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2 S&P 500 Dividend Stocks With Yields Above 6% That You Can Buy With $100

If you’re looking for stocks that pay dividends among members of the S&P500Finding a return high enough to inspire a purchase can be an extra challenge these days. The average dividend-paying stock in the benchmark index offers a paltry yield of 1.39%.

If you only have $100 available to invest, you can buy shares of both Altria Group (NYSE:MO)And AT&T (NYSE:T). These S&P 500 stocks are currently offering returns of over 6%.

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When it comes to eye-watering dividend yields, investors should remember that they generally don’t exceed 6% unless the market is concerned about their underlying business.

The past year hasn’t been easy for these prosperous companies, but it appears the market has been too pessimistic about their ability to continue increasing their payouts. This is why they seem like good stocks to buy now and hold for the long term.

Altria Group

Altria Group is the company behind Marlboro cigarettes in the US. At recent prices, the stock offers a yield of 9.5%.

Marlboro is still the leading brand in the US, but the gradual decline in cigarette smoking we’ve seen for decades has accelerated. Altria Group shipped 9.9% fewer cigarettes to retailers in 2023 than a year earlier.

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The number of combustible cigarettes is declining, but the total amount of nicotine Americans consume has remained relatively stable. Unfortunately, Altria Group is losing many customers to illegal e-vapor products that ignore the Food and Drug Administration’s (FDA) flavor ban.

Despite strong competition from the illegal e-vapor market, Altria Group reported adjusted earnings per share that rose 2.3% in 2023. This probably won’t be the fastest growing dividend in your portfolio, but continued movement in the right direction seems likely.

Altria Group has increased its dividend payout 58 times in the last 54 years. With the U.S. government on Altria’s side, consumers could begin to move away from illegal e-vapor products, which will become harder to purchase.

Last year, the company launched NJOY, the only pod-based e-vapor product approved by the FDA. And the agency has stepped up enforcement of its flavor ban in recent months, sending dozens of warning letters to retailers.

The FDA is also working with Customs and Border Protection to seize incoming shipments of Elf Bar and other flavored e-vapor products.

AT&T

If you’re looking for stocks that can grow their high-yield dividends, you may have overlooked AT&T, which cut its 2022 dividend payout by 47% to offset the spinoff of its media assets. The stock offers a huge yield of 6.9% at recent prices and a good chance of a steady payout increase in the coming years.

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Its cash flows could be much more predictable now that it is purely a telecommunications company with a leading network of 5G towers and fiber optic cables. Last year, the company’s mobility segment added 1.7 million postpaid phone customers, driving mobility revenues up 4.4%.

AT&T Fiber also added 1.1 million subscribers last year, boosting broadband revenues 8.3%. The recent rollout of fixed wireless service for broadband customers who do not yet have access to AT&T Fiber could lead to further growth.

The $128.9 billion in net debt on AT&T’s balance sheet at the end of 2023 is concerning, but the company’s efforts to reduce it are encouraging. Net debt decreased from 3.19 times adjusted EBITDA in 2022 to 2.97 times adjusted earnings before interest, taxes, depreciation and amortization (EBITDA). Management expects net debt to continue to decline and reach a relatively comfortable ratio of 2.5 times adjusted EBITDA. in the first half of 2025.

The heavy investments that went into building AT&T’s 5G network are finally tapering off. Management expects capital expenditures to shrink from $23.6 billion in 2023 to a range between $21 billion and $22 billion this year.

More subscriber revenue and less capital investment is a formula for increasing profits that can be used to increase AT&T’s dividend payout. Because the returns are already high, investors who buy this stock now to hold it for the long term can realize huge amounts of passive income.

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Should You Invest $1,000 in Altria Group Now?

Consider the following before purchasing shares in Altria Group:

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Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

2 S&P 500 Dividend Stocks With Yields Above 6% That You Can Buy for $100 was originally published by The Motley Fool

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