Investing in the stock market offers a unique advantage: there’s no one-size-fits-all approach. With thousands of publicly traded companies and exchange-traded funds to choose from, investors can tailor their portfolios to their individual goals and risk tolerance. While some strategies may generate higher returns than others, one approach has stood the test of time: investing in high-quality dividend stocks.
Research has shown that dividend stocks have outperformed non-dividend payers over extended periods, offering higher returns with lower volatility. However, not all dividend stocks are created equal. Ultrahigh-yield dividend stocks, with yields four or more times higher than the S&P 500, can be particularly attractive but also come with higher risks.
Despite these risks, there are certain ultrahigh-yield dividend stocks that stand out as exceptional buys. Three sensational options, with an average yield of 6.23%, offer investors a compelling opportunity to generate significant income.
The first is pharmaceutical giant Pfizer, which has made significant strides since the beginning of the decade. Despite a decline in sales of its COVID-19 vaccine and treatment, Pfizer’s revenue is expected to reach $61 billion in 2024, representing 46% growth over four years. The company’s acquisition of cancer drug developer Seagen will also expand its product portfolio and provide cost savings. With a forward price-to-earnings ratio of 10, Pfizer’s valuation is attractive compared to the S&P 500.
Energy juggernaut Enterprise Products Partners is another unbreakable dividend stock that income seekers can add to their portfolios. With 26 consecutive years of annual distribution increases, Enterprise has demonstrated its ability to weather economic storms. As an energy middleman, the company’s contracts with upstream drilling companies provide predictable operating cash flow, making it an attractive option in a volatile energy market.
The third sensational ultrahigh-yield dividend stock is automaker Ford Motor Company. Despite recent struggles in the electric vehicle market, Ford’s internal combustion engine vehicles are performing well, with the F-Series pickup being the best-selling truck in the U.S. for 47 straight years. The company’s decision to postpone $12 billion of its expected EV manufacturing investments will also help to reduce costs. With a forward price-to-earnings ratio of just 5.5, Ford’s valuation is historically cheap, making it an attractive option for income investors.
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