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Yahoo
5 days ago
- Business
- Yahoo
Want Decades of Passive Income? Buy This Index Fund and Hold It Forever.
Key Points There are many forms of passive income. Investing in dividend-paying stocks is a particularly effective form. This ETF makes it easy -- and it's recently yielding a hefty 3.9%. 10 stocks we like better than Schwab U.S. Dividend Equity ETF › It's hard to beat passive income. Set up your investments and then money flows to you regularly, without your having to do any, or much, work. There are many forms of passive income, too, such as rent checks from properties you own, interest payments from savings accounts or bonds you own, royalties from books you wrote, and dividend income from dividend-paying stocks or dividend-focused exchange-traded funds (ETFs) you own. Here's a look at a particularly attractive way to collect passive income: the Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD). As an ETF, it's a fund that trades like a stock. And it offers not only dividend income but growing dividend income and the likelihood of its component holdings growing in value over time as well. Why dividends? In case you're not yet sold on the power of dividend investing, check out the table below: Dividend-Paying Status Average Annual Total Return, 1973-2024 Dividend growers and initiators 10.24% Dividend payers 9.20% No change in dividend policy 6.75% Dividend non-payers 4.31% Dividend shrinkers and eliminators (0.89%) Equal-weighted S&P 500 index 7.65% Data source: Ned Davis Research and Hartford Funds. See? Dividend-paying stocks are not boring investments made by grandparents. They're suitable for all kinds of investors, and they perform rather well, too. That's partly because a company has to grow enough to have fairly dependable income before it will commit to paying a regular dividend. A passive-income winner: The Schwab U.S. Dividend Equity ETF There are lots of dividend-focused ETFs, so what's so great about the Schwab US Dividend Equity ETF? Well, while some dividend ETFs deliver lots of income but relatively little growth, and others are strong growers but don't offer that much income, this ETF strikes a nice balance between the two. The Schwab US Dividend Equity ETF recently sported a very solid dividend yield of 3.9%. It tracks the Dow Jones U.S. Dividend 100 Index, which is "designed to measure the performance of high-dividend-yielding stocks in the U.S. with a record of consistently paying dividends, selected for fundamental strength relative to their peers, based on financial ratios." As an index fund, it aims to deliver roughly the same return as the index it tracks, less its fees, which are rather puny. The ETF's expense ratio (annual fee) is 0/06%, meaning that you'll fork over $6 per year for every $10,000 you have invested in the ETF. What's in the Schwab U.S. Dividend Equity ETF? Here are the ETF's recent top 10 holdings: Stock Weight in ETF Recent yield Texas Instruments 4.35% 2.53% Chevron 4.22% 4.56% PepsiCo 4.16% 3.90% Cisco Systems 4.11% 2.41% ConocoPhillips 4.10% 3.36% Amgen 3.99% 3.11% Merck 3.92% 3.97% Altria Group 3.84% 6.86% AbbVie 3.82% 3.51% Verizon Communications 3.80% 6.31% Source: as of July 22, 2025. You can see that these 10 (out of about 100) holdings, which together make up around 40% of the ETF's value, pay meaningful dividends. And as long as they remain healthy and growing, they're likely to increase their payouts over time. For context, note that the S&P 500 index recently yielded 1.23%. How has the Schwab U.S. Dividend Equity ETF performed? Finally, here's a look at how the ETF has performed in the past. I'll include the S&P 500's performance for comparison, using the Vanguard S&P 500 ETF (NYSEMKT: VOO): Fund 3-year average annual gain 5-year average annual gain 10-year average annual gain Schwab U.S. Dividend Equity ETF 8.14% 12.54% 11.39% Vanguard S&P 500 ETF 18.49% 15.69% 13.51% Source: as of July 22, 2025. You can see that, on average, investors are likely to see their money grow faster in a low-fee S&P 500 index fund, but it's not going to produce nearly as much income as the Schwab ETF. Some investors may want to park a portion of their long-term portfolio in each of the ETFs. Either or both will deliver decades of passive income, though one will deliver more. Should you invest $1,000 in Schwab U.S. Dividend Equity ETF right now? Before you buy stock in Schwab U.S. Dividend Equity ETF, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Schwab U.S. Dividend Equity ETF wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $636,628!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,063,471!* Now, it's worth noting Stock Advisor's total average return is 1,041% — a market-crushing outperformance compared to 183% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 21, 2025 Selena Maranjian has positions in AbbVie, Altria Group, Amgen, Schwab U.S. Dividend Equity ETF, and Verizon Communications. The Motley Fool has positions in and recommends AbbVie, Amgen, Chevron, Cisco Systems, Merck, Texas Instruments, and Vanguard S&P 500 ETF. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy. Want Decades of Passive Income? Buy This Index Fund and Hold It Forever. was originally published by The Motley Fool
