Dividend stocks can be a great source of cash flow for your portfolio. You don't need to settle for stocks that pay just a few percentage points, either. Some fairly safe, high-yielding stocks pay far more than the S&P 500 average of 1.3%.
Pfizer (NYSE: PFE) , BCE (NYSE: BCE) , and AT&T (NYSE: T) could all make for good income investments to add to your portfolio right now, as they all pay more than 5% and are fairly safe buys. Here's how investing $30,000 across these stocks could generate $2,000 in annual dividends for your portfolio.
1. Pfizer
Healthcare giant Pfizer pays an attractive dividend that yields 5.9%. If you were to invest $10,000 into the stock, it would generate more than $590 in dividends over the course of a full year. Investors have been bearish on Pfizer of late, seeing it as a business that got a boost due to its COVID vaccine and pill but whose future is much less certain.
While it's true that its COVID revenue is declining, the stock is arguably worth more than the 11 times estimated future earnings (based on analyst projections) it's trading at right now. It has been loading up on acquisitions to enhance its growth prospects.
Its $43 billion acquisition of Seagen last year has the potential to be transformative for the company, making oncology a much larger part of its operations in the years ahead. It also has an underrated opportunity in the promising weight loss market as it works on developing a daily pill to help people lose weight.
Pfizer is in cost-cutting mode, and while it has incurred losses in recent quarters due to restructuring and impairment charges, investors shouldn't discount it as a top dividend stock to own.
2. BCE
Canadian media and telecom company BCE makes for another stable dividend stock to buy and hold. It likely won't generate significant capital gains for investors, but given its dominance and leadership position in the Canadian telecom industry, it's not a stock you'll have to worry about over the long haul.
At 8.4%, its yield is abnormally high as investors have been bearish on telecom stocks this year due to rising interest rates. But as those rates start to come down, BCE and similar stocks may start to rally. In the meantime, investing $10,000 into the stock could help net you $840 in annual dividends while the payout remains high.
The company is expecting minimal growth this year (between 0% and 4%). Still, its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) will also expand by up to 4.5%, a great sign the business is still moving forward despite less-than-ideal economic conditions. The stock trades at just 16 times its estimated future earnings and could make for another solid income investment to buy and hold.
3. AT&T
Rounding out this list of high-yielding dividend stocks is AT&T. Its 5.8% yield is the lowest on this list, but it wasn't all that long ago that the payout was even higher. Investors have been more bullish on the telecom provider of late as it has been generating strong results, putting to rest many fears investors had about its operations and high dividend.
As with BCE, you're getting another fairly slow-growing business in AT&T. This year, it projects its wireless service revenue to grow by 3%, but it expects a higher 7% growth rate in its broadband operations. Adjusted EBITDA growth is also expected to be at around 3%.
Despite its recent rally, investors are still arguably discounting the stock a bit too much as AT&T trades at a forward price-to-earnings multiple of 9. The company is slowly winning investors over with its results and proving it is not a value trap, but it's still a cheap-looking investment to own right now.
Another $10,000 invested in the company would give you $580 in annual dividends. When combined with the other payouts on this list, that would put your total annual dividend at approximately $2,010 from a total investment of $30,000.
Before you buy stock in Pfizer, consider this: