List of Dividend Stocks with the Highest Yields and the One to Buy Now

This list of dividend stocks ranks 10 companies trading on U.S. exchanges by biggest dividend yield...

Dividend Stock Share Price 2017 Return Dividend Yield (as of June 1)
SandRidge Mississippian Trust II (NYSE: SDR) $1.45 +2.8% 23.66%
SandRidge Mississippian Trust I (NYSE: SDT) $1.44 +10.8% 19.36%
SandRidge Permian Trust (NYSE: PER) $2.95 0% 17.63%
Oxford Lane Capital Corp. (Nasdaq: OXLC) $10.94 +4.1% 14.63%
StoneMor Partners LP (NYSE: STON) $9.26 +3.8% 14.27%
Chesapeake Granite Wash Trust (NYSE: CHKR) $2.50 +6.3% 14.05%
MIND C.T.I. Ltd. (Nasdaq: MNDO) $2.48 +0.8% 12.9%
VOC Energy Trust (NYSE: VOC) $4.34 +36.5% 12.2%
Western Asset Mortgage Capital Corp. (NYSE: WMC) $10.24 +1.6% 12.11%
Eagle Point Credit Co. Inc. (NYSE: ECC) $20.19 +20.8% 11.89%

As you can see, half of the dividend stocks listed above are energy-related trusts. These investments boast extremely high yields, with the VOC Energy Trust's 12.2% yield more than six times the S&P 500's 1.91% yield.

Energy trusts offer high yields because they're designed to pass profits made from oil and gas wells directly to shareholders. That exempts them from various corporate income taxes, which affords them more cash to distribute to shareholders.

list of dividend stocksHowever, we don't recommend buying shares of any of the energy trusts listed above. Although they have above-average yields, their quarterly dividends often fluctuate wildly due to oil and gas price volatility. Between February 2014 and February 2015, the oil price's 47.4% drop caused the SDR dividend to be cut by 35.1% from $0.57 to $0.37.

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Since the trusts only distribute profits made from oil and gas wells, they quickly run out of payments to stream to shareholders since wells are depreciating assets. In other words, their dividends are reduced either when oil and gas wells dry up or when low oil and gas prices don't justify more production.

The only dividend stocks you should buy are the ones that both outperform the market and offer consistent, stable dividends.

That's why Money Morning Director of Technology & Venture Capital Research Michael A. Robinson recommends one company that's steadily grown its dividend for nearly 12 years - and has also seen shares rise by 123% over the same period.

This big-name company is also preparing to enter a new and explosive market. Researchers project sales in this market will skyrocket from $4.7 billion in 2016 to $13.3 billion in 2020.

Here's one of the best dividend stocks to buy right now...

This Dividend Stock Offers Market-Beating Profits and Big Dividend Payments

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Michael's top dividend stock pick is garden product manufacturer Scotts Miracle-Gro Co. (NYSE: SMG).

While Scotts is known for being a dominant force in the gardening market, Michael believes its long-term dividend and share-price growth will come from its movement into the burgeoning marijuana sector.

"Scotts is already the world's largest maker of lawn-care and gardening products and is now making a big push into indoor plant cultivation, as evidenced by its April 2015 $150 million purchase of General Hydroponics and other pot-related acquisitions," Michael said last November.

"Hydroponic" refers to the indoor cultivation of marijuana by gardening the plant with air, light, and water. It's much less work than outdoor gardening and reduces the use of pesticides in the plants. All of these are big considerations for consumers, which is why Scotts decided to jump into the marijuana market via its $130 million General Hydroponics buyout in 2015.

Beyond the hydroponic subsector, the marijuana market's growth in general is enough to convince investors Scotts Miracle-Gro is in for big profits ahead. The 2017 Cannabis Industry Annual Report from New Frontier Data projects medical marijuana sales to nearly triple from $4.7 billion last year to $13.3 billion in 2020. Medical marijuana is even creating a huge job market, with more than 250,000 jobs expected to open up over the next three years.

Thomson Reuters analysts say the SMG stock price could rise from its current $87.64 price to as high as $105 by June 2018. That would be a 19.8% return for investors who buy SMG stock today.

While a 19.8% return isn't the most stunning projection, the company more than makes up for it with an annual dividend of $2 and yield of 2.31%. Scotts has distributed dividends every year since August 2005, growing from $0.12 per quarter to $0.50 per quarter in 2017.

For comparison, the annual SMG dividend smashes its competitors like Andersons Inc. (Nasdaq: ANDE) and Central Garden & Pet Co. (Nasdaq: CENT). The annual ANDE dividend is only $0.64 per share for a 1.82% yield, while Central Garden doesn't offer a dividend at all.

With a competition-beating dividend policy and potential double-digit share-price return, SMG is one of the best dividend stocks to buy today.

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Alex McGuire is an associate editor for Money Morning. Follow him on Twitter at @AlexMcGuire92.

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