Want to earn secure dividends in 2024 and beyond? Invest in these three ultra-high-yield stocks
If your gut is telling you that now is a good time to add some safe dividend-paying stocks to your investment portfolio, you'd be wise to listen. Between geopolitical turmoil, persistent inflation, unpredictable interest rates, rising loan defaults and political uncertainty, the near future may not be a good environment for some (or perhaps any) growth stocks.
However, these three high-yield dividend stocks are up to the task of providing investors with solid returns, and should continue to do so indefinitely.
1. Altria Group
The United States Tobacco industry It is like living on borrowed time. That is the main conclusion of the latest study by the World Health Organization (WHO) on the subject, which suggests that only 18.2% of the country's adult population will be regular tobacco users (mostly smokers) in 2025. That is considerably lower than the 23.3% in 2000.
However, the tobacco business in the United States may have more years ahead of it than one might expect. The same WHO report, which also acknowledges that the quit-smoking movement is slowing, suggests that 16.5% of American adults will still be regular tobacco users in 2030. Meanwhile, people are taking up alternative vices like vaping and e-cigarette use in droves. The National Center for Health Statistics reports that more than 4% of the country’s adults use vaping products regularly, offsetting the declining number of smokers.
Connect the dots. Given the nation's expected population growth between now and then (and beyond), there are still plenty of opportunities to turn these common spending habits into big bucks.
The backdrop bodes well for Altria Group (NYSE:MO)Philip Morris USA is the parent company of Philip Morris USA, which owns well-known American cigarette brands such as Marlboro, Virginia Slims and others. And, while cigarettes remain its best-selling product, it also owns the vaping brand ENJOY and oral nicotine pouch maker Helix Innovations. These other initiatives are softening the impact of tobacco’s slow demise at Altria, which has adopted the motto “Quit Smoking.” By embracing the gradual but inevitable decline of the cigarette market rather than resisting it, the company can continue to generate healthy earnings by managing — and even steering — the transition to other nicotine products. More importantly for shareholders, managing this evolution allows Altria to continue producing the profits that have supported 55 consecutive years of annual dividend increases.
It is important for investors to understand that significant or sustainable capital appreciation is unlikely to occur in this case. Altria does not even appear to be trying to generate growth. Its goal is to maintain the cash flow that funds its dividend payments.
However, with a forward yield of 7.7% and a dividend that could continue to grow and pay for decades, it's not a bad option.
2. Real estate income
Contrary to popular assumption, not all sectors of the retail industry are in crisis. Most of the weakness is limited to department stores and the shopping malls where they are typically located. Neighborhood malls and shopping centers are doing quite well, serving consumers where and how they like to shop.
Get into Real estate income (NEW YORK STOCK EXCHANGE:O).
It's not a retail company, though its fate is tied to a broad swath of that industry. It's a real estate investment trust (REIT) that rents out physical properties to retailers, saving its tenants some of the financial commitments that come with owning all those buildings.
At first glance, it may seem like a risky proposition, but the landlord continues to rent to companies in a retail sector that is under pressure from the continued growth of e-commerce.
However, this general idea ignores a couple of important details. One is that a large portion of retail consumption is still handled (for reasons of convenience and speed) in person at stores. And the other reason? The bulk of Realty Income's tenants are among the retailers with the longest staying power, such as General dollar, Walgreens7-Eleven, and even WalmartOnce these chains have established a physical presence in a location, they are unlikely to abandon it.
That's what this REIT's dividend history suggests. Not only has it distributed its monthly (yes, monthly) payments like clockwork since they started in 1969, but those payments have increased 127-fold. Those who buy the stock today would be stepping in while Realty Income's forward dividend yield remains at 5%.
3. Hot tub
Last but not least, add the appliance manufacturer. Whirlwind (NYSE: WHR) to your list of dividend stocks to consider buying while their forward yield is at 7%.
It's a suggestion that may surprise more than one person. Although we don't know for sure, intuitively there doesn't seem to be a huge demand for home appliances at the moment. The growing competition from companies like SamsungBosch and LG further deflate the optimistic argument for owning a stake in this iconic brand.
Although things may not be as difficult on this front as they seem they should be.
Unlike other major purchases, buying a major appliance can't always be put off. Appliances are also more affordable than cars or homes, for example, so getting financing is less of a hurdle. For this reason, the Conference Board's consumer confidence index rose in August specifically because, in apparent defiance of the economic backdrop, more American consumers said they intended to buy a refrigerator, washing machine or television in the next six months. It was the fourth consecutive month that these purchasing plans improved.
Investors who already know Whirlpool will probably also know that while it has continued to pay dividends, it has not increased them since 2022, when it raised the quarterly payment to $1.75 per share.
All things considered, though, its ability to maintain its payout was never in doubt. The decision to pause its long-standing dividend growth cadence was based on a great deal of caution at an extraordinary time in modern history. The COVID-19 pandemic and its fallout not only temporarily impacted purchases of appliances, but also hampered companies’ ability to manufacture them. However, the projected 14% drop in revenue this year and the resulting earnings pullback should mark the end of these problems. Analysts are forecasting Whirlpool’s business to improve next year. Meanwhile, with shares trading 60% below their 2021 high and valued at less than 9 times next year’s estimated earnings, the worst-case scenario is already priced in… and then some.
Should You Invest $1,000 in Altria Group Right Now?
Before buying Altria Group stock, please consider the following:
He Motley Fool Stock Advisor The team of analysts has just identified what they believe to be the Top 10 Stocks for investors to buy now…and Altria Group wasn't one of them. The 10 stocks that made the cut could deliver massive returns in the years ahead.
Consider when Nvidia I made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, You would have $694,743!*
Stock market advisor offers investors an easy-to-follow blueprint for success, including guidance on how to build a portfolio, regular analyst updates, and two new stock picks each month. Stock market advisor The service has more than quadruple the return of the S&P 500 since 2002*.
*Stock Advisor performance as of September 16, 2024
James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in Realty Income and Walmart and recommends them. The Motley Fool has a Disclosure Policy.
Want to earn secure dividends in 2024 and beyond? Invest in these three ultra-high-yield stocks Originally published by The Motley Fool
