All It Takes Is $2,000 Invested in Each of These High Dividend Stocks to Help Generate Over $280 in Passive Income Per Year

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Key Points
Income-focused investors seeking reliable dividends and a stable company can consider investing in telecommunications giant Verizon.
AT&T's disciplined financial management is supporting its solid 4.1% dividend yield.
AbbVie's ability to thrive post-Humira, combined with a 53-year history of dividend growth, makes it a smart buy now.
10 stocks we like better than Verizon Communications ›
It has been a volatile year for the U.S. markets, with many stocks experiencing impressive highs and sharp lows. Investing in such a turbulent environment may feel daunting for retail investors.
However, dividend-paying stocks can help generate substantial passive income even amid market fluctuations. With the correct picks, investors can generate a steady dividend income even with a relatively modest investment.
For instance, investing $2,000 each in Verizon Communications (NYSE: VZ), AT&T (NYSE: T), and AbbVie (NYSE: ABBV) will generate a total of $282.60 in passive income annually. Here's how the dividend income breaks down:
With a 6.5% yield, $2,000 invested in Verizon will generate $130.20 in annual dividends.
With a 4.1% yield, $2,000 invested in AT&T will generate $82.40 in annual dividends.
With a 3.5% yield, $2,000 invested in AbbVie will generate $70 in annual dividends.
These stocks are not only reliable dividend payers, but also boast strong business models and a rich and durable history of returning value to shareholders.
Verizon
Communications giant Verizon offers investors a sustainable 6.5% dividend yield, which translates to $2.71 annually per share, all backed by solid business fundamentals. It has raised its dividend for 18 consecutive years.
Verizon's strong financial results underline the stability of its dividend policy. The company delivered its highest-ever quarterly adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $12.6 billion in the first quarter of fiscal 2025 (ending March 31). Free cash flow was $3.6 billion. With a dividend payout ratio of 64.2%, there are enough earnings to cover the dividend.
The company's convergence strategy, which integrates its wireless and wireline networks (including 5G and fiber-optic networks) to create comprehensive connectivity solutions, has proven successful. This has helped reduce customer churn by 40% to 50% for both mobility and fiber products. A sticky customer base translates into predictable cash flows.
Besides retaining existing customers, the company is also rapidly acquiring new clients. Verizon added 339,000 broadband customers and 308,000 fixed wireless customers in the first quarter. The company aims to achieve a goal of 100 million premises with fiber and fixed wireless access following the completion of its pending Frontier acquisition.
Besides telecommunication services, Verizon built a robust adjacent services business (including discounted streaming services and other subscriptions, insurance products, and financial services) expected to clock an annual run rate of $2 billion by the end of 2025. The business also boasts mid-30s margins.
Management is guiding for 2% to 3.5% adjusted EBITDA growth and free cash flows of $17.5 billion to $18.5 billion in 2025. This provides the required cushion for dividend sustainability.
Hence, for investors seeking to earn passive income from high-quality companies, Verizon appears to be a smart buy now.
AT&T
Telecommunications giant AT&T is offering a solid 4.1% yield, which translates to $1.11 per share annually. The dividend also appears well-covered with a 68.1% dividend payout ratio, implying that the company also has the flexibility to increase dividends in the coming years. AT&T expects to resume share buybacks in the second quarter of fiscal 2025 as part of a $10 billion repurchase program, with at least $3 billion completed by the end of fiscal 2025, and the remainder allocated for fiscal 2026.
AT&T has also been increasingly focusing on financial discipline. Since 2020, the company reduced its net debt by $32 billion. It ended the first quarter of fiscal 2025 with a net debt-to-adjusted EBITDA ratio of 2.63, lower than the 2.68 ratio at the end of fiscal 2024. In Q1, the company's revenues increased 2% to $30.6 billion, net income rose 23.6% year over year to $4.7 billion, and free cash flow increased 10.7% year over year to $3.1 billion. These numbers demonstrate AT&T's ability to fund its dividend policy sustainably while maintaining sufficient financial flexibility to invest in growth initiatives and repurchase shares.
AT&T also has exceptional fiber and wireless businesses, both of which are relatively recession-resistant. The company is currently operating the largest fiber network in the U.S. and expects to hit 30 million fiber locations by mid-2025 and 50 million by 2029. This expansion is already driving strong customer growth, with 261,000 fiber net additions in Q1 alone. Additionally, the company's wireless network modernization and fixed wireless expansion contributed to a customer count increase of 181,000 during Q1.
AT&T is also benefiting by bundling its services, creating stickier and more profitable customer relationships. AT&T Fiber and wireless services have 15% higher lifetime values than stand-alone customers.
For income investors seeking defensive dividend growth, this transformed telecommunications player is an appealing pick now.
AbbVie
AbbVie also offers an impressive yield of 3.52% with an annual payout of $6.56 per share. With its history of increasing dividends for 53 consecutive years (including its Abbott Laboratories heritage), AbbVie sports the prestigious Dividend King status.
When AbbVie lost the patent protection for its blockbuster immunology drug Humira in 2023, many investors were concerned about the sustainability of its dividend policy. However, the company has successfully reduced its over-reliance on Humira and continues to thrive even after the dreaded patent cliff.
Humira's sales have fallen more than expected, decreasing by 49.5% year over year to $1.1 billion in Q1 of fiscal 2025. However, its next-generation immunology drugs Skyrizi and Rinvoq are showing impressive results, generating a combined $5.1 billion, a substantial 65% year-over-year increase. Management now expects these two drugs to generate $31 billion in combined sales by 2027, surpassing Humira's peak sales of $20.7 billion.
In addition to immunology, AbbVie has successfully diversified into areas such as neuroscience, oncology, and aesthetics. The company is also focusing on strategic investments, including a $350 million obesity partnership with Gubra and plans for a $2.1 billion acquisition of CAR-T therapy developer Capstan Therapeutics. These deals will position AbbVie in several high-growth areas.
Recently, however, AbbVie announced that the acquired in-process research and development (IPR&D) and milestone expenses have negatively affected its second-quarter earnings guidance. While these represent a short-term challenge, the deals can prove to be major growth drivers in the long run.
With AbbVie proving its capability to navigate major patent cliffs while growing its dividend, I think the stock is worth considering in 2025.
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Manali Pradhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AbbVie and Abbott Laboratories. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy.
All It Takes Is $2,000 Invested in Each of These High Dividend Stocks to Help Generate Over $280 in Passive Income Per Year was originally published by The Motley Fool