3 High Yield Dividend Stocks That Are GROWING Dividends!

The S&P 500 starting dividend yield just hit a new all-time low. This is the lowest it's been in literally over 100 years. Now, if you're a long-term investor like I am looking to one day live off dividends, then dividend growth is most likely your optimal strategy. You buy stocks that might have a low starting dividend yield, but continue to grow the amount they pay out in dividends every single year. This causes a significant snowball effect. But if you're someone looking for income now, obviously your starting dividend yield is immensely important. And if you're turning to the S&P 500 to look for yield, you're not going to find many optimal opportunities. So in this video, we're going to be looking at three dividend stocks that not only have high starting dividend yields, but these are yields that are sustainable, and in some cases, the dividend payouts are even growing over time. So let's go ahead and dive in. But first, I'd like to say thank you to Dividend Wealth for sponsoring this video, where you can currently get a 14-day free trial and 40% off at the link in the description. If you're tracking dividends by hand, then you're still making a huge mistake. Dividend Wealth just released a huge update where you can automatically connect your brokerage with your dividend wealth account. This makes it incredibly easy to see the dividends you have coming in, the future dividends that you'll collect, and to see exactly how far away you are from achieving your income goals. Dividend wealth doesn't just break down your portfolio allocation, but perhaps just as importantly, your income allocation, revealing some potential risk in your portfolio that you may not have been aware of. You can run different models to see exactly how far away you are from achieving your income goals. And with the dividend calendar, you'll know exactly when those dividend payments are going to be paid. They also just updated their three model portfolios, the dividend income strategy, the income growth strategy, and the balanced dividend strategy, where you can get deep insights into what developing an actual dividend portfolio should look like. So again, check out Dividend Wealth at the link in the description to get a 14-day free trial as well as 40% off. And the first opportunity we're going to be talking about is the Verdice Infocap US preferred stock ETF. I know that's a mouthful, but it's stock ticker PFA. This is an ETF that has a trailing 12-month yield of very close to 10%. And perhaps what's just as impressive is despite that double-digit starting dividend yield is when you look at the dividend history, you can see those payouts have continued to grow over time. In fact, if we scroll down, you can see almost every single year for the past few years, there's been dividend increases. The hikes have been small. There's no doubt. But the fact a 10% yel is growing dividends at all is definitely a bonus. So, what is this ETF? Well, PFA is an actively managed, keep that in mind, actively managed exchange traded fund that invests in a diversified portfolio of US preferred stocks. So, what are the advantages of preferred stocks? Well, to start, they have superior credit safety. Compared to high yield bonds, preferred stocks have historically defaulted at a lower rate. Preferred stock issuers are typically larger issuers with durable assets. On top of this, they get payment priority. By that we mean preferred stocks sit above common equity in the capital stack and preferred dividends must be paid out prior to common equity dividends. And then of course there's a huge yield advantage in most cases at least. Preferred stocks will typically have higher yields for similar credit than higher yield bonds. So for investors looking for yield this is an interesting asset class but there's no doubt not all preferred stocks are created equal and not are all high yield opportunities. Now when we talk about the performance of PFFA, really what we need to compare it to is PFF. This is the eyesshares preferred in income securities ETF. However, there's a major difference. PFF is passively managed. It's not actively managed. It tracks the ICE exchange listed preferred and hybrid securities index. The fund generally holds preferred stocks and hybrid securities according to the index's rules. So we have this passively managed fund versus the actively managed fund and the performance is pretty telling. PFA over the last year has outperformed PFF. If we look at the last 3 years, that outperformance becomes even larger. And if we look at the last 5 years, the outperformance becomes even larger once again. So why is this the case? Why have they been able to outperform by such a wide margin versus the passively managed preferred securities fund? In a lot of cases, I'm a fan of passively managed funds, but particularly with preferred stocks, active management is extremely important. And you can only understand this by understanding the asset class. Look at this example I talked about on dividendology.com. In equities, passive strategies can work because cap weighted indexes often align with momentum and market leadership. But in fixed income, especially with preferred stocks, passive indexing can result in inefficient and sometimes irrational allocations. Why is that the case? Well, it's because a lot of preferred stocks are callable, which means the issuer can redeem them, forcing investors to reinvest at lower yields. A passive index cannot account for this, so it ends up heavily allocated to securities most likely to be called away. That's a major risk. This is why active management is so important with preferred securities. It helps with call risk, credit risk, and sector concentration risk. Now, one of the big mistakes a lot of investors make is when they look at the headline expense ratio for this fund on platforms like Seeking Alpha, they see it listed at 2.11% and immediately write it off. But that would be a big mistake. This is not the true expense ratio. It's not the true management