Discover the Benefits of Investing in Dividend Stocks
If you’re planning to enhance your portfolio with dividend-paying stocks, you’re on the right track. These investments can be powerful builders of wealth. If you haven’t considered it yet, now is the perfect time to start!
Dividend-paying stocks aren’t merely for conservative investors. Many high-performing growth companies, like Apple and Nvidia, offer dividends that can sometimes be low, yet rapidly increasing. When you include growing dividends in the total returns of stable blue-chip companies, they become significantly more attractive.
Where to invest $1,000 right now? Our analyst team has highlighted the 10 best stocks to buy at this moment. See the 10 stocks »
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To grasp the impact of dividends, take a look at these informative statistics from a Hartford Funds report:
|
Dividend-Paying Status |
Average Annual Total Return, 1973-2023 |
|---|---|
|
Dividend growers and initiators |
10.19% |
|
Dividend payers |
9.17% |
|
No change in dividend policy |
6.74% |
|
Dividend non-payers |
4.27% |
|
Dividend shrinkers and eliminators |
(0.63%) |
|
Equal-weighted S&P 500 index |
7.72% |
Data source: Ned Davis Research and Hartford Funds.
Here are four dividend-paying stocks to consider for your long-term investment strategy:
1. Pfizer
Pfizer (NYSE: PFE) gained recognition during the COVID-19 pandemic, as many sought its vaccines. While vaccine demand has decreased, the company remains strong. Its vaccines and Paxlovid treatment are still driving more than $8 billion in annual sales. Additionally, Pfizer is expanding its drug portfolio, including an acquisition of Seagen that enhanced its oncology business.
Currently, Pfizer boasts a dividend yield of 6.6%. Its shares appear reasonably priced, featuring a forward price-to-earnings (P/E) ratio of 8.7, significantly lower than its five-year average of 10.7.
2. Medtronic
Medtronic (NYSE: MDT) is a leader in medical devices, providing a dividend yield of 3.2%. Over the last five years, Medtronic has increased its dividends at an average annual rate of around 5%, and it has raised payouts for 46 years straight.
While its stock performance has been steady rather than explosive, investors benefit from ongoing dividends while awaiting future growth. Recently, Medtronic had over 190 active clinical trials and earmarked $2.7 billion for research and development for fiscal 2024, indicating potential new products.
3. Realty Income
Realty Income (NYSE: O) may not be a household name, but it has a strong reputation among those familiar with it. This real estate investment trust (REIT) invests in numerous properties and is known for paying dividends monthly instead of quarterly. Recently, Realty Income completed its 108th consecutive dividend increase.
With 15,450 properties spanning 90 industries leased to 1,500 clients across the U.S. and parts of Europe, Realty Income demonstrated impressive growth, reporting a 28% year-over-year revenue increase in its latest quarter.
4. Schwab U.S. Dividend Equity ETF
Lastly, take a look at the Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD), an exchange-traded fund (ETF) that offers solid performance, averaging annual returns of about 11% over the last five and ten years, alongside consistent growing dividends. It has a recent yield of approximately 3.5% and invests in around 100 companies.
Investing in a well-managed dividend-focused ETF can lighten the load of researching and selecting individual dividend stocks.
Should you invest $1,000 in Pfizer right now?
Before purchasing Pfizer stock, consider this:
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For instance, if you invested $1,000 in Nvidia based on our recommendation on April 15, 2005, you would now have $859,342.
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*Stock Advisor returns as of December 23, 2024
Selena Maranjian holds positions in Apple, Medtronic, Nvidia, Pfizer, Realty Income, and Schwab U.S. Dividend Equity ETF. The Motley Fool has positions in and recommends Apple, Nvidia, Pfizer, and Realty Income. The Motley Fool recommends Medtronic and recommends the following options: long January 2026 $75 calls on Medtronic and short January 2026 $85 calls on Medtronic. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
