3 Unstoppable Dividend Stocks Yielding More Than 4% for Income-Seeking Investors to Buy in August and Hold Forever
The past week has been a rotten one for most portfolios. On Monday, Aug. 5, the benchmark S&P 500 index began the trading session about 3% lower. That led the benchmark index to a loss of about 9.4% from its previous peak on July 16.
The S&P 500 index’s recent drop is nearly enough to be considered an official correction. Fear that the recent losses could become a full-blown market crash is making plenty of investors nervous about buying stocks right now.
Luckily, there are more than a few unstoppable dividend payers out there that offer high yields. At recent prices, shares of CVS Health (NYSE: CVS), AT&T (NYSE: T), and Pfizer (NYSE: PFE) offer dividend yields of 4.6% and higher. Read on to see why they could make smart additions to your portfolio now.
1. CVS Health
Nearly everyone is familiar with CVS Health’s ubiquitous retail pharmacy chain, but far fewer know that this is a relatively small part of the healthcare conglomerate’s vertically integrated operation.
At recent prices, CVS Health stock offers a 4.6% dividend yield and probably more in the years ahead. The company has raised its dividend payout by 142% over the past decade.
In addition to being one of the largest pharmacy chains, CVS Health owns a leading pharmacy benefits management (PBM) business. In America’s healthcare system, PBMs are powerful middlemen that effectively determine the level of reimbursement pharmacies receive from health insurance benefits managers every time a patient fills a prescription.
In addition to a vertically integrated PBM business, CVS Health owns Aetna, a large health insurance benefits manager. This makes the company an unstoppable force for generating profits because its employees can provide many of the benefits Aetna is paid to manage.
2. AT&T
In 2022, AT&T cut its dividend to compensate for the sale of its media assets. These days, it’s purely a telecommunications business with steady cash flow driven by mobile and broadband internet subscribers. At recent prices, the stock offers a juicy 5.8% dividend yield.
In 2023, AT&T became the last of America’s big three mobile network operators to launch a fixed wireless internet service that taps into a 5G network. In addition to a new fixed wireless option, AT&T’s fiber optic internet service ended June with 8.8 million subscribers. That was 14% more than it had a year earlier.
Over the past 12 months, AT&T shelled out about $8.2 billion in dividend payments. With increasing broadband revenue driven by both fixed wireless and fiber, management expects between $17 billion and $18 billion in free cash flow this year. That’s more than enough to significantly reduce a big debt load while meeting and raising its dividend payout.
3. Pfizer
Pfizer spun off its consumer goods division a few years ago, so these days, it’s America’s largest innovative pharmaceutical company by revenue. At recent prices, it offers a 5.6% yield and the confidence that comes with 15 years of consecutive annual payout raises.
Its already big product lineup expanded by leaps and bounds when it acquired Seagen, a cancer drug developer, for $43 billion last year.
I know that $43 billion might seem like a lot, but at the time of the deal, Pfizer expected Seagen to contribute more than $10 billion in annual sales to its top line by 2030. Now that it has six months of Seagen sales following the acquisition under its belt, it looks like Pfizer can reach its goal.
Pfizer took over sales of four marketed therapies from Seagen. One of them, Padcev, recently earned approval to treat first-line bladder cancer patients, which caused second-quarter sales of the drug to soar 145% year over year to $394 million.
Padcev is just one of four cancer therapies with rising sales that Pfizer acquired from Seagen. With a slew of new treatments to sell, Pfizer has a good chance of keeping its dividend-raising streak going for another 15 years.
Should you invest $1,000 in CVS Health right now?
Before you buy stock in CVS Health, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and CVS Health wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $657,306!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of July 29, 2024
Cory Renauer has positions in CVS Health. The Motley Fool has positions in and recommends Pfizer. The Motley Fool recommends CVS Health. The Motley Fool has a disclosure policy.
3 Unstoppable Dividend Stocks Yielding More Than 4% for Income-Seeking Investors to Buy in August and Hold Forever was originally published by The Motley Fool
