Dividend stocks, particularly those offering high yields, have always been favorites among investors. These stocks not only provide a steady stream of passive income, but also have the potential to boost overall returns. Further, as the Federal Reserve signals the possibility of future interest rate cuts, dividend-paying stocks — especially those with high yields — could become more attractive, providing a stable alternative amidst declining rates.
In light of these trends, Genco Shipping & Trading (GNK) and Starwood Property Trust (STWD) appear attractive for their high yields and the reliability of their dividend payouts. These businesses also demonstrate a solid commitment to enhancing shareholder returns, implying they are well-positioned to continue their generous dividend distributions for years to come. Let’s take a closer look at these stocks.
Genco Shipping & Trading Limited (GNK)
Genco Shipping & Trading (GNK) is a leading global dry bulk shipping company. Specializing in the transportation of key commodities, Genco stock has consistently returned significant capital to its investors, maintaining a solid track record of dividend payments over the past five years.
Alongside its commitment to shareholder returns, Genco focuses on modernizing its fleet. Recently, the company acquired two advanced Capesize vessels known for their large cargo capacity and efficiency. At the same time, Genco sold three older ships built between 2009 and 2010 in the first half of 2024. These transactions have enhanced the fuel efficiency of its fleet, boosted earnings potential, and reduced both the average age of its ships and dry docking expenses for the year.
It’s worth noting that Capesize vessels, like those in Genco’s fleet, are critical for transporting bulk commodities, including iron ore, bauxite, and coal. They offer significant operating leverage, meaning they have the potential for high earnings when demand surges. In contrast, Genco’s smaller vessels transport minor bulk goods and provide more stable income. These ships operate on various trade routes and are closely tied to global economic growth.
Thanks to its strategic fleet composition and strong balance sheet, Genco is well-positioned to take advantage of market opportunities. Its “barbell” approach — balancing high-potential Capesize ships with more stable smaller vessels — gives the company the flexibility to respond to shifts in global demand for shipping services. Further, with vessel supply constrained and demand expected to rise, Genco is set to deliver solid earnings and boost its shareholders’ returns.
Wall Street has a positive outlook on Genco, reflected in its "Strong Buy" consensus rating. Currently, Genco stock offers a high yield of 8.1%.
Starwood Property Trust (STWD)
Starwood Property Trust (STWD) is a leading diversified finance company, primarily focused on the real estate and infrastructure sectors. STWD operates as a REIT, and manages a substantial portfolio of debt and equity investments valued at around $26 billion.
Starwood’s strategy involves acquiring and originating real estate debt assets at attractive prices. This approach allows it to withstand potential drops in property values. Further, the company specifically targets real estate markets and asset types with solid supply-demand dynamics or high barriers to entry, creating more stability.
Additionally, Starwood invests in commercial real estate properties that generate consistent income, extend the lifespan of its portfolio, and offer the potential for value appreciation. This mix of investments helps Starwood deliver steady returns, mostly in the form of dividends.
STWD has paid a quarterly dividend of $0.48 per share for over 10 years, adding up to an impressive $7.7 billion in total dividends. The company maintains a robust $9.9 billion in credit capacity across its business lines, ensuring it has the flexibility and liquidity to support its operations.
Starwood’s well-diversified portfolio, strong leverage profile, and healthy liquidity position give it a solid foundation. These factors, combined with stable earnings, suggest the company is well-positioned to sustain its dividend payouts moving forward.
Currently, the stock offers an attractive dividend yield of over 9.8%, making it an appealing option for income-focused investors. Wall Street has rated STWD as a “Moderate Buy.”
