The Motley Fool

2 high-yield dividend stocks I’d buy for 2021

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

The coronavirus pandemic has caused many companies around the world to abandon their dividend payouts, and rightly so. Normally, during times of economic uncertainty, most companies eliminate dividend payments to ensure financial stability and reduce volatility. As such, it’s not easy to find high-yield stocks with low risk right now. This issue is particularly painful for investors when interest rates around the world are at historic low levels. 

But, if you’re willing to take a calculated risk with higher-yield stocks, then I think there are good opportunities in the market right now. With that in mind, here’s a look at two high-yield dividend stocks (that are also a bit risky) I’d consider buying for 2021.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

Evraz: one of the high-yield dividend stocks I’d buy

The first stock I’d consider buying for next year is Evraz (LSE: EVR), the miner that’s also a major steel producer. Frankly, investing in Evraz isn’t suitable for many investors. It’s using a lot of debt to finance its operations, so it carries a relatively high level of risk. But at the same time, Evraz is offering an annual dividend yield of around 9%, which is well above the FTSE 350 average yield of slightly more than 2%. This makes Evraz one of the highest-yielding stocks in the UK at the time of writing. 

But there’s more than that. The share price of the company, of which Roman Abramovich is the biggest shareholder, has made an impressive recovery from the low levels it was trading at in March. In fact, it’s among the few companies that will end 2020 with a positive year-to-date return of around 17%.

Looking ahead to 2021, as Covid-19 vaccines are rolled out, it’s very likely that demand for steel and mining commodities will be on the rise next year. The World Steel Association predicts that global demand for steel will increase by 4.1% in 2021. With that yield of around 9% and the bullish momentum seen in the last months, I think Evraz could be one of the best high-yield dividend stocks to buy with an eye on its additional share price appreciation potential. 

High-yield oil stock

Normally, I would be a bit sceptical about a company with an annual dividend yield of above 10%. If any company is willing to pay such a high yield, it’s generally an alarming sign for investors. But here, I actually think Diversified Gas & Oil (LSE: DGOC) appears to be in a good position to continue its positive momentum in 2021.

First, I’m currently pretty bullish on the oil and gas industry. As I ‘ve written before, I reckon oil companies like Petrofac could be heading back to profitability next year. In my view, the same applies to Diversified Gas & Oil. 

Second, the company is doing pretty well. In September, it joined the FTSE 250 index as well as the FTSE All-Share Index. Then, in its Q3 trading update, DGOC raised its adjusted EBITDA from $64m in 2019 to $75m in 2020, announced $221 million of available liquidity, and pointed to a notable reduction in its net debt. Consequently, DGOC shares have finished the year with a positive return of above 7%. In my view, this could be an under-the-radar investment for 2021. 

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

Tom Chen has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.