Yahoo
22-07-2025
- Business
- Yahoo
5 Brilliant Dividend Stocks to Buy Now and Hold for the Long Term
Key Points Dividend stocks offer a reliable income stream as companies distribute a portion of their profits to shareholders. Research indicates that companies that pay dividends tend to outperform those that do not over the long term, with lower volatility. Dividend companies tend to have strong business models, sound management, and a commitment to returning capital to shareholders. 10 stocks we like better than JPMorgan Chase › Looking for a way to boost your passive income? Dividend stocks might just be your golden ticket. Dividend-paying companies share a portion of their profits with shareholders, typically on a quarterly basis. Many investors find this appealing because it creates a steady passive income stream. But the benefits don't stop there! Dividend stocks often leave their non-dividend counterparts in the dust. Research from Hartford Funds reveals something remarkable: During a 50-year span, companies that pay dividends have outperformed those that don't, 9.2% to 4.3% on average annually, and they have also done so with less volatility. Ultimately, it boils down to this: Dividend-paying companies typically have effective business models, prudent capital management, and a strong commitment to rewarding their investors over the long term. Here are five quality dividend stocks that investors should consider adding to their portfolios today. JPMorgan Chase JPMorgan Chase (NYSE: JPM) is the largest U.S. bank by assets and has a long history of capital discipline and profitability. Under the leadership of Chief Executive Officer Jamie Dimon, who has led the bank since 2005, the bank has consistently outperformed peers. The bank has steadily increased its dividend during the past 15 years, boasting a current yield of nearly 2% and a low payout ratio, meaning there's room for future increases. Its strong capital position is reinforced by consistent results in Federal Reserve stress tests, allowing it to return capital to shareholders. It recently raised its dividend payout for the second time this year. Since the fourth quarter, the bank has increased its dividend payout by 20%. JPMorgan Chase offers stability, dividend growth potential, and a fortress-like balance sheet, making it an ideal core holding for dividend-focused investors seeking exposure to the financial sector. Ares Capital Ares Capital (NASDAQ: ARCC) is the largest publicly traded business development company (BDC) in the U.S. As a BDC, Ares Capital primarily focuses on providing debt financing to middle-market companies. Not only that, but BDCs are required to distribute at least 90% of their taxable income to shareholders, making them ideal for dividend investors. Ares stands out for its well-managed, diversified portfolio. It has a long history of strong underwriting and credit management processes, even during volatile periods such as the Great Recession from 2007 to 2009. Its portfolio spans hundreds of companies across various industries, reducing exposure to sector-specific downturns. As of March 31, its portfolio comprises 566 companies across numerous industries. Ares also benefits from rising interest rates, as many of its loans are floating-rate. At the end of the first quarter, 69% of the investments in its portfolio, valued at fair value, pay interest and dividends at floating rates. Ares Capital's dividend yield typically exceeds 9%, and it has also provided 15 years of stable or growing dividend payouts, showing its ability to reward shareholders over time. T. Rowe Price Group T. Rowe Price (NASDAQ: TROW) is a leading asset management firm recognized for its active investment strategies and strong long-term performance. The company has a solid track record. As of March 31, 61% of its U.S. mutual funds' assets under management (AUM) outperformed their Morningstar median during the past year, and 87% outperformed during the past 10 years. As a money manager, T. Rowe earns fees from managing its assets of more than $1.57 trillion, creating a stable and scalable earnings stream as markets grow in line with its AUM. This fee-based model also helps generate steady earnings, which is significant as the company looks to maintain and expand its payout. The asset management company's