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The idea that you can’t beat the broader market and grow your capital by holding on to dividend stocks is outdated. As major tech companies like Meta Platforms, Salesforce and Alphabet join the growing ranks of dividend-paying growth stocks, the opportunities are increasing for investors looking for both dividend income and share price appreciation.
About a year ago, a dividend investor on Reddit shared his success story, saying he made over $10,000 in passive income and beat the S&P 500 by investing in dividend stocks. He shared screenshots of his investment portfolio, which shows his annual income is approximately $11,800 per year or $991 per month.
When asked how much he invested, the Redditor said his total worth was $200,000. Because the investor had emphasized in his post that he felt “doubly great” by generating significant dividend income and beating the market, someone asked him if he had beaten the market for just one year.
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“Three years in a row,” the investor responded.
Let’s take a look at some of the largest investments in this portfolio to see which stocks helped the investor generate significant dividend income and beat the market.
Arbor Realty Trust
Arbor Realty Trust Inc. (NYSE:ABR) is a mortgage REIT with a dividend yield of over 11%. It was the largest position in the Redditor’s portfolio, earning approximately $11,800 per year in dividends. Analysts believe the future is bright for REITs like ABR, amid falling interest rates and hopes of a soft landing. Wells Fargo said in a recent note that a “less restrictive” Fed policy could lay the groundwork for commercial real estate recovery.
Altria
With a dividend yield of over 8% and more than 50 years of consecutive dividend increases, Altria Group Inc. (NYSE:MO) may be one of Reddit’s hottest dividend stocks, despite concerns about declining use of traditional tobacco products. Analysts believe that Altria will switch to smoke-free products such as vapes and nicotine pouches in a timely manner. MO was the Redditor’s second-largest holding, earning $11,800 per year in dividends.
Petroleo Brasileiro
Petroleo Brasileiro ADR (NYSE:PBR) is a Brazilian state-owned energy company. Once famous for its eye-popping dividends, PBR’s dividend yield now stands at around 13%, amid a drop in payouts following a disagreement over management’s cash allocation. The Redditor, who published his earnings report in October 2023, said Petroleo Brasileiro ADR (NYSE:PBR) was his third largest holding.
United Parcel Service
The Redditor who earned $11,800 a year in dividend income owned United Parcel Service Inc. (NYSE:UPS) among its largest holdings. The stock has a dividend yield of about 5% and 15 years of consecutive payout increases. UPS shares are down 15% in the past year. In July, the company reported second-quarter results that beat Wall Street estimates for both earnings per share and revenue. However, the company restarting its $1 billion stock buyback program gave investors something to cheer about.
Texas instruments
Texas Instruments Inc. (NASDAQ:TXN) has a dividend yield of about 2.6% and the stock is up 28% in the past year. Citi recently published an upbeat note on the semiconductor industry following better-than-expected August numbers powered by dynamic random-access memory. The company has a buy rating on TXN.
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PepsiCo
PepsiCo Inc. (NASDAQ:PEP) has a dividend yield of approximately 3.2% and more than 50 consecutive years of dividend increases. Like Coca-Cola, it is considered a defensive stock that investors love in all market cycles. The portfolio screenshots shared by the Redditor who earned $11,800 annually showed that Pepsi was among the top positions.
Apple
When asked which stocks helped him beat the S&P 500, the Redditor named Apple Inc. (NASDAQ:AAPL) one of the top companies. Apple shares are up 28% in the past year, and the company has increased its dividends for more than a decade in a row.
Broadcom
Broadcom Inc. (NASDAQ:AVGO) was one of the stocks that helped the Redditor beat the S&P 500. The stock is up more than 110% in the past year, thanks to rising demand for the company’s custom AI chips. The stock has a dividend yield of approximately 1.1%.
Cisco systems
Cisco Systems Inc. (NASDAQ:CSCO) yields over 3% and has increased its payouts annually since 2011. Cisco’s CFO Scott Herren recently said at a conference that the company expects approximately $1 billion in AI product orders in fiscal 2025, with growth of 30%. in hyperscalers that the company has registered in the second half of 2024 alone.
Home Depot
The shares of Home Depot Inc. (NYSE:HD) is up 37% over the past year and its stock returns 2.2%. Home Depot Inc. was among the Redditor’s top holdings, earning $11,800 a year in dividends. The home improvement retailer has increased its dividends for fifteen years in a row.
Microsoft
When asked about stocks that helped him beat the market, the Redditor said Microsoft Corp. (NASDAQ:MSFT) was one of the companies that boosted its overall portfolio performance above the S&P 500. Microsoft shares are up 26% in the past year, and the company announced a 10% dividend increase last month.
Wondering if your investments could earn you a $5,000,000 nest egg? Talk to a financial advisor today. SmartAsset’s free tool matches you with up to three vetted financial advisors serving your region, and you can interview your advisors for free to decide which one is right for you.
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This article Dividend Investor Feels ‘Doubly Great’ Making $11,800 a Year and Beating the S&P 500 Stock Portfolio: Top 11 Stocks originally appeared on Benzinga.com
