Whether you want to retire early, work less or just have extra money to finance a vacation, dividend stocks can provide you with the cash flow to help you achieve your goals. The key is to find high-yield stocks that aren’t too risky so you don’t face disappointment later.
Three stocks that can be great dividend-paying investments to build your portfolio around are Pfizer (NYSE:PFE), B.C (NYSE:BCE)And Western Union (NYSE: WU). They all pay you more than four times what you would get with the average S&P500 return of 1.3%. Here’s how investing $23,000 in each of these stocks can ensure you receive more than $5,000 in annual dividend income.
1. Pfizer
One of the best dividend stocks you can get right now is Pfizer. The healthcare giant yields about 5.9%, which is unusually high for the stock, and that’s partly due to its struggling share price. Down 13% over the past five years, investors have become concerned about the company’s long-term prospects as it fails to get a boost from COVID-19 revenues and has multiple patent expirations looming.
However, Pfizer has invested in strengthening its growth prospects with many acquisitions in recent years. An exciting opportunity could be carving out a piece of the lucrative anti-obesity market, which could exceed $100 billion by the end of the decade. Pfizer doesn’t have an approved treatment yet, but it does have a once-daily pill that is showing encouraging results so far. There could be a lot of growth in store for the company in the future. With more than 110 programs in the pipeline, investors shouldn’t be too bearish on the stock as there is still a lot of potential for Pfizer.
The company has had some disappointing quarters lately due to asset impairments, but Pfizer still has a promising future and the payoff could be significant for investors willing to remain patient with healthcare stocks. If you invest $23,000 in Pfizer today, you would receive approximately $1,360 in dividends over the course of an entire year.
2. BC
Another good and reliable dividend stock to own is BCE. The Canadian telecom company is a market leader and what is attractive about its operations is consistency. The company has steadily increased revenue from CA$22.9 billion ($16.9 billion) in 2020 to CA$24.7 billion in 2023.
As long as you don’t expect rapid growth and are investing in the stock mainly for its stability and dividend income, you probably won’t be disappointed with this investment. BCE averages an incredibly low beta value of around 0.50, meaning it doesn’t move much with market fluctuations, making it an attractive option for risk-averse investors.
Telecom stocks haven’t been exciting buys in a high interest rate environment, but if rates fall that could change. In the meantime, buying BCE stock for its hefty 8.5% dividend yield could give you a ton of recurring income. A $23,000 investment in the company would yield more than $1,950 in dividends for an entire year.
3. Western Union
Investors can also buy a great dividend stock in Western Union. While consumers today have a growing number of payment options to choose from, Western Union remains a trusted international brand. One area where it is performing particularly well is digital transactions. In the most recent quarter ended June 30, consumer money transactions rose 4% year over year. However, in digital brand transactions, the growth rate was even higher: 13%.
The company expects to generate solid operating margins of around 20% this year, with earnings per share expected to be at least $1.62, which is more than enough to cover annual dividend payments of $0.94 per share. That’s a great sign of resilience for the company, as Western Union’s revenue has fallen this year due to weakness in some international markets.
Given the modest share price of under $12, buying the stock today means you could earn an 8% return. That would generate $1,840 in annual dividend income from a $23,000 investment. Combined with the other investments on this list, that would bring your total annual dividend income to about $5,150, based on a total of $69,000 invested. And because each stock focuses on a different sector, you also get excellent diversification with these investments.
Should you invest €1,000 in Pfizer now?
Consider the following before buying shares in Pfizer:
The Motley Fool stock advisor The analyst team has just identified what they think is the 10 best stocks for investors to buy now… and Pfizer wasn’t one of them. The ten stocks that survived the cut could deliver monster returns in the coming years.
Think about when Nvidia created this list on April 15, 2005… if you had $1,000 invested at the time of our recommendation, you would have $752,838!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including portfolio building guidance, regular analyst updates, and two new stock picks per month. The Stock Advisor is on duty more than quadrupled the return of the S&P 500 since 2002*.
View the 10 stocks »
*Stock Advisor returns September 30, 2024
David Jagielski has no position in any of the stocks mentioned. The Motley Fool holds and recommends positions in Pfizer. The Motley Fool has a disclosure policy.
Want more than $5,000 in annual dividends? Invest $23,000 in each of these 3 stocks originally published by The Motley Fool
