Why I Just Loaded Up on These 2 High-Yield Dividend Stocks

Dividends can be more important than you might think. Some investors might not realize that over the last 30 years, roughly 45% of the S&P 500's (SNPINDEX: ^GSPC) total return has stemmed from dividends.

Importantly, you can like dividends even if you don't rely on them for income. I'm in that boat right now. I don't need dividends for income yet, but I've begun focusing on dividend stocks more heavily than ever before. Here's why I just loaded up on two high-yield dividend stocks.

Powering up

I recently initiated a new position in Evergy (NASDAQ: EVRG). The company, which is based in Kansas City, Missouri, operates electric utilities in Kansas and Missouri. It serves around 1.7 million residential, commercial, and industrial customers.

Evergy's forward dividend yield stands at 4.15%. I'd be lying if I said this juicy dividend wasn't a key part of my decision to buy the stock. Although I don't need income from the dividend payments, they should help boost Evergy's total return.

I think double-digit total returns (or close to that level) are quite possible for Evergy over the long run. The strong dividend gives the company a nice head start to achieving the goal. Evergy also expects to increase its adjusted earnings per share by 4% to 6% annually on average -- and near the top end of that target range in the second half of this decade. That's relatively good growth for a utility stock.

We only have to look at recent developments to understand how Evergy could grow. For example, the company will provide power to two new data centers operated by Alphabet's Google and Meta Platforms, as well as Panasonic's electric vehicle battery manufacturing facility.

Could I have invested in other stocks that might generate even greater total returns? Sure. However, I like Evergy's stability in what could be a volatile market over the next few years. Its valuation is reasonable in a market where many stocks are priced for perfection. Evergy is a regulated monopoly in the areas it serves, so there's no threat from competition. And I'm confident that electricity demand will increase rather than decrease.

Banking on this stock

I also recently bought shares of U.S. Bancorp (NYSE: USB) for the first time. This big bank was founded in 1863. It's headquartered in Minneapolis, but has operations in 26 states, including over 2,250 branches.

U.S. Bancorp is the fourth-largest U.S. bank based on assets and deposits. Roughly 90% of the Fortune 1000 companies bank with the company. J.D. Power ranked U.S. Bancorp's wealth and asset management unit as the No. 1 wealth advisor in 2024.

The bank's forward dividend yield currently tops 3.8%. That's actually the lowest level the yield has been in quite a while. It's not because U.S. Bancorp has cut its dividend, though. The company has increased its dividend for 14 consecutive years. Instead, the stock has soared since July, driving the yield down.

There are two key things I like about U.S. Bancorp, other than its attractive dividend. One is its valuation. The bank stock trades at only 12.4 times forward earnings. This multiple is well below the forward price-to-earnings ratio of nearly 17.5 for the S&P 500 financials sector.

The other thing I like about U.S. Bancorp is the improving outlook for its business. The Federal Reserve's interest rate cuts should be positive for the company overall, especially if they help boost greater mortgage lending. The potential for a relaxation of regulations on the banking industry in a second Trump presidential term could also be beneficial. I think U.S. Bancorp's strong stock performance in recent months is largely due to this improved outlook.

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Keith Speights has positions in Alphabet, Evergy, Meta Platforms, and U.S. Bancorp. The Motley Fool has positions in and recommends Alphabet, Meta Platforms, and U.S. Bancorp. The Motley Fool has a disclosure policy.