5 Best High Dividend Stocks to Buy in November 2021

The last year hasn’t been good for investors looking for regular income from their investments. While the S&P 500’s dividend yield is at multi-year lows, fixed income instruments are yielding a fraction of the inflation. High dividend stocks could be a good bet for investors looking at regular income.

While the US Federal Reserve looks set to unwind its accommodative monetary policy, it’s still much time before the returns from fixed income instruments deliver real returns which are higher than inflation. Here are the five best high dividend-paying stocks that you can buy in November 2021.

1. Ellington Financial (NYSE: EFC)

Ellington Financial invests in several financial instruments which include mortgage loans, mortgage-backed securities, consumer loan-backed securities, and collateralized loan obligations. The stock has gained 24% so far in 2021 and its dividend yield is almost 10%, which makes it among the best dividend stocks to buy in November 2021. Wall Street analysts are also bullish on EFC stock and it has six buys and two hold ratings. Its median target price of $19.75 is a 9.2% premium over current prices.

EFC looks like a reasonably valued high dividend stock

EFC looks like a reasonably valued high dividend stock. The company said that its estimated book value at the end of September was between $18.31-$18.37 per share, which is higher than the current stock price. It trades at an NTM (next-12 months) PE of around 9.4x which again looks reasonable.

Now, there are concerns over mortgage REITs as the expected rate hikes and tapering would lead to an increase in yields and a fall in prices of fixed income assets. That said, EFC’s reasonable valuation and almost double-digit dividend yield, make it among the best dividend stocks to buy in November 2021.

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2. Chevron (NYSE: CVX)

CVX stock is up about 35% in 2021. While the stock is outperforming the broader markets, it is underperforming many of its smaller peers. Smaller energy companies have seen a much larger rise this year as crude oil prices have risen to the highest level since 2014. Here it is worth noting that smaller and leveraged energy companies have a higher sensitivity to crude oil prices as compared to their larger peers. Meanwhile, with a dividend yield of 4.7%, which is over thrice of the S&P 500’s dividend yield, Chevron is among the best high dividend stocks that should be on your radar.

Morgan Stanley is bullish on CVX stock

Last month, Morgan Stanley reiterated Chevron stock as overweight. “E&Ps have posted a warranted rally, underpinned by rising commodity prices and a strategic shift toward FCF & returns. Now, more stable oil majors CVX & XOM trade at FCF yields in-line with large cap E&Ps – a valuation disconnect that could support a catch-up trade for these two Big Oil stocks,” it said in its note.

CVX is a high dividend stock in the energy industry

CVX reported earnings beat in the third quarter and the stock surged to its 52-week highs. The stock trades at an NTM EV-to-EBITDA multiple of 5.3x which looks quite reasonable even as the valuations of commodity companies tend to bottom near cyclical peaks. That said, given the current momentum in the global economy, and the supply discipline from OPEC+, crude oil prices look set to stay at elevated levels for some more time.

CVX looks among the best high dividend stocks to buy in the energy industry. The stock should also see a catch-up trade after the recent underperformance.

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3. Devon Energy (NYSE: DVN)

With a YTD gain of 165%, Devon Energy is the second-best performing S&P 500 stock, just behind Moderna. Devon is a leading oil and gas exploration and production company in the US, focusing on onshore drilling. The company posted record free cash flows in the third quarter and has been using the cash for dividends and buybacks. It announced a $1 billion share buyback in the third-quarter earnings release which is about 4% of its market cap. It also increased its total dividend by 71% to $0.84.

Goldman Sachs picks Devon as among the best high dividend stocks

Goldman Sachs projects that Devon would increase its dividends at a CAGR of 50% between 2021 and 2023 and the stock’s dividend yield would be 7.5% in 2022. If Goldman’s projections are correct, DVN could be among the highest dividend stocks in the energy industry next year.

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4. Edison International (NYSE: EIX)

Utility stocks are known to pay good dividends. However, with a dividend yield of around 4.2%, Edison stands out as among the best high dividend stocks in the utility industry. The stock’s price action has lagged the broader markets though and it is up only about 5% for the year. The long-term price action has been even dismal and the shares have lost almost 10% over the last five years. Even after accounting for the dividends, the stock has underperformed the markets by a wide margin.

Edison stock has been bogged down by the California fire incident and the company estimates that the losses from the fire would be around $7.5 billion. Meanwhile, Wall Street analysts look constructive on the stock and it has 11 buys and 7 seven hold ratings. None of the analysts rate the stock as a sell. Its median target price of $69 is an 8.6% premium over current prices.

EIX is a stable dividend stock

If you are looking for a stable dividend stock, EIX could be among the best bets. Unlike energy companies whose dividends can be quite volatile, generally, the dividends for utility companies are quite stable. Utility companies are defensive stocks that can add diversification to the portfolio.

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5. Pinnacle West Capital Corporation (NYSE: PNW)

Pinnacle West Capital is a holding company that owns Bright Canyon Energy and Arizona Public Service. The stock has a dividend yield of 5.1% at current prices. Goldman Sachs expects the company to increase its dividend at a CAGR of 7% between 2021 and 2023 and is projecting its dividend yield at 5.3% in 2022. Meanwhile, in terms of price action, the stock has been a terrible underperformer and is down 18% in 2021 even as the broader markets have risen to a record high.

PNW is a high dividend stock but an underperformer

Wall Street analysts are also bearish on the stock and it has four buys, seven hold, and five sell ratings. Its median target price of $69 is a premium of only about 6.5% over current prices.

That said, if you are looking for stable and rising dividends, PNW is among the dividend stocks that should be on your watchlist in November 2021.

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