Many investors rely on investments that provide a regular stream of passive income as dividend and leads to capital appreciation in the long run. Thus, amidst economic and market turmoil, high-dividend yield stocks can optimize investment portfolio with their distinct qualities.
Against this backdrop, it could be wise to invest in high-dividend yield stocks Verizon Communications Inc. (VZ), AT&T Inc. (T), and Altria Group, Inc. (MO) to secure your retirement portfolio.
The recent U.S. consumer prices drop for the first time in four years in June amid cheaper gasoline and moderating rents has put disinflation back on track and brought the Federal Reserve closer to possibilities of interest rates cuts in September.
Also, after the consumer price spike in the first quarter, the recent readings have bolster confidence among officials at the U.S. central bank that inflation is easing.
According to the International Monetary Fund, while proceeding cautiously, Federal Reserve could start acting on interest rates cuts later this year. The drop in U.S. June consumer prices also indicates positive insights for an earlier rate cut. IMF spokesperson Julie Kozack said, the disinflation process was underway in the United States.
However, the poor job growth, and the rising unemployment rate signal worrisome circumstances for the US economy. Unemployment rate has surged steadily from 3.5% last July to 4.1% as of June. Inflation is still regarded as "elevated" by policymakers as it remained around 2.6% by the Fed's preferred Personal Consumption Expenditures Price index.
Amid these economic trends, investing in dividend paying stocks offer two way benefit to the investors, one in the form of appreciation in the price of the stock and secondly, through dividend payments. They appear as a reliable investment choice where investors can park their hard earned money and yield short-term and long-term returns.
Considering the encouraging economic trends, let’s delve into the fundamentals of the high dividend yield stocks.
Verizon Communications Inc. (VZ)
VZ is engaged in the provision of communications, technology, information, and entertainment products and services to consumers, businesses, and governmental entities worldwide. The company operates in Verizon Consumer Group (Consumer), and Verizon Business Group (Business) segments.
On June 26, VZ introduced new programs and benefits to offer customers more choices and flexibility, and advance the momentum of its business. VZ also refreshed its brand, bringing forward the energy and vibrancy of how people live, work and play.
On the same day, VZ launched myHome to make it easy for customers to choose, and save. myHome is a one-stop-shop for home internet, live TV, entertainment and connected home offerings – all in one place, and all in your control. The new launch bodes well with the company and will offer best entertainment and connected home perks in one place to the customers.
On June 5, VZ’s Board of Directors declared a quarterly dividend of 66.50 cents per outstanding share, consistent with the previous three quarters. The quarterly dividend is payable on August 1, 2024, to shareholders of record at the close of business on July 10, 2024.
VZ pays an annual dividend of $2.66, which translates to a yield of 6.39% at the current share price. Its four-year average dividend yield is 5.73%. Moreover, the company’s dividend payouts have increased at a CAGR of 1.9% over the past three years. Kroger has raised its dividends for 19 consecutive years.
VZ’s total operating revenues for the second quarter that ended June 30, 2024, increased marginally year-over-year to $32.80 billion. Its consolidated adjusted EBITDA grew 2.8% from the year-ago value to $12.30 billion. The company’s consolidated net income and adjusted EPS came in at $4.70 billion and $1.15, respectively.
Analysts expect VZ’s revenue and EPS for the fourth quarter (ending December 2024) to grow marginally and 2.7% year-over-year to $35.45 billion and $1.11, respectively. Also, the company topped the consensus EPS estimates in three of the four trailing quarters.
Shares of VZ have surged 5.8% over the past six months and 22.5% over the past year to close the last trading session at $41.62.
VZ’s solid fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
VZ has a B grade for Stability. It is ranked #5 out of 17 stocks in the Telecom - Domestic industry.
In addition to the POWR Ratings we’ve stated above, we also have VZ ratings for Growth, Momentum, Value, Sentiment, and Quality. Get all VZ ratings here.
AT&T Inc. (T)
T provides telecommunications and technology services internationally. It operates through two segments, Communications; and Latin America. The company offers wireless voice and data communications services, and sells handsets, wireless data cards, wireless computing devices, carrying cases/protective covers, and wireless chargers.
