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Following Tuesday’s job openings and labor turnover survey (JOLTS), the market reacted poorly in anticipation of the Fed response. Instead of the labor market loosening up, as preferred by the Federal Reserve to combat inflation, it hardened with a 5.8% job openings increase year-over-year.

More importantly, the increase beat the estimate by a significant margin, at 9.6 million job openings vs. 8.8 million expected. For the Fed, this signals that the elevated interest rate should be kept up for longer or even issued another hike. 

The fed fund futures have already priced in another hike below 50% by the end of 2023 and 2024. The highest hike probabilities remain for December ‘23 and January ‘24 at around 30%, per the CME FedWatch Tool.

On the other end of the monetary stick, if a recession unfolds and quashes employment and inflation, investors are still looking for steady income. This is where dividend stocks come into play as safeguards in uncertain economic times. 

The question is, which ones?

Top 4 Yielding Dividend Stocks

Alongside holding company shares and waiting for them to appreciate to cash out for profits, there are dividends. Some companies issue dividends as an extra loyalty bonus, either in the form of cash or more shares. These payouts come from a portion of a company’s profits, quarterly or annually.  

For instance, Walmart (WMT) portioned 43.85% of its profits as a dividend payout to issue a $2.28 annual dividend per WMT share. This means WMT shareholders earn a 1.43% cash yield every year. The industry average yield is 1.7%.

It also bears noticing that WMT is a dividend aristocrat stock. The retail king earned that title by increasing dividends for at least 25 consecutive years. In the case of Walmart, it managed it for 49 consecutive years.

This is exceedingly important to consider because it means that Walmart is sufficiently resistant to give investors yields regardless of economic downturns.

However, some companies give even higher yields. Note that dividend payouts per share in cash may be lower despite having a higher yield percentage. That’s because different companies have differently priced shares, enabling investors to hold 10x as many shares from lower-priced companies. 

TC Energy Corp ($TRP) (8.1% Dividend Rate)

In the dividend game, being essential and mature is key. TC Energy is an established energy infrastructure company, supplying civilization with power plants, pipelines, and energy storage facilities for over 60 years.

Although TRP’s debt-to-equity ratio is rather high at 180%, this niche is capital-intensive. With that in mind, TRP has a long history of effectively managing its debt. Likewise, it is well-positioned to service the global energy market as it continues to expand its diversified investments.

TC Energy’s annual dividend yield stands at 8.1%, higher than the industry average of 5.2%.

Verizon Communications Inc. ($VZ) (8.3% Dividend Rate)

In the digital era, there is hardly a more secure cash flow than supplying people with means to connect. Verizon is one of the largest wireless carriers in the US, holding ~30% market share as of Q1 2023.

Verizon is also in the capital-intensive arena, but with a lower debt-to-equity ratio of 163%. The telecom giant is on its way to join the aristocrat dividend club, having increased its dividend payouts for 18 consecutive years.

Verizon Communications’ annual dividend yield stands at 8.3%, beating the telecom industry average of 7.8%

National Storage Affiliates Trust ($NSA) (7.4% Dividend Rate)

Running for over 30 years, NSA is a real estate investment trust (REIT). Across the country, it operates over 2,700 self-storage facilities. This business is widely known as recession-proof, given that people need to store their belongings in economic downturns safely. 

NSA has a debt-to-equity ratio of 152.6%, with $3.78 billion in total liabilities against $6.16 billion of assets. Although rising interest rates hurt the NSA’s bottom line by increasing borrowing costs, it is not the first hiking cycle the company has endured.

NSA’s annual dividend yield stands at 7.4%, significantly beating the industry average of 4.5%

Northwest Natural Holding Co. ($NWN) (5.2% Dividend Rate)

Serving Oregon and Washington’s gas utility needs, NWN has been operating for over 100 years. Regardless of economic downturns, people will always need to heat their homes, especially in the north. 

NWN has the lowest debt-to-equity ratio of 127.1% of all the listed companies so far. Although still on the higher end, much of NWN’s debt goes to expansions. Recently, the gas company acquired Rose Valley Water in Peoria, Arizona, one of Phoenix’s largest suburbs. 

NWN’s annual dividend yield is 5.2%, beating the industry average of 4.1%.

Which economic sector is best suited for economic turmoil this time around? Let us know in the comments below.

About the author

Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird’s US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firm specializing in sensing, protection and control solutions.