Top Dividend Stocks to Boost Your Investment Strategy

With thousands of publicly traded companies and exchange-traded funds (ETFs) on the market, Wall Street presents numerous opportunities for investors to enhance their financial growth. One highly effective strategy among this vast array is to invest in high-quality dividend stocks.

Dividend-paying companies typically share several characteristics:

Start Your Mornings Smarter! Wake up with Breakfast news in your inbox every market day. Sign Up For Free »

• They are usually consistently profitable.
• They provide clear growth expectations over the long term.
• They have proven their ability to weather economic downturns.

Image source: Getty Images.

More significantly, dividend stocks tend to outperform their non-dividend counterparts. According to a study titled The Power of Dividends: Past, Present, and Future by Hartford Funds and Ned Davis Research, dividend stocks achieved an average annualized return of 9.17% between 1973 and 2023, while also proving to be 6% less volatile than the S&P 500. In contrast, companies that do not pay dividends delivered an average annualized return of only 4.27% over the same 50-year period while being 18% more volatile than the S&P benchmark.

Investors typically seek the highest yield with the least amount of risk. However, the relationship between risk and yield can complicate this goal, making careful evaluation essential to avoid yield traps.

Fortunately, there are three well-known, high-yield dividend stocks with an average yield of 6.65% that investors can confidently buy right now with $300.

Pfizer: 6.74% Yield

The first noteworthy stock for long-term income investors is the pharmaceutical giant Pfizer (NYSE: PFE). Its current yield of 6.74% approaches an all-time high.

Though Pfizer’s stock performance may seem lackluster, looking closely reveals that it has faced challenges due to its own success. After generating over $56 billion in sales from COVID-19 products in 2022, Pfizer expects COVID-19 drug sales to drop to slightly over $11 billion in 2024.

This decline, however, needs context. The drop of around $45 billion in COVID-19 sales is significant but still dwarfs the $0 in revenue it generated from this segment four years ago. From 2020 to 2024, Pfizer’s net sales increased by 52% to $63.6 billion, indicating strong performance overall.

Additionally, Pfizer’s recent $43 billion acquisition of cancer-drug developer Seagen in December 2023 significantly expands its oncology portfolio, promising immediate sales boosts and cost savings for 2025 revenues.

Pfizer’s steady cash flow is bolstered by the defensive nature of the healthcare sector; as illness is unpredictable, the company’s earnings are more stable. This makes its forward price-to-earnings (P/E) ratio of 8 very appealing to investors.

Image source: Getty Images.

Verizon Communications: 6.69% Yield

Another stock poised for patient investors is Verizon Communications (NYSE: VZ), which boasts a yield nearing 6.7%—also close to its all-time high.

Verizon does not attract the buzz of artificial intelligence (AI) stocks, which sways many investors toward tech companies with high-growth potential. However, Verizon’s predictable cash flow makes it an advantageous choice for income-focused investors.

Wireless services and internet access are often considered essential, leading consumers to maintain subscriptions even during financial downturns. In Q4, Verizon’s wireless retail postpaid churn rate stayed low at 1.12%, while average revenue per account rose by 4.2% year-over-year. The ongoing adoption of 5G technology is likely to enhance these trends further.

Although Verizon’s peak growth phase has passed, its broadband segment continues to show promise. As of 2024, total broadband connections exceeded 12.3 million—reflecting a 15% increase from the previous year and enhancing its operating cash flow. Bundling services may further strengthen customer loyalty and profitability.

Verizon’s financial position is also improving, with a nearly 10% reduction in total unsecured debt over the last two years, bringing it down to $117.9 billion. Paired with a forward P/E ratio of around 8, Verizon presents a strong investment opportunity.

Ford Motor Company: 6.51% Yield

Lastly, patient investors can look to Ford Motor Company (NYSE: F). Despite facing struggles since the onset of the COVID-19 pandemic, Ford’s current yield at over 6% marks a significant opportunity.

The high yield reflects Ford’s stock price declining to a four-year low, largely due to losses from its electric vehicle sector and challenging outlook for 2025. Its earnings forecast of $7 billion to $8.5 billion for 2025 fell short of expectations, impacting investor sentiment.

Even with these challenges, Ford has catalysts that could drive long-term growth. The company can adjust spending in response to consumer demand, allowing it to scale back on less profitable EV ventures and refocus on more established segments.