Looking for stocks to buy with dividend yields greater than 7%? I would consider these 3!

When buying stocks, I never look at the dividend yield in isolation. I try to buy shares in large companies at attractive prices. But if they have a big dividend, even better.

Here are three stocks that I think investors should consider buying, each offering a yield of 7% or higher.

M&G

Asset Manager M&G (LSE: MNG) has consistently been among the highest-yielding stocks in the FTSE 100 index in recent years.

However, the company continued to deliver results, increasing its dividend per share annually. This is in line with its stated objective of maintaining or increasing the dividend per share every year.

Right now, the dividend yield is 9.7%. This is very attractive to me and I have no plans to sell my M&G shares.

The company could see customer demand drop if there is a significant correction in the stock market, potentially hurting sales revenue and profits. But despite this risk, I consider the current share price attractive for a company that benefits from a strong brand, a large customer base and a proven business model.

British American Tobacco

There are two large tobacco companies listed on the London market. British American Tobacco (LSE: bats) and Imperial Marks yield of 8.7% and 6.7%, respectively.

In other words, both yield over 6%, well above the FTSE 100 average. But of the two, I only own one – British American Tobacco.

Its much higher yield is attractive to me, as is its track record of increasing annual dividend per share for decades. Imperial made a cut in 2020. But dividends are never guaranteed, and in a world where cigarette consumption is declining in most markets, both companies face risks. I feel that British American’s specific efforts to build a non-tobacco business have prepared him well for this world.

Over time, compared to the more cigarette-focused Imperial, I think this could help it continue to generate considerable cash flows. Its stable of premium tobacco brands and well-developed global distribution network should help.

Aviva

Other FTSE 100 stock, I think investors should consider buying at 7.1% yield Aviva (LSE:AV).

Like Imperial, it has reduced its dividend per share in recent years. This is another useful reminder that dividends are never guaranteed. But, coupled with a reorganization of the business to focus more on its core UK market, I think this shows that the company exercises strategic financial discipline that hopefully sets it up well for the future.

Aviva has centuries of underwriting experience. Combined with its strong brands and large customer base, this helps the company make money.

Insurance is a potentially lucrative market and I see a risk that price competition in the UK in the coming years could undermine Aviva’s profitability. But I think it’s a well-run business, with real strengths and a strong dividend yield.