Pursue Secure Dividend Earnings in 2025 and Beyond by Investing in These Three Ultra-High-Dividend Shares.
In the realm of investing, it's a widespread misconception that companies set their dividend yields. The truth is, while companies decide the dividend amount they pay out, the market determines the dividend yield. This yield is calculated as a percentage of the dividend amount relative to the share price.
You might stumble upon stocks yielding significantly high percentages, like 10% or more. However, be wary. These high-yielding stocks often have underlying issues with their business, leading to potential dividend cuts.
Transitioning to more reliable dividend options, we have companies yielding between 6% and 8%. These include real estate investment trusts (REITs) and mature, stable companies with conservative spending habits.
Let's delve into three solid dividend stocks for your consideration:
- A Dividend Champion With a Slow-Burning Legacy
Altria Group (MO) has built a reputation through its Marlboro cigarettes and other tobacco products on the U.S. market. It also owns a stake in international beer giant Anheuser-Busch InBev. The tobacco industry has witnessed declining smoking rates in the U.S. for decades, but Altria has managed to maintain its dominant position by increasing the prices of its popular, addictive products. The stock yields almost 8%, thanks to the company's high profit margins and low growth potential.
Altria's dividend is secure with a payout ratio of 80% on its earnings. Analysts forecast a modest 3.5% earnings growth over the next few years, ensuring further dividend boosts for shareholders. While the company's shift to smoke-free products might deter some investors, its decades-long uninterrupted dividend streak is a testament to its reliability.
- A High-Yield REIT With Vegas Roots But National Reach
VICI Properties (VICI) is a leading REIT with a diverse portfolio of gaming, hospitality, and entertainment properties across the U.S. and Canada. Major names such as Caesars Palace, MGM Grand, and Venetian Resort are among its properties. REITs are renowned for their high dividend yields, thanks to the requirement to distribute a majority of their taxable profits to shareholders. VICI Properties boasts a 6% dividend yield and a solid payout ratio of 76% based on its projected 2024 funds from operations (FFO).
VICI Properties caters to profitable tenants like casinos, securing a stable income stream. Its 100% rent collection history since its inception is an impressive feat. REIT dividends are typically taxed as ordinary income, so you might want to consider investing in a tax-advantaged account like a Roth IRA.
- Command a Steady Stream of Dividends With This Telecom Giant
Verizon Communications (VZ) is a household name in the U.S. telecommunications industry. Operating America's leading wireless network, Verizon has a 37% market share and dominant competition in the industry. Despite facing pressure from new and existing competitors, the telecom giant's reliable income stream ensures a steady dividend payout, yielding an impressive 7% today.
Verizon's annual dividend increase streak dates back to 20 years, with a conservative payout ratio of 59% on its 2024 earnings. Although long-term growth prospects are modest, investing in Verizon for its high yield is a compelling option for dividend investors.
Although REITs are known for delivering high dividend yields, their tax implications and potential reliance on specific tenant industries necessitate careful evaluation. It's essential to conduct thorough research before making investment decisions to ensure you're selecting the right dividend stocks for your portfolio.
After learning about the potential risks associated with high-yielding stocks, you might choose to invest in more reliable dividend options. Companies with yields between 6% and 8%, like REITs and mature, stable companies, can provide a more stable income stream.
Investing in Altria Group (MO) could be beneficial for dividend investors seeking a secure income. With a payout ratio of 80% and a forecasted 3.5% earnings growth, the tobacco company's dividend is both reliable and likely to increase further.