fee. The true management fee is actually about 0.8. So, why is it listed like this? Well, one of the things that the fund actually does is apply slight leverage to potentially enhance portfolio exposure. And they do this opportunistically. But anytime you use leverage, you have to add the cost of leverage to the expense ratio. So really, this is still the net yield you're getting on a forward-looking basis. Again, closer to 10%, but this is not the true management fee. The true management fee is closer to 0.8%. Now, something that's interesting about this fund is if you scroll down on their website and look at the top holdings, you'll notice the top holding right now is Strategy Preferred Security. This is one that gets a lot of attention, STRC. This is a very highly debated preferred security. It's yielding over 12%. Now, on the mispriced podcast, I actually interviewed the fund manager for PFFA just a few days ago, and we had a deep dive into STRC, and we talked about his reasoning as to why he held it in the fund, as well as a few other funds. So, if you're not subscribed over there, be sure to check out that interview. You'll definitely learn a lot about highinccome strategies. Now, the last thing I do want to point out in regards to PFA is preferred stocks in general are highly interestensitive. So, if long-term interest rates continue to march higher, PFA is likely going to have pressure on its share price. And because rates have indeed gone higher over the last year, the share price has pulled back a little bit, around 3%. But this isn't like an option income ETF where a declining share price automatically equals lower income. The income has not only been sustained, but as we saw, it's continued to grow even in a higher interest rate environment, which in my opinion gives it a huge advantage. Now, for the second stock on this list, I actually cheated a bit. Now, what do I mean by this? Well, I actually selected a basket of stocks, and all of them have been performing very well. But let me give you a little bit of background. Over on dividendology.com, over the last year, we've been building a real money high yield portfolio that's yielding around 9.3% and has outperformed the market for the majority of the last year. It's been an incredible run. And really, there's a few different reasons as to why this is, but one of the reasons is we wisely avoided the BDC market. We did not like the way the BDC market was shaping up heading into 2026 and over the last year it's down by about 16%. However, I did think the MLP space was quite attractive and so far that thesis has played out very well. A few of the MLPS that I cover frequently over the last year from a total return perspective have done incredibly well. In fact, every single one has outperformed the S&P 500. And these are positions that again are relatively high yield. Energy Transfer returned about 29%, EPD 28.5, NPLX 24.5, and Western Midstream Partners, one that doesn't get covered nearly as much, up 37%. Now, here's what's interesting about this. I built out a simple spreadsheet to break down the key metrics for these different MLPS, and there's a couple of different things we have to take in consideration. Let's just use energy transfer for example. If we jump back over to seeking Alpha, look at Energy Transfer over the last 5 years. It's up 132%, not including dividends. And keep in mind, at multiple points over the last 5 years, this was a stock yielding over 9% in a lot of instances, over 8% in some instances as well. So, total returns have been incredibly strong. Does that mean that the opportunity is already gone? Well, here's what's interesting. One of the key metrics we use to value MLPS is enterprise value to EVID dot earnings before interest, taxes, depreciation, and amortization. And what you'll notice is right now it is trading above its 5-year average. And in fact, we can see that relatively simply when looking at the different valuation ratios for this MLP. It's trading above its historic average. But again, here's what's interesting. If we jump over to our valuation sheet, let's take a closer look. If we jump over to our dividend discount model, again, this is valuing a stock based on how much it's paying out in dividends and how much that dividend will grow in the future. Now, historically, Energy Transfer has continued to grow dividends at a relatively healthy rate with a three-year dividend growth rate of about 4.24%. And from my research, management is guiding towards around 3 to 5% dividend growth moving forward. So, let's just assume the low end of that over the long term. At 3% dividend growth, this would be a stock worth around $24.63, implying around 15% upside from current prices. And the reality is this is the case for a lot of these MLPS. Despite the fact they've had an incredible 5-year run, it looks like there's still upside from current prices. And again, they all still have high starting yields. MPLX yielding around 7.3, Energy Transfer 6.3%, Enterprise Product Partners 5.7, and Western Midstream Partners at about 7.7%. These are very nice starting dividend yields. And what I like about a lot of these is their leverage ratios are even stronger than they were pre2020. If you're looking for one of the safer yields in this scenario, then EPD is pretty interesting. The yield's about 5.7 and its leverage ratio is the lowest out of the three sitting at just about 3x. Now again, if we use energy transfer as an example, you can see their distributions are very well covered. Again, when talking about MLPS, the way we analyze dividend sustainability is by looking at distributable cash flow per share and the dividends they're paying out. And so in 2026, they're projected to produce around $2.91 in distributable cash flow per share, while the dividend per share is only $1.37. So the dividend is very well covered. This is why they're able to continue to grow it at a healthy rate while still funding growth internally, which ultimately will continue to drive distributable cash per share higher, which means intrinsic value is