dividend yields about 5% and it has raised the dividend every year for 39 consecutive years. Aflac Aflac (NYSE: AFL) is a leading provider of supplemental health and life insurance, with a strong presence in Japan and the U.S. The company and its subsidiaries offer financial protection to policyholders, with a primary business focus on supplemental health and life insurance. Its emphasis on supplemental coverages aims to help consumers pay for medical and non-medical costs not covered by primary insurance, with a focus on products such as cancer, critical illness, accident, and hospital indemnity coverage. Its Japanese business accounts for more than half of its revenue, providing a steady, cash-generating base. Furthermore, with premium persistency at 93.8% in Japan during the past 12 months, the company demonstrates strong customer retention, a crucial indicator of customer satisfaction. Aflac has raised its dividend for over 42 consecutive years. The yield currently stands at 2.2% with a payout ratio of 31%, allowing room for continued increases. Aflac's conservative financial management, strong underwriting discipline, and stable cash-flow generation make it a reliable dividend stock. Marsh & McLennan Marsh & McLennan (NYSE: MMC) is a global leader in insurance brokerage, risk management, and consulting services through its Marsh, Mercer, Guy Carpenter, and Oliver Wyman brands. Marsh's dominance as an insurance broker positions it well to benefit from continued increases in insurance premiums, while Mercer's human capital consulting business adds a complementary revenue stream. As a fee-based business, Marsh avoids underwriting risk and instead generates steady, fee-based cash flows. The company operates a capital-light business, serving a diverse range of clients, including corporations, government entities, professional organizations, and individuals. Last year, the company generated $4 billion in free cash flow, and has increased this vital measure by 17% compounded annually since 2010. Marsh and McLennan has delivered consistent revenue and earnings growth during the past decade, increasing adjusted earnings per share for 17 consecutive years, enabling it to raise its dividend for 15 straight years. With a yield of about 1.5% backed by strong free cash flow, Marsh and McLennan is another solid dividend stock to consider today. Should you buy stock in JPMorgan Chase right now? Before you buy stock in JPMorgan Chase, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and JPMorgan Chase wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $652,133!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,056,790!* Now, it's worth noting Stock Advisor's total average return is 1,048% — a market-crushing outperformance compared to 180% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 15, 2025 JPMorgan Chase is an advertising partner of Motley Fool Money. Courtney Carlsen has positions in JPMorgan Chase. The Motley Fool has positions in and recommends JPMorgan Chase and T. Rowe Price Group. The Motley Fool has a disclosure policy. 5 Brilliant Dividend Stocks to Buy Now and Hold for the Long Term was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
21-07-2025
- Business
- Yahoo
5 Brilliant Dividend Stocks to Buy Now and Hold for the Long Term
Key Points Dividend stocks offer a reliable income stream as companies distribute a portion of their profits to shareholders. Research indicates that companies that pay dividends tend to outperform those that do not over the long term, with lower volatility. Dividend companies tend to have strong business models, sound management, and a commitment to returning capital to shareholders. 10 stocks we like better than JPMorgan Chase › Looking for a way to boost your passive income? Dividend stocks might just be your golden ticket. Dividend-paying companies share a portion of their profits with shareholders, typically on a quarterly basis. Many investors find this appealing because it creates a steady passive income stream. But the benefits don't stop there! Dividend stocks often leave their non-dividend counterparts in the dust. Research from Hartford Funds reveals something remarkable: During a 50-year span, companies that pay dividends have outperformed those that don't, 9.2% to 4.3% on average annually, and they have also done so with less volatility. Ultimately, it boils down to this: Dividend-paying companies typically have effective business models, prudent capital management, and a strong commitment to rewarding their investors over the long term. Here are five quality dividend stocks that investors should consider adding to their portfolios today. JPMorgan Chase JPMorgan Chase (NYSE: JPM) is the largest U.S. bank by assets and has a long history of capital discipline and profitability. Under