There’s no wrong way to leverage your money on Wall Street, but some methods produce more reliable returns than others. If you’re looking for a relatively safe and easy way to increase your retirement income stream, buying high-dividend stocks and holding them for the long term is a great option.
Over the 50-year period ending in 2023, high-dividend stocks in the S&P 500 index returned an average of 9.17% per year. This is more than twice the profit generated by non-dividend-paying companies. Over the same period, dividend payers in the benchmark index returned an average of just 4.27% annually, according to Ned Davis Research and The Hartford Funds.
You don’t have to be wealthy to have someone spend money on you. At the moment, AT&T (NYSE: T), Hercules Capital (NYSE: HTGC), and Pfizer (NYSE: PFE) stocks offer dividend yields above 5%, and all three companies’ shares are under $100. You can purchase it at . Adding these to your portfolio gives you the chance to outperform the market while enhancing your passive income stream.
1.AT&T
AT&T lowered its 2022 dividend in preparation for unpredictable media asset sales. Since it is now purely a telecommunications business, the cash flow used for dividend payments should be more reliable. At recent prices, this stock has a dividend yield of 5.2%.
While traditional wireline contracts are still on the decline, this headwind will be easily overcome by 5G networks and the growing demand for services running on fiber optic cables. Mobility services revenue increased 3.4% year-over-year in the second quarter, but it’s not the only growth driver.
The three months ended June 30 were the 18th consecutive quarter in which AT&T added more than 200,000 new fiber Internet subscribers. Late last year, the company also launched fixed wireless service for people who don’t live near fiber optic cables. As a result, consumer broadband sales increased 7% year over year in the second quarter.
2.7 billion in the second quarter, with consumer broadband accounting for less than 10% of total revenue. Because AT&T is one of only three carriers with a nationwide 5G network, investors can reasonably trust the company’s consumer broadband business to drive growth for many years to come. .
2. Hercules Capital
Hercules Capital is a business development company (BDC). This means they can avoid income tax by giving almost all of their profits to shareholders as dividends. At recent prices, regular distributions on the stock offer a great yield of 8%.
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Hercules is also proposing an additional dividend this year, set at $0.32 per share. If next year’s additional dividend remains unchanged, investors who buy this stock at recent prices would receive a yield of 9.7%.
Most BDCs originate relatively high-interest loans to established, mid-sized companies that are already profitable. Hercules Capital takes a riskier approach to raising capital by getting involved with startups in the life sciences and technology industries before they have reportable recurring revenue.
Taken alone, Hercules’ bet is extremely risky. However, the potential payoff is so large that even if only a small portion of its investments are successful, the company could report significant revenue growth.
Hercules has raised or maintained its regular distribution since 2010, and the move in the right direction seems likely to continue. For the first half of 2024, BDC reported total funding of $1.07 billion, an increase of 28% year over year.
3. Pfizer
Sales of Pfizer’s COVID-19 vaccine and antiviral treatments have broken records for their growth and decline rates. Comilnati and Paxrovid’s revenue soared to a combined $56.7 billion in 2022. Less than a year and a half later, sales for the same two drugs had fallen to $1.8 billion annually.
Don’t be fooled by recent ups and downs. Pfizer is a reliable dividend company, increasing its dividend every year since 2009. The recent stock price offers a 5.7% yield, which is more predictable as margins are less than 3% due to reduced sales of COVID-19 products. Probably. Total revenue.
Pfizer’s dividend is supported by one of the largest drug catalogs with patent-protected market exclusivity. In the first half of 2024, more than a dozen products grew sales by double-digit percentages compared to the same period last year.
One of the investments Pfizer made with pandemic-related proceeds was its $43 billion acquisition of cancer drug developer Seagen. The acquisition gives Pfizer access to four commercial-stage treatments, including Padcef. In late 2023, Padcef will become a chemotherapy-free option for patients newly diagnosed with bladder cancer. As such, sales are expected to reach $8 billion annually by 2030.
Padcev is one of several blockbuster drugs that could help Pfizer continue its dividend increase streak. Adding stocks to a diversified portfolio now seems like the right move.
Don’t miss out on this potentially lucrative second chance
Have you ever felt like you missed out on buying the most successful stocks? Then you’ll want to hear this.
On rare occasions, our team of expert analysts will issue a “Double Down” stock recommendation on a company we think is about to crash. If you’re already worried that you’re missing out on an investment opportunity, now is the best time to buy before it’s too late. And the numbers speak for themselves.
Amazon: If you invested $1,000 when it doubled in 2010, you would have earned $21,022. *
Apple: If you invested $1,000 when it doubled in 2008, you would have earned $43,329. *
Netflix: If you invested $1,000 when it doubled in 2004, you would have earned $393,839. *
We currently have “double down” alerts on three great companies, and we may not see an opportunity like this again anytime soon.
See 3 “Double Down” stocks »
*Stock Advisor will return as of October 7, 2024
Cory Renauer has no position in any stocks mentioned. The Motley Fool has a position in and recommends Pfizer. The Motley Fool has a disclosure policy.
3 Reliable Dividend Stocks with Over 5% Yield to Buy Now for Under $100 was originally published by The Motley Fool.
