3 Magnificent Dividend Stocks With Yields Above 6% to Buy in December

The past couple of years have been terrific for stocks, with the benchmark S&P 500 index up a whopping 57.1% since the end of 2022. However, after the index's two-year bull run, it's getting harder to find quality dividend stocks that offer satisfying yields.

The average stock in the S&P 500 index offers a yield of just 1.2%, but Pfizer (NYSE: PFE), W.P. Carey (NYSE: WPC), and Omega Healthcare Investors (NYSE: OHI) offer more than 6% at recent prices. These businesses support steadily rising dividend payouts with time-tested strategies. Here's why adding them to a diversified portfolio now makes a lot of sense for most income-seeking investors.

Pfizer

Pfizer is one of the world's largest pharmaceutical companies. Profit margins on its patent-protected medicines are wide enough that the company has been able to raise its dividend payout for 15 consecutive years.

Last December, Pfizer raised its dividend payout to 0.42 per share, which works out to a yield of 6.4% at recent prices. Investors who buy now can look forward to a 16th consecutive annual-payout bump soon.

This year, management expects adjusted earnings to reach $2.85 at the midpoint of management's guidance range. That's more than enough to support raising a payout currently set at just $1.68 annually.

Pfizer's rheumatoid arthritis drug Xeljanz and its cancer therapy Ibrance are both losing ground to incoming competitors. The company reported third-quarter sales that rose 31% year over year, despite a loss of market share for the two top-selling products.

Adding new medicines to replace older ones that lose exclusivity or face new competition is something Pfizer does well. For example, the Food and Drug Administration approved nine new drugs from Pfizer in 2023 that will push its big needle forward in the decade ahead.

W.P. Carey

W.P. Cary is a real estate investment trust, or REIT, that's fallen on hard times. Instead of managing properties, it takes a hands-off approach with net leases that transfer the variable costs of building ownership to its tenants.

Net-lease REITs tend to produce reliable cash flow, but W.P. Carey's bottom line has been slipping. The company spun off its office property portfolio last year, plus one of its larger tenants, True Value, declared bankruptcy in October.

Shares of W.P. Carey declined recently in response to a third-quarter earnings contraction. At recent prices, the stock offers a 6.1% yield.

W.P. Carey's largest tenant is responsible for just 2.7% of the total rent the REIT expects to receive annually. True Value is its 15th largest tenant, which means replacing any revenue it could lose from the troubled hardware-store operator won't be hard.

It probably won't be long before this REIT's bottom line returns to growth. On Oct. 29, management said it had already closed deals worth nearly $1 billion and would likely complete deals worth another $500 million by the end of the year.

This year, W.P. Carey expects adjusted funds from operations (FFO), a proxy for earnings used to evaluate REITs, to reach a range between $4.65 and $4.71 per share. This is enough to support a payout currently set at $3.50 annually. With roughly $1.5 billion worth of new assets to collect rent from in 2025, an upcoming dividend raise seems likely.

Omega Healthcare Investors

Omega Healthcare Investors is another net-lease REIT, but instead of commercial properties, it owns nursing homes and assisted-living facilities. The COVID-19 pandemic was more than a little challenging for these types of businesses, but their landlord has maintained or raised its dividend payout to investors since 2015.

At recent prices, Omega Healthcare offers a 6.6% yield that hasn't budged in a few years. Since the pandemic, the nursing-home industry has been taking three steps forward and two steps back. For example, one of Omega's operators, LaVie Care Centers, filed for Chapter 11 bankruptcy protection this year but also managed to pay full rent from June through October.

Management expects adjusted FFO to land in a range between $2.84 and $2.86 per share this year. This is sufficient to maintain its present dividend payout, which is set at $2.68 annually.

Nursing-home operators don't always succeed, but Omega Healthcare only needs them to pay rent. There will always be a LaVie, but demand for nursing-facility beds rises constantly, along with America's aging population. Adding some shares of this high-yield stock to a diversified portfolio now could produce lots of passive income throughout your retirement.

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Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Pfizer. The Motley Fool has a disclosure policy.