the leadership of Chief Executive Officer Jamie Dimon, who has led the bank since 2005, the bank has consistently outperformed peers. The bank has steadily increased its dividend during the past 15 years, boasting a current yield of nearly 2% and a low payout ratio, meaning there's room for future increases. Its strong capital position is reinforced by consistent results in Federal Reserve stress tests, allowing it to return capital to shareholders. It recently raised its dividend payout for the second time this year. Since the fourth quarter, the bank has increased its dividend payout by 20%. JPMorgan Chase offers stability, dividend growth potential, and a fortress-like balance sheet, making it an ideal core holding for dividend-focused investors seeking exposure to the financial sector. Ares Capital Ares Capital (NASDAQ: ARCC) is the largest publicly traded business development company (BDC) in the U.S. As a BDC, Ares Capital primarily focuses on providing debt financing to middle-market companies. Not only that, but BDCs are required to distribute at least 90% of their taxable income to shareholders, making them ideal for dividend investors. Ares stands out for its well-managed, diversified portfolio. It has a long history of strong underwriting and credit management processes, even during volatile periods such as the Great Recession from 2007 to 2009. Its portfolio spans hundreds of companies across various industries, reducing exposure to sector-specific downturns. As of March 31, its portfolio comprises 566 companies across numerous industries. Ares also benefits from rising interest rates, as many of its loans are floating-rate. At the end of the first quarter, 69% of the investments in its portfolio, valued at fair value, pay interest and dividends at floating rates. Ares Capital's dividend yield typically exceeds 9%, and it has also provided 15 years of stable or growing dividend payouts, showing its ability to reward shareholders over time. T. Rowe Price Group T. Rowe Price (NASDAQ: TROW) is a leading asset management firm recognized for its active investment strategies and strong long-term performance. The company has a solid track record. As of March 31, 61% of its U.S. mutual funds' assets under management (AUM) outperformed their Morningstar median during the past year, and 87% outperformed during the past 10 years. As a money manager, T. Rowe earns fees from managing its assets of more than $1.57 trillion, creating a stable and scalable earnings stream as markets grow in line with its AUM. This fee-based model also helps generate steady earnings, which is significant as the company looks to maintain and expand its payout. The asset management company's dividend yields about 5% and it has raised the dividend every year for 39 consecutive years. Aflac Aflac (NYSE: AFL) is a leading provider of supplemental health and life insurance, with a strong presence in Japan and the U.S. The company and its subsidiaries offer financial protection to policyholders, with a primary business focus on supplemental health and life insurance. Its emphasis on supplemental coverages aims to help consumers pay for medical and non-medical costs not covered by primary insurance, with a focus on products such as cancer, critical illness, accident, and hospital indemnity coverage. Its Japanese business accounts for more than half of its revenue, providing a steady, cash-generating base. Furthermore, with premium persistency at 93.8% in Japan during the past 12 months, the company demonstrates strong customer retention, a crucial indicator of customer satisfaction. Aflac has raised its dividend for over 42 consecutive years. The yield currently stands at 2.2% with a payout ratio of 31%, allowing room for continued increases. Aflac's conservative financial management, strong underwriting discipline, and stable cash-flow generation make it a reliable dividend stock. Marsh & McLennan Marsh & McLennan (NYSE: MMC) is a global leader in insurance brokerage, risk management, and consulting services through its Marsh, Mercer, Guy Carpenter, and Oliver Wyman brands. Marsh's dominance as an insurance broker positions it well to benefit from continued increases in insurance premiums, while Mercer's human capital consulting business adds a complementary revenue stream. As a fee-based business, Marsh avoids underwriting risk and instead generates steady, fee-based cash flows. The company operates a capital-light business, serving a diverse range of clients, including corporations, government entities, professional organizations, and individuals. Last year, the company generated $4 billion in free cash flow, and has increased this vital measure by 17% compounded annually since 2010. Marsh and McLennan has delivered consistent revenue and earnings growth during the past decade, increasing adjusted earnings per share for 17 consecutive years, enabling it to raise its dividend for 15 straight years. With a yield of about 1.5% backed by strong free cash flow, Marsh and McLennan is another solid dividend stock to consider today. Should you buy stock in JPMorgan Chase right now? Before you buy stock in JPMorgan Chase, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and JPMorgan Chase wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $652,133!