Are you looking to diversify your investment portfolio with some reliable dividend-paying stocks? You’re on the right track! Dividend-paying companies tend to be more stable and established, as they are able to consistently reward their shareholders. But that’s not all – studies have shown that dividend payers often outperform non-payers. For instance, a recent study revealed that companies with growing or initiating dividends delivered impressive annualized returns of 10.3% from 1973 to 2022, surpassing non-dividend paying companies at 3.95% and an equal-weight S&P 500 fund at 7.7% annually. Furthermore, dividend stocks tend to be less volatile, making them an attractive option for investors.
If you’re considering adding some dividend-paying stocks to your watchlist or portfolio, here are four well-known companies that currently offer generous dividend yields:
Verizon Communications:
With a market value close to $180 billion, Verizon Communications (NYSE: VZ) boasts a hefty dividend yield of 6.6%. While the dividend hasn’t increased significantly recently, the high yield remains attractive to many investors. Verizon’s robust wireless network and recent acquisition of Frontier Communications Parent for $20 billion to enhance fiber services point to further growth potential. However, some caution is advised due to the company’s significant debt load. Despite this, Verizon’s strong cash flow currently supports the dividend, with management recently raising it by 1.9%.
Citigroup:
Operating as one of the largest banks in the U.S., Citigroup (NYSE: C) has a market value near $109 billion, experiencing a drop of 16% from its 52-week high. This decline contributes to a more appealing dividend yield of 3.6%. The payout has shown steady growth, increasing by 6% in its last review. With a diverse client base and significant assets, Citigroup is undergoing a transformation to improve profitability, focusing on wealth management and commercial banking. This shift has led to some short-term challenges but potentially better long-term prospects.
CVS Health:
Even with recent challenges, CVS Health (NYSE: CVS) offers a dividend yield of 4.7% due to a 31% decline from its 52-week high. Over the past five years, the company has consistently increased its dividend by 6% annually, with a payout ratio of 45%. Although the health insurance business lags behind, CVS has shown resilience in other divisions, driving revenue growth and exceeded earnings expectations. At an attractively valued stock price and promising growth prospects, CVS Health presents an appealing investment opportunity.
United Parcel Service (UPS):
United Parcel Service (NYSE: UPS) is a prominent player in the delivery industry, with a market value of $111 billion and a dividend yield of 5.1%, down 21% from its 52-week high. Despite a robust dividend growth average of 11% over the past five years, the high payout ratio indicates a potential slowdown in future increases. Challenges from competitors and changing market dynamics have impacted UPS’s performance, but cost-cutting initiatives and a recovering economy offer hope for future growth. With an essential role in facilitating the growing trend of online shopping, UPS remains a viable investment option.
As you consider investing in these dividend-paying stocks, keep in mind that there are numerous other attractive options available, including dividend-focused exchange-traded funds. Conduct thorough research and due diligence to identify the best investment opportunities that align with your financial goals and risk tolerance. Happy investing!
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