When it comes to dividend shares, my go-to market is the UK. It offers high yields and a wealth of high-quality, undervalued stocks to choose from.
But since I’ve largely tapped out most opportunities this side of the pond, I decided to look abroad.
Traditionally, the US is not as income-focused as the UK, so there are fewer companies with high dividend yields. Still, I thought it was worth having a look.
I uncovered three US dividend shares that can add a touch of diversity to an investment portfolio: United Parcel Service (NYSE: UPS), Healthpeak Properties (NYSE: DOC), and Macy’s (NYSE: M).
United Parcel Service
UPS is a global leader in the logistics of package delivery and freight forwarding. It has the second-highest dividend yield on this list, at approximately 5.5%, translating to an annual dividend of $6.56 per share.
The company has a commendable track record, increasing its dividend for 16 consecutive years, with an average annual growth rate of 16.91% over the past three years.
The history of consistent dividend growth exemplifies the company’s commitment to rewarding shareholders.
To support its dividend payments, it also enjoys strong cash flow. Projections for 2025 expect $5.7bn in free cash flow generated, supporting its dividend payouts and stock repurchase plans.
With a payout ratio of 97%, a significant portion of earnings is directed to dividends, potentially limiting reinvestment opportunities. It also faces potential risks such as weak parcel demand and increased competition, which could impact future earnings.
Healthpeak Properties
Healthpeak Properties is a real estate investment trust (REIT) specialising in healthcare properties. The healthcare property sector offers potentially greater resilience against economic downturns, given the sector’s essential nature.
As a REIT, the company is required to distribute a significant portion of its earnings as dividends, equating to regular income for investors. It reported a dividend yield of 5.34% for its fiscal quarter ending in October 2024.
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REITs can be sensitive to interest rate fluctuations, which may affect borrowing costs and property values. This was evident by the declining stock value during 2022 and 2023.
Plus, like all REITs, its stock price is subject to real estate market cycles and economic conditions.
Macy’s
Macy’s is a renowned retail giant with a relatively good track record of dividend payments, barring a reduction during Covid. Currently, the yield stands at 5.4%, up from 3.3% last March. Its well-established brand and extensive retail presence provide a solid foundation for revenue generation.
It’s recently made concerted efforts to improve its online shopping experiences in a bid to capture a broader customer base. With a low price-to-earnings (P/E) ratio of 4.83, the price has significant room to grow.
The problem is, brick-and-mortar retailers like Macy’s face stiff competition from e-commerce platforms, which threaten sales and profitability.
These economic pressures — compounded by changing consumer behaviours — could hurt profits and limit Macy’s ability to maintain its dividend payouts.
Worth considering
I believe each of the above stocks is worth considering as they exhibit similar characteristics to the ones I would choose in the UK – strong market position, a steady income stream, and decent potential for growth.
As with stocks in any region, it’s important to check each company’s financial health, market position, and the broader economic landscape.