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,056,790!* Now, it's worth noting Stock Advisor's total average return is 1,048% — a market-crushing outperformance compared to 180% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 15, 2025 JPMorgan Chase is an advertising partner of Motley Fool Money. Courtney Carlsen has positions in JPMorgan Chase. The Motley Fool has positions in and recommends JPMorgan Chase and T. Rowe Price Group. The Motley Fool has a disclosure policy. 5 Brilliant Dividend Stocks to Buy Now and Hold for the Long Term was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
15-07-2025
- Business
- Yahoo
10 Dividend Stocks to Double Up On Right Now
Dividend stocks have historically outperformed non-dividend payers. Several companies have excellent records of paying a growing dividend. They're worth doubling up on right now, or adding to your portfolio if you don't already own them. 10 stocks we like better than Alphabet › Dividend stocks can make great long-term investments. They've outperformed nonpayers by more than 2-to-1 over the past 50 years, with a 9.2% average annual return compared with 4.3%, according to data from Hartford Funds and Ned Davis Research. The best returns have come from dividend growers and initiators, with a 10.2% return. Given that data, investors should consider boosting their allocations to top dividend growth stocks. Here are 10 to consider doubling up on right now, or adding to your portfolio if you don't already own them. Technology titan Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL) might not seem like an appealing dividend stock at first glance, given its paltry 0.5% yield. However, the company currently trades at a low valuation. Meanwhile, it only started paying dividends last year. It has already raised its payout by 5% earlier this year. With a cash-rich balance sheet and a business that generates lots of cash, Alphabet should have no trouble growing its business in the future. The company has lots of growth drivers, including its emerging AI platform built around Google Gemini. AI is already driving accelerated growth across its business, which could continue for years to come. American Water Works (NYSE: AWK) is a leading water utility. The company generates stable cash flow by providing water, wastewater, and other services to customers under government-regulated rate structures and long-term, fixed-rate contracts. That enables it to produce durable cash flow to pay dividends. The water company's payout currently yields 2.3%, which is almost double the S&P 500's dividend yield of around 1.2%. American Water Works pays out 55% to 60% of its durable earnings in dividends. It retains the rest to invest in expanding its existing water utilities and buying new ones. These growth investments should increase its earnings per share by 7% to 9% annually. American Water Works expects to grow its dividend at the same rate as its earnings rise. Semiconductor and software giant Broadcom (NASDAQ: AVGO) also has a rather lackluster dividend yield of 0.9%. However, the company has a stellar record of increasing its payout. It has raised its payout in all fourteen years since it initiated a dividend in its 2011 fiscal year, including hiking it by 11% last year. Broadcom should have no trouble increasing its dividend in the future. The company is growing fast, driven by robust demand for its AI semiconductors. AI revenue grew a staggering 220% last year to $12.2 billion. With AI still in the early stages of deployment, Broadcom has a long growth runway ahead. Renewable energy juggernaut Brookfield Renewable (NYSE: BEPC)(NYSE: BEP) currently has a more than 4.5% dividend yield. The company backs its high-yielding payout with very stable and steadily growing cash flow. Brookfield sells about 90% of the power it produces under long-term, fixed-rate power purchase agreements, which link 70% of its revenue to inflation. In addition to inflation indexation, Brookfield's growth drivers include margin enhancement activities, development projects, and acquisitions. The company expects this quartet will boost its funds from operations (FFO) per share by more than 10% annually. That easily supports Brookfield's plans to increase its dividend by 5% to 9% per year. The company has grown its payout at a 