On June 26, T’s Board of Directors declared a quarterly dividend of $0.28 per share on its common shares. The board also declared quarterly dividends on the company’s 5.000% Perpetual Preferred Stock, Series A of $312.50 per preferred share, or $0.3125 per depositary share and its 4.750% Perpetual Preferred Stock, Series C of $296.875 per preferred share, or $0.296875 per depositary share.
Dividends on the common stock and Series A and Series C preferred stock will be paid on August 1, 2024, to stockholders of record at the close of business on July 10, 2024. T pays an annual dividend of $1.11, which translates to a yield of 5.81% at the current share price. Its four-year average dividend yield is 7.17%.
On May 15, T and AST SpaceMobile entered a definitive commercial agreement to provide a space-based broadband network directly to everyday cell phones, extending until 2030, marking a significant step towards enhanced connectivity across the U.S.
For the first quarter that ended March 31, 2024, T’s operating revenues increased marginally year-over-year to $28.59 billion. Its operating income rose 3.1% year-over-year to $6.47 billion. The company’s adjusted EBITDA came in at $11.05 billion, up 4.3% year-over-year and its adjusted EPS stood at $0.55.
Also, the company’s free cash flow increased 210% from the year-ago value to $3.10 billion.
Street expects T’s revenue for the fiscal year (ending December 2025) to increase 1.3% year-over-year to $124.52 billion, while its EPS is expected to grow 3.1% year-over-year to $2.28, respectively. Furthermore, the company surpassed the consensus EPS estimates in three of the trailing four quarters.
T’s stock has gained 14.7% over the past six months and 31.1% over the past year to close the last trading session at $19.12.
T’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
The stock has a B grade for Value. T is ranked #4 among 17 stocks in the Telecom - Domestic industry.
Click here to access T’s ratings for Quality, Growth, Stability, Momentum, and Sentiment.
Altria Group, Inc. (MO)
MO manufactures and sells smokeable and oral tobacco products. The company provides cigarettes mainly under the Marlboro brand, large cigars and pipe tobacco under the Black & Mild brand, moist smokeless tobacco and snus products under the Copenhagen, Skoal, Red Seal, and Husky brands.
On June 21, MO announced that the FDA issued marketing orders for NJOY ACE Pod Menthol 2.4%, NJOY ACE Pod Menthol 5%, NJOY DAILY Menthol 4.5%, and NJOY DAILY Extra Menthol 6%. The authorizations follow FDA review of the Premarket Tobacco Product Applications, submitted by NJOY, LLC in March 2020.
Also, on May 20, MO’s NJOY submitted a supplemental Premarket Tobacco Product Application to the FDA to commercialize and market the NJOY ACE 2.0 device. The device incorporates access restriction technology designed to prevent underage use via Bluetooth® connectivity to authenticate the user before unlocking the device.
On May 17, MO’s Board declared a regular quarterly dividend of $0.98 per share, paid on July 10, 2024, to shareholders of record as of June 14, 2024.
MO pays an annual dividend of $3.92, which translates to a yield of 7.93% at the current share price. Its four-year average dividend yield is 8.04%. Moreover, the company’s dividend payouts have increased at a CAGR of 4.5% over the past three years. Kroger has raised its dividends for 54 consecutive years.
For the first quarter ended March 31, 2024, MO posted net revenues of $5.58 billion. The company’s gross profit was $3.28 billion and operating income was $2.67 billion for the quarter. Its net earnings of $2.13 billion, indicates growth of 19.1% year-over-year, while its adjusted EPS came in at $1.15.
Street expects MO’s revenue for the third quarter (ending September 2024) to increase 0.8% year-over-year to $5.32 billion, while its EPS is expected to grow 4.6% year-over-year to $1.34 for the same period. For the fiscal year 2025, the company’s revenue and EPS are expected to increase marginally and 3.6% year-over-year to $20.59 billion and $5.29, respectively.
Over the past month, MO’s stock has gained 10.1% and 22.6% over the past six months to close the last trading session at $49.45.
MO’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
The stock has an A grade for Quality. Within the B-rated Tobacco industry, MO is ranked #4 out of 10 stocks.
Click here to access additional ratings of MO for Sentiment, Value, Momentum, Growth, and Stability.
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VZ shares were trading at $39.06 per share on Monday afternoon, down $2.56 (-6.15%). Year-to-date, VZ has gained 8.81%, versus a 17.49% rise in the benchmark S&P 500 index during the same period.
About the Author: Rjkumari Saxena
Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.
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