Investing in dividends can give your business stability and steady income. And because the market is so unstable right now, steady returns are more important than ever.
Good news: right now, some high-quality companies that pay dividends are trading at lower prices.
You can make a lot of passive dividend income by buying in a variety of stocks that yield between 4 and 6 percent.
With a $25,000 investment spread out among Kraft Heinz, AT&T, and Pfizer, you could easily get $1,500 or more in dividends next year. Let’s take a closer look at each chance.
1. Kraft Heinz – A Warren Buffett Dividend Stock With Brand Power
Warren Buffett is known for investing with a long-term view and a focus on steady results. So the fact that Kraft Heinz (NASDAQ: KHC) is one of Berkshire Hathaway’s most important holdings says a lot.
A steady dividend payment is something that the Oracle of Omaha knows how to do well. Besides that, he knows that Kraft Heinz’s consumer names will last.
The market is unstable right now, but Kraft Heinz stands for security. In the last quarter, the business made 4% more money, or $19.8 billion in net sales. On the other hand, adjusted EBITDA went up 9% because prices went up and sales stayed the same.
Kraft Heinz can raise prices without seeing a drop in sales volume because it has more pricing power than many of its competitors. This helped the dividend yield reach 4.4%, which is much better than the average.
Today, if you put $5,000 into Kraft Heinz, you would get about $220 back in returns every year. Of course, selling off shares didn’t make Buffett one of the best investors of all time. This source of income can grow over many years.
AT&T – Turnaround Accelerating for this Generous Dividend Stock
In recent years, AT&T (NYSE: T) had some problems because it grew too quickly and took on too much debt. But under new management, the company has returned its attention to its core connection business. These efforts help the company offer a large 6.7% dividend yield that not many stocks can match today.
AT&T’s sales rose 1% year-over-year to $30.4 billion in the last quarter. Management raised their full-year free cash flow forecast to $16.5 billion, which is a big deal.
Since dividends cost about $15 billion a year, this is more than enough to make the payment. If you put $10,000 into AT&T, you would get back about $670 a year in profits.
The stock price is also going up again after big drops. AT&T is 35% below its all-time high from 2021, but its stock price has gone up 15% in the last three months.
When dividends are added in, the total gains start to get close to 20% over that time. The change in business is picking up speed, which makes now a great time to lock in a huge income stream.
Pfizer – Future Growth and a 6.2% Dividend From This Pharma Giant
With its top-of-the-line COVID vaccine and medicine, Pfizer (NYSE: PFE) faced a demand cliff. But the business itself has a lot of potential for long-term dividend owners.
In fact, Pfizer thinks it will make more than $100 billion by 2030, even if they don’t count any sales linked to the pandemic. Key drug launches and the recent purchase of cancer specialist Seagen back the optimistic outlook of management.
Pfizer, on the other hand, has a strong balance sheet and enough free cash flow to meet its payout obligations. It is very rare for a stock to have both deep worth and strong income generation.
The price of shares is only 9 times expected profit, and the dividend yield is over 6%. If you put $10,000, this means you’ll get $620 a year in dividends.
Last quarter, Pfizer did have a small net loss because higher costs were not fully covered by higher sales. But as the effects of the outbreak lessen, profits should go up a lot by next year. The company is bringing out a lot of exciting new drugs.
And Seagen, a cancer powerhouse, brings four approved treatments and four important new clinical projects. This stream will keep the business growing for years to come and give the big dividend plenty of room to grow.
The Bottom Line
If you put $25,000 into all three of these long-term income opportunities, you could get about $1,500 a year in passive dividends. A return on cost of more than 6% from the first day is pretty good.
And each company has the chance to raise its dividends over time as its revenue rise. With this mix of present income and future growth, dividend stocks are a great addition to buy-and-hold portfolios, especially at the prices they are at now.