6% compound annual rate since 2001. Realty Income (NYSE: O) has a more than 5.5% dividend yield. The real estate investment trust (REIT) backs its high-yielding payout with very stable rental income. It primarily invests in properties secured by long-term net leases, which require tenants to cover building insurance, routine maintenance, and real estate taxes. The REIT has an incredible record of increasing its dividend. It has raised its payment 131 times since its public market listing three decades ago, including for 111 quarters in a row. Realty Income has grown its payout at a 4.2% compound annual rate during that period, primarily by investing in additional income-producing real estate. With a strong financial profile, the REIT should have no trouble continuing to deliver a steadily rising income stream to shareholders. PepsiCo (NASDAQ: PEP) has a more than 4% dividend yield. The beverage and snacks giant has an amazing record of increasing its payout. It raised its payment by 5% earlier this year, extending its growth streak to 53 straight years. That kept PepsiCo in the elite group of Dividend Kings, companies with 50 or more years of annual dividend increases. The company invests heavily to organically expand its business. It expects its investments to deliver 4% to 6% annual revenue growth and high-single-digit earnings-per-share growth over the long term. PepsiCo also uses its strong balance sheet to make acquisitions that accelerate its growth. Those drivers should enable it to continue increasing its dividend. Leading industrial REIT Prologis (NYSE: PLD) has a dividend yield approaching 4%. The company has grown its dividend at a 13% compound annual rate over the past five years. That's more than double the pace of other REITs, at 6%, and the S&P 500, at 5%. Prologis is in a strong position to continue increasing its dividend. Demand for warehouse space is strong while new supplies will likely remain limited, which should support steady rent growth. The company also has a strong balance sheet, enabling it to invest in development projects and acquisitions. Healthcare giant Johnson & Johnson (NYSE: JNJ) has a dividend yield of more than 3%. The company raised its payout by 4.8% earlier this year, extending its growth streak to an impressive 63 straight years. Johnson & Johnson backs its dividend with one of the healthiest financial profiles in the world. It's one of only two companies with a pristine AAA bond rating. The company generates about $20 billion in free cash flow annually, more than enough to cover its $11.8 billion dividend outlay. It also invests heavily in research and development, as well as making acquisitions to enhance its pipeline and current product offerings. NextEra Energy (NYSE: NEE) has a 3% dividend yield. The utility has grown its payout at a brisk 10% compound annual rate over the past 20 years. It plans to deliver around 10% annual dividend growth through at least next year. Powering the company's rapidly rising dividend is its heavy investment in renewable energy and in expanding its electric utility in Florida. NextEra Energy sees tremendous growth potential ahead, fueled by surging demand for power from catalysts like AI data centers. That should enable the company to continue growing its earnings at a healthy rate, supporting steady dividend increases. Visa (NYSE: V) has a rather low dividend yield of 0.7%. However, the credit card giant is growing its payout briskly. It has raised its payout annually for over a decade and a half, growing it at a more than 17% compound annual rate over the past 10 years. The credit card company generates massive and growing free cash flow. It has produced almost $9.5 billion in free cash flow over the last 12 months. Visa is returning that money to investors via share repurchases and dividends. It's also investing in expanding its business, which is growing at a double-digit annual clip. These companies do a great job of paying dividends. They have excellent records of increasing their payouts, which should continue. That should enable them to generate strong total returns over the long term. Before you buy stock in Alphabet, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Alphabet wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $671,477!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,010,880!* Now, it's worth noting Stock Advisor's total average return is 1,047% — a market-crushing outperformance compared to 180% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of July 14, 2025 Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Matt DiLallo has positions in Alphabet, Broadcom, Brookfield Renewable, Brookfield Renewable Partners, Johnson & Johnson, NextEra Energy, PepsiCo, Prologis, Realty Income, and Visa. The Motley Fool has positions in and recommends Alphabet, NextEra Energy, Prologis, Realty Income, and Visa. The Motley Fool recommends Broadcom, Brookfield Renewable, Brookfield Renewable Partners, and Johnson & Johnson and recommends the following options: long January 2026 $90 calls on Prologis. The Motley Fool has a disclosure policy. 10 Dividend Stocks to Double Up On Right Now was originally published by The Motley Fool Sign in to access your portfolio
