Buying high-yielding dividend stocks can be scary, even when it’s not Halloween. You can be fooled into thinking a high payout is safe, only to see management lower it later. And when those cuts come, not only will your dividend income decline, but the market will likely drive the stock price down as well.
But there are some great dividend stocks you can buy now that not only deliver high returns, but are also considered safe and could be excellent investments for years to come. Pfizer (NYSE:PFE), Real estate income (NYSE:O)And ExxonMobil (NYSE:XOM) They’re all solid investments to start with this Halloween.
Here’s why these three passive income providers are better options than your average dividend stocks and why the Halloween season is a great time to consider buying.
When you buy Pfizer stock, you get a lot more than just a high-yielding dividend stock. The 5.8% yield at the current share price is certainly a major reason why many investors should consider adding it to their portfolios now. But another is the extremely low valuation.
Healthcare stocks have struggled in recent years and are trading around 2020 levels. Based on analyst projections, next year’s stock is trading at just 10 times higher. That’s incredibly cheap when you look at the average stocks in the Healthcare Select Sector SPDR Fund is trading at a price-to-earnings ratio of 22.
Investors are unwilling to pay a premium for Pfizer stock because of rapidly declining sales of its COVID-19 vaccine and antiviral drugs, and concerns about looming patent cliffs. But the company has used windfalls from its pandemic-era vaccines and treatments to bolster its pipeline and growth prospects through acquisitions, including the massive $43 billion purchase of oncology company Seagen, which it closed last year.
There’s some near-term uncertainty ahead for Pfizer, but overall the low valuation gives investors an excellent margin of safety in case its growth plans don’t quite materialize.
Real estate income can also be an excellent income investment. Besides the 4.9% yield you’ll receive at the current share price, the great thing about this real estate investment trust (REIT) is that unlike most other dividend stocks, it makes monthly payments.
It also benefits from a lack of customer concentration risk: it rents its extensive real estate portfolio to more than 1,500 different tenants. The occupancy rate is also quite high at 98.8%. The REIT has a lot of stability, which has allowed it to increase its dividend 127 times since it started trading on the NYSE in 1994.
For the first half of the year, Realty Income reported fund operations per share of $2.01, down slightly from the $2.05 it posted in the first half of last year. With a lot of consistency in its financials, the REIT could be an ideal stock to buy and hold for years to come.
Oil giant ExxonMobil’s dividend yields 3.2% at recent share prices. That’s lower than Realty Income or Pfizer, but still more than double S&P500‘s average return of 1.3%.
Oil and natural gas stocks can be a great investment if you want to diversify your portfolio and protect it from inflation. What makes this a fun stock to own is the dividend growth and stability it offers. ExxonMobil has increased its payouts for more than four decades in a row, even as it has sometimes faced significant headwinds and the volatility that often comes with fluctuating commodity prices.
Over the past four reported quarters, ExxonMobil generated profits totaling $34.2 billion on revenue of $340.7 billion. Even though the company is experiencing a decline in profitability due to lower oil prices, its size and scale put it in an excellent position to outperform its peers.
While it may experience some volatility in the short term, ExxonMobil should remain a solid buy in the long term given the world’s continued need for oil. Despite the increasing use of electric vehicles, global oil demand may not peak for another decade, according to a 2024 forecast by Goldman Sachs.
Have you ever felt like you missed the boat on buying the most successful stocks? Then you would like to hear this.
On rare occasions, our expert team of analysts provides a “Double Down” Stocks recommendation for companies they think are about to pop. If you’re worried that you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:
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Amazon: If you had invested $1,000 when we doubled in 2010, then you have $20,803!*
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Apple: If you had invested $1,000 when we doubled in 2008, you would have $43,654!*
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Netflix: If you had invested $1,000 when we doubled in 2004, you would have $404,086!*
We’re currently issuing ‘Double Down’ warnings for three incredible companies, and another opportunity like this may not happen anytime soon.
See 3 “Double Down” Stocks »
*Stock Advisor returns October 21, 2024
David Jagielski has no position in any of the stocks mentioned. The Motley Fool holds positions in and recommends Goldman Sachs Group, Pfizer and Realty Income. The Motley Fool has a disclosure policy.
3 Sweet Dividend Stocks to Treat Your Portfolio This Halloween was originally published by The Motley Fool
