Indulge in the delight of a consistent stream of income swelling your investment account, like a soothing melody in an otherwise chaotic market symphony. If you crave more passive profits, delve into the realms of dividend-heavy companies that pamper their shareholders with abundant and dependable payouts.
Verizon: Riding the Waves of Wireless Wealth
In the vast expanse of the telecom industry lies a treasure trove of dividend-yielding stocks. Verizon Communications (NYSE: VZ) stands tall among its peers, beckoning investors with a bountiful 6.7% yield and a risk-to-reward ratio that’s hard to resist.
With over 100 million customers relying on Verizon for their 5G wireless and broadband internet cravings, the company generates a steady flow of cash. This stream of revenue is generously shared with investors through lucrative dividends, painting a rosy picture of fiscal stability.
As the dust settles on its 5G network construction, Verizon’s path to sustained free cash flow appears smooth. With reduced capital expenditures contributing to a 33% surge in free cash flow to $18.7 billion in 2023, the company seems poised to effortlessly cover its annual $11 billion dividend payments and extend its remarkable 17-year streak of payout hikes.
Verizon’s surplus cash may soon dance in the direction of debt reduction, fortifying its balance sheet and assuaging shareholder risks. The anticipated interest rate cuts by the Federal Reserve could expedite this deleveraging dance, enhancing Verizon’s financial resilience even further.
By trimming its net unsecured debt by $1.6 billion to $126.4 billion in 2023, Verizon is treading the path of financial prudence. With interest rate cuts on the horizon, the company might find it easier to bid adieu to more debt in 2024 and beyond, fueling investor confidence and bolstering its stock further.
Altria: Lighting Up the Dividend Sky
For investors hungry for greater dividend spoils, Altria Group (NYSE: MO) offers a delectable 8.9% yield paired with an enviable track record of raising dividends annually for over 50 years.
Despite declining smoking rates in the U.S., Altria continues to puff up profits from cigarette sales by steadily hiking prices, a feat worthy of applause in a shifting landscape.
The horizon looks promising for Altria as it ventures beyond traditional cigarettes. The company’s foray into oral nicotine pouches sans tobacco leaves is gaining traction, with shipments soaring by 38.5% in 2023. Altria’s acquisition of vaping device maker NJOY Holdings in June signals a strategic move towards an anticipated $5 billion in smoke-free sales by 2028, up from $2.7 billion last year.
Peering further into the crystal ball, Altria’s cannabis aspirations gleam brightly. With a 40% stake in Cronos Group, Altria sits on the cusp of a potentially burgeoning cannabis market, should the U.S. legalize marijuana. This strategic foothold, coupled with its extensive tobacco distribution network, positions Altria favorably in what could burgeon into a $100 billion annual sales market.
Despite the allure of future growth, Altria’s current shares remain a steal. Priced at less than 9 times its 2024 profit forecast, wise investors might find themselves joining hands with the company’s recent decision to offload a segment of its Anheuser-Busch InBev stake, signaling a commitment to enhancing shareholder value through share repurchases.
Embrace the dividends, relish the insights, and let your investment journey be peppered with wisdom from the Motley Fool, guiding you through the market maze to potential profits and financial freedom.
Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy.
Explore the realm of dividend stocks with Verizon and Altria, and let your investment voyage be a harmonious blend of profits and portfolio prosperity.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