Yahoo
03-07-2025
- Business
- Yahoo
3 Ultra-High-Yield Dividend Stocks -- Sporting an Average Yield of 9% -- Which Make for No-Brainer Buys in July
Dividend stocks have more than doubled up the average annual return of non-payers over the previous 51 years (1973-2024). Amid one of the priciest stock market's in history, amazing deals can still be found among ultra-high-yield income stocks -- i.e., those with yields of 5% or greater. Three high-octane dividend stocks, with yields ranging from 5.1% to 14.9%, have the right blend of macro and company-specific catalysts to thrive. 10 stocks we like better than Annaly Capital Management › For more than a century, Wall Street has been a bona fide wealth-creating machine. Though other asset classes, including bonds, commodities, and real estate, have also delivered positive long-term returns, none of these other investments has come particularly close to matching the average annual return of stocks over the last 100 years. With thousands of publicly traded companies and exchange-traded funds (ETFs) to choose from, there's probably one or more securities that can help investors meet their goals. But among the countless ways investors can grow their wealth on Wall Street, few have proved more successful over long periods than buying and holding high-quality dividend stocks. Companies that pay a regular dividend to their shareholders are typically profitable on a recurring basis, capable of providing transparent long-term growth outlooks, and have demonstrated their ability to navigate a challenging economic climate. Best of all, dividend stocks tend to outperform. In The Power of Dividends: Past, Present, and Future, the analysts at Hartford Funds, in collaboration with Ned Davis Research, compared the performance of dividend stocks to non-payers from 1973 to 2024. They found that dividend stocks more than doubled the average annual return of non-payers (9.2% vs. 4.31%), and did so while being notably less volatile. Even with the benchmark S&P 500 hitting record highs, amazing deals can still be found among ultra-high-yield dividend stocks -- i.e., companies whose yields are at least four times higher than the current yield of the S&P 500 (1.24%, as of June 27). The following three ultra-high-yield stocks, which are sporting an average yield of 9.02%, make for no-brainer buys in July. The first sensational buy that income seekers can confidently add to their portfolios as we turn the page to the second-half of 2025 is mortgage real estate investment trust (REIT) Annaly Capital Management (NYSE: NLY). While Annaly's nearly 14.9% yield may appear too good to be true, the company recently raised its quarterly payout and has averaged a double-digit yield over the trailing two decades. Throughout much of this decade, mortgage REITs have been disliked by Wall Street. This industry is highly sensitive to rapid changes in monetary policy and interest rates. The Federal Reserve increasing interest rates at the fastest clip in four decades from March 2022 to July 2023 increased short-term borrowing costs for companies like Annaly and lowered their net interest margin. The good news for Annaly Capital Management and its mortgage REIT peers is that we're entering a favorable environment for growth. The nation's central bank is now in a rate-easing cycle, and declining interest rates usually allow mortgage REITs to expand their net interest margin. In other words, they can still buy mortgage-backed securities with robust yields, but short-term borrowing costs tend to decline. Well-telegraphed monetary policy shifts during a rate-easing cycle are ideal for Annaly. Something else to consider is that Annaly Capital Management's $84.9 billion investment portfolio is heavily skewed toward highly liquid agency assets. An "agency" security is backed by the federal government in the unlikely event of default on the underlying asset. This added layer of protection is what affords Annaly the luxury of utilizing leverage to its advantage and pumping up its profits. With the innerworkings of the mortgage REIT industry becoming more favorable, Annaly trading at a slight discount to its book value, as of the March-ended quarter, makes it a smart buy for income-seeking investors. A second ultra-high-yield dividend stock that makes for a no-brainer buy in July is pharmaceutical titan Pfizer (NYSE: PFE). Its