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The benchmark S&P500 The index is up about 26% over the past three years, but that doesn’t mean all stocks have had a great run. In the same time frame, the shares of W. P. Carey (NYSE:WPC), Verizon (NYSE: VZ)And Pfizer (NYSE:PFE) have fallen by 15%, 18% and 33% respectively.
All three of these stocks offer yields of over 5% at their low prices. You wouldn’t know it from looking at their stock charts, but all three of these companies have what they need to meet their current dividend obligations and increase them much further in the coming years.
Here’s how adding these stocks to a diversified portfolio can lead to huge amounts of passive income to fuel your retirement.
W. P. Carey
WP Carey is a diversified real estate investment trust (REIT) with a portfolio of 1,291 properties that it does not manage. Instead, it uses net leases that transfer all variable costs of building ownership to tenants.
You may have noticed that WP Carey’s dividend payout fell in 2023 after the REIT spun off a portfolio of 59 office buildings into a new company called Net lease office buildings. Now that the company is no longer active in office rentals, 63.9% of expected rental payments come from industrial properties and warehouses.
At recent prices, the stock offers a 5.5% yield and perhaps much more by the time you’re ready to retire. Management expects adjustments this year money from operationsa measure of earnings used to evaluate REITs reaches a range between $4.63 and $4.73 per share. That’s more than enough to cover a dividend currently set at $3.48 per share.
In addition to predictable rental income from existing tenants, WP Carey investors can look forward to profits arising from new properties. This year, management expects to expand its portfolio by investing between $1.25 billion and $1.75 billion.
Verizon
In September, Verizon increased its dividend payout for the 18th year in a row. That’s the longest consecutive annual streak of dividend increases among America’s three major 5G network operators. At recent prices, the stock offers a huge dividend yield of 6.1%.
Verizon’s equipment sales have fallen due to longer smartphone renewal cycles, but a recently launched iPhone 16 could lead to a sales boost in the fourth quarter.
Fortunately, Verizon doesn’t require customers to have new phones to continue collecting their monthly service payments. Second quarter wireless service revenue rose 3.5% year over year to $19.8 billion.
Investors can look forward to another significant dividend increase next year. During the first half of 2024, Verizon reported $8.5 billion in free cash flow, but only needed $5.6 billion to meet its dividend obligations.
Verizon probably won’t be the fastest-growing dividend stock in your portfolio. However, as one of only three 5G service providers nationwide, it may be the most reliable.
Pfizer
Pfizer’s stock price is down about 51% from the peak it reached in 2021. At a glance, the company looks like a disaster as sales of its COVID-19 vaccine and antiviral treatment both collapsed.
This stock is well below its previous peak, but Pfizer’s overall sales are booming. Excluding sales related to COVID-19, second quarter revenue rose 14% year over year.
Last December, Pfizer increased its payout for the 15th year in a row. At recent prices, the share offers an ample yield of 5.6%.
Even cautious investors can feel good about adding some Pfizer stock to their portfolios. Pfizer has a longer list of patent-protected drugs to sell than any of its Big Pharma peers.
In the first half of 2024, sales of eleven of its products increased by a double-digit percentage, and new growth engines are flowing from an industry-leading development pipeline. Last year, the Food and Drug Administration (FDA) approved nine new Pfizer drugs. With many new products that its global sales force can bring to market, Pfizer could continue to increase its payout for another fifteen years.
Should you invest $1,000 in WP Carey now?
Before you buy shares in WP Carey, consider the following:
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 WP Carey 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 $715,640!*
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Cory Renauer has no position in any of the stocks mentioned. The Motley Fool holds and recommends positions in Pfizer. The Motley Fool recommends Verizon Communications. The Motley Fool has one disclosure policy.
3 great dividend stocks with yields over 5% to buy now and hold forever was originally published by The Motley Fool