going to continue to climb, which again ultimately to summarize is why the stock still looks attractive despite the fact over the last 5 years it's up 132%. The last thing I will note is again a lot of these are still growing dividends at a pretty decent rate and MPLX has just seen ridiculous growth over the last year. It's about 12.5% and management is guiding towards that growth rate for around another year or two. It's really impressive what they're able to pull off as an already high yielding MLP. And third, we have the Amplify CWP Enhanced Dividend Income ETF stock ticker DIVO, which has a trailing 12-month yield of about 6.12%. But in reality, the forward-looking yield is even higher. And I'll explain why that's the case here in just a moment. Now, it's important we understand what type of ETF we're looking at here. We're looking at an option income ETF. And I want to be abundantly clear. There's a lot of bad option income ETFs out there, a lot of risky ones with very unsustainable yields. This is not one of those ETFs. This one is very different because it's structured in a way to create very sustainable income. And this is very intentional by the fund managers. And as a result, the dividend is not just sustainable, the performance has been very strong as well. In fact, take a look at the performance over the last year. Despite the fact it's yielding around 6 to 7%, it's slightly outperformed the S&P 500 on a total return basis. Even if we zoom out over the last 5 years, again, it's actually outperformed the S&P 500 on a total return basis. That's extremely rare for an option income strategy. So, how is it structured that would allow it to do this? Well, this is where it becomes really important we understand these funds. What contributes to them taking part in the upside? How do they generate their income? Well, if we take a close look at the overview over here, we can see there's two potential income streams. DVO seeks income from dividend paying stocks and by opportunistically writing covered calls on those stocks. So they're generating income in two ways. They're generating income from the actual underlying holdings, not just from writing options on the underlying holdings. And when they do write those options, they do it opportunistically. That's important because it means it helps not completely cap the upside. Let me go into a little more detail on what this actually looks like. Again, over on dividendology.com, one of the features that I provide in the database is the option income or covered call ETF database. This has in-depth data on quite a few of these option income ETFs. And Amplify has a few different funds that I cover in this. And if we zoom in, you'll see DVO DIVO right here. Now, if we scroll all the way over, here's what we need to pay close attention to. They typically have portfolio options coverage of around 50%. Now, this is incredibly important to understand because why? Well, if you look at most of these option income ETFs, typically you see 100% portfolio options coverage. The vast majority are utilizing close to 100% portfolio options coverage. Why is that so important? Well, if you look at the guide, scroll over. What can you see? This is the percentage of the ETF's underlying portfolio that is overwritten or covered with call options. For example, 50% coverage means only half the portfolio has calls written against it. Now remember, when a fund is using covered calls, what it naturally does is it caps the upside. So if you're writing covered calls on 100% of the portfolio, the upside is significantly limited, which means the fund typically doesn't climb higher, at least from a net asset value perspective. Now, some people would argue that's okay. I only care about the distributions. But here's the issue with this. If the net asset value continues to climb lower, then the distributions start to go lower as well over time. But when we have a fund like DVO from Amplify who only uses 50% portfolio options coverage, the result is we get an increasing net asset value. And look at the result of this. If we jump over to our dividend breakdown sheet and look at the dividend payments, let's take a look at DVO. What you can see is distributions grow over time with occasionally at the end of the year we'll see a massive distribution. Why has this happened two times in the fund's history? Well, you have to understand to get the tax status that they want, typically at the end of the year, if the fund has done really well and seen a lot of capital gains, they have to make a larger distribution to get optimal tax status. So, typically when you see a massive distribution at the end of the year, that means the fund from a capital appreciation standpoint has done really well. It's also the reason if you look at the share price for these option income ETFs, occasionally you'll see a relatively large drop that's not typical. Like right here, this is when they made that large distribution. Remember, it's paid out of the net asset value. So that's the option strategy behind this fund. But again, a lot of the dividends are coming from the underlying holdings. We can see companies like Microsoft and Apple where the yield is low, but these are dividend growth stocks. The same is true with Caterpillar, JP Morgan, Chase, Chevron, American Express, lower yielding companies for the most part that grow those distributions over time. So this is certainly a much more sustainable higher yield strategy. And again, the trunk 12-month yield is sitting at about 6%, but the reality is because those dividends are growing over time. The forward-looking yield is much closer to maybe 6.5, maybe even a little bit higher percent. So, a nice way to boost the overall yield of your portfolio. So, yes, the S&P 500 dividend yield is at an all-time low, but there's more opportunities arguably than ever in finding high yield stocks that could potentially be a good fit for your portfolio. So, go ahead and let me know what you think in the comments down below. And like always, don't forget to like and subscribe to the