Bank of America (BAC)

Let’s start with a bank stock. Why? While many sectors fear rising interest rates, banks look forward to them.

Central banks hike interest rates to tame inflation. Banks lend money at higher rates than they borrow, pocketing the difference. When interest rates increase, the spread for how much a bank earns widens.

And it just so happens that quite a few banks, such as Bank of America, have upped their payouts to shareholders over the past year.

In July, it boosted its quarterly dividend 17% to 21 cents U.S. per share. That gives the company an annual yield of 1.8% at the current share price.

According to the latest earnings report, the bank earned a profit of US$7.0 billion in Q4, up 28% from a year ago.

Even with the stock market’s sluggish start in 2022, Bank of America shares have climbed 30% over the past 12 months. Its peers, such as Goldman Sachs and Morgan Stanley — both of which raised their dividend in 2021 — have also enjoyed substantial rallies during this period.

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Southern Co. (SO)

Moving up the yield ladder is Southern, a gas and electric utility holding company headquartered in Atlanta. It serves close to 9 million customers.

The utility sector is known for being a defensive play — and not just against inflation. Come what may, people still need to heat their homes in the winter and turn the lights on at night.

The recession-proof nature of the business means Southern can pay reliable dividends. In April, the company boosted its quarterly payout by 2 cents per share to 66 cents per share, marking the 20th consecutive year that Southern has increased its dividend.

Look further back, the company has paid steady or increasing dividends since 1948.

In 2021, Southern earned an adjusted profit of US$3.41 per share, up 5% from 2020. Management expects adjusted earnings per share for 2022 to be in the range of US$3.50 to US$3.60.

Trading at US$64 apiece, Southern stock offers a solid annual yield of 4.1%.

Global Partners (GLP)

If you really want oversized yields, you may have to look at the lesser-known stocks — like Global Partners.

Structured as a master limited partnership, Global Partners is one of the largest independent owners, suppliers and operators of gas stations and convenience stores in the U.S. northeast.

At the same time, it is a leading wholesale distributor of fuel products and is involved in transporting petroleum products and renewable fuels by rail from the mid-continental U.S. and Canada.

The business pays quarterly distributions of 58.5 cents U.S. per unit, which comes out to a staggering annual yield of 9.1%.

In the trailing 12 months as of Sept. 30, Global Partners’ distributable cash flow covered its payout 1.1 times after factoring in distributions to its preferred unitholders.

The partnership will report Q4 results on Monday, Feb. 28 before the markets open.

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About the Author

Jing Pan

Jing Pan

Investment Reporter

Jing is an investment reporter for MoneyWise. Prior to joining the team, Jing was a research analyst and editor at one of the leading financial publishing companies in North America. Jing has covered numerous aspects of the financial markets, from blue chip dividend stocks to small cap tech stocks to precious metals and currency. An avid advocate of investing for passive income, he wrote a monthly dividend stock newsletter for the better half of the past decade. In his spare time, Jing plays basketball, the violin and the ukulele.

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