current yield tops 7% and looks to be sustainable, based on growth forecasts from management. Whereas the S&P 500 has rallied to a fresh record high, Pfizer stock has struggled under the weight of its own prior success. Investors sent shares of the company higher during the height of the COVID-19 pandemic for having developed a vaccine (Comirnaty) and oral therapy (Paxlovid). But between 2022 and 2024, combined sales of these COVID-19 therapeutics declined from more than $56 billion to $11 billion, respectively. Another drop-off is expected this year, with Paxlovid sales falling off in a big way in the March-ended quarter. While it might be unnerving to see Pfizer's COVID-19-related revenue decline, keep in mind that this area of focus didn't exist at the end of 2020. Any recurring sales from this segment is a bonus from where things stood 4.5 years ago. Furthermore, Pfizer's net sales from all segments actually grew by more than 50% between 2020 and 2024. In spite of weaker sales tied to its COVID-19 franchise, Pfizer's product portfolio, as a whole, is only getting stronger. On top of continued strength from Pfizer's specialty care segment, there's plenty of optimism that follows its $43 billion acquisition of cancer-drug developer Seagen in December 2023. This deal added more than $3 billion in annual sales, provides ample opportunity to boost margins via cost synergies, and should meaningfully bolster Pfizer's oncology pipeline. Ongoing improvements in cancer screening and diagnostics, coupled with strong pricing power for brand-name cancer drugs, bodes well for Pfizer's oncology division. The final piece of the puzzle is Pfizer's historically inexpensive valuation. Amid one of the priciest stock markets in history, shares of Pfizer can be scooped up for around 8 times forecast earnings in 2025 and 2026. This compares to an average forward price-to-earnings (P/E) ratio of 10.2 over the trailing-five-year period. The third ultra-high-yield dividend stock that stands out for all the right reasons and can be purchased with confidence by income investors in July is The Campbell's Company (NASDAQ: CPB). The 146-year-old food company formerly known as Campbell's Soup Company sports a nearly 5.1% dividend yield, which is an all-time high. Campbell's stock is effectively hovering at a 16-year low due to two factors. First, demand in the snack food category has recently weakened, which isn't unique Campbell's. The other issue (also not unique to Campbell's) is President Donald Trump's recently imposed steel tariffs, which are expected to take a bite out of the margins of food companies that can their products. While these are tangible headwinds, they're both relatively short-term in nature and overlook some of the factors that make The Campbell's Company a solid long-term investment. Perhaps the most obvious catalyst for Campbell's is that it sells basic need goods, such as food and beverages. No matter how well or poorly the U.S. economy and stock market perform, consumers need food and beverages to survive. This leads to highly predictable operating cash flow for Campbell's in any economic climate and makes it a particularly attractive stock to own during periods of heightened volatility and uncertainty. Furthermore, Campbell's went on the offensive last year to improve its product portfolio and make its operations more efficient. It announced the closure of a plant, as well as $230 million in investments through fiscal 2026 (Campbell's fiscal year usually ends in late July) in existing plants to bolster production efficiency and buoy margins. Ongoing innovation and the occasional acquisition are ways Campbell's looks to deliver volume growth and support the value of its brands. The valuation is also compelling. With Campbell's stock at levels not consistently witnessed since 2009, shares can be purchased for around 10 times forecast earnings this year. This equates to a 31% discount to the company's average forward P/E ratio over the past half-decade. Before you buy stock in Annaly Capital Management, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Annaly Capital Management wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $697,627!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $939,655!* Now, it's worth noting Stock Advisor's total average return is 1,045% — a market-crushing outperformance compared to 178% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 30, 2025 Sean Williams has positions in Annaly Capital Management and Pfizer. The Motley Fool has positions in and recommends Pfizer. The Motley Fool recommends Campbell's. The Motley Fool has a disclosure policy. 3 Ultra-High-Yield Dividend Stocks -- Sporting an Average Yield of 9% -- Which Make for No-Brainer Buys in July was originally published by The Motley Fool
