum if the Federal Reserve cuts rates. And based on Fed Chairman Jerome Powell’s recent remarks, those rate cuts look increasingly likely.

Lower interest rates cause bond yields to fall, making bonds less attractive to income investors. This in turn makes Dominion more attractive with its juicy forward dividend yield of 4.8%. The lower rates also make it cheaper for Dominion to fund its loans.

The best thing about Dominion Energy, though, is its solid business. The company supplies electricity or natural gas to more than 4.5 million customers in 13 states. Arguably the most important of these markets is Dominion’s home state of Virginia. The upstate in particular has become a magnet for data centers, representing a key growth opportunity for Dominion.

2. Real estate income

I really believe Real estate income (A 1.16%) ranks among the best dividend stocks around. Exhibit A is the company’s forward dividend yield of 5.1%. Exhibit B is that Realty Income pays its dividends monthly rather than quarterly.

However, the most impressive thing about Realty Income’s dividend is its long-term growth. The real estate investment trust (REIT) has increased its dividend payout for 29 consecutive years with a compound annual growth rate of 4.3%.

Lower interest rates should benefit real estate income for the same reasons it helps Dominion Energy. Income investors shifting away from bonds should find the REIT’s high dividend yield attractive. Realty Income borrows heavily to finance the purchase of new properties; lower rates will make it less expensive for the company to expand.

Like Dominion Energy, data centers are a growth opportunity for Realty Income. In addition, the REIT should be able to increase its presence in Europe, which has a larger total addressable public rental market than the US.

3. United Parcel Service

In some ways, United Parcel Service (UPS 1.24%) might appear to be the type of dividend stocks you want to avoid. The stock has dropped quite a bit this year. Revenue and earnings fell year over year in the second quarter. UPS’s largest customer, Amazonexpands its internal logistics capabilities.

However, I see a major rebound on the way for UPS. The package delivery giant expects an improved performance in the second half of the year. The first year anniversary of his Teamsters contract was on August 1st. This is good news because most of the higher costs associated with this contract were in the first year. The company is focused on expanding its higher-margin opportunities in healthcare logistics and serving small and medium-sized businesses.

UPS management seems confident that its situation is improving as well. The company is restarting its share buyback program. It plans to buy back about $500 million of shares this year and increase that to about $1 billion a year in the future.

Then there is the dividend. UPS’s forward dividend yield is 5.1%. Continued demand for the package delivery should allow the company to generate plenty of free cash flow to extend its streak of 15 consecutive dividend increases.