As interest rates continue to plummet, income-focused investors are scrambling to find alternative sources of passive income. One strategy is to turn to dividend stocks, which offer a relatively stable source of returns. However, high yields can sometimes be a warning sign, so it’s essential to exercise caution when selecting dividend stocks.
For investors seeking safer high-yield options, three dividend stocks stand out for their strong fundamentals and attractive yields. These companies have demonstrated a commitment to paying consistent dividends, making them excellent buy-and-hold candidates.
First, Enbridge (NYSE: ENB) boasts a 6.5% dividend yield, making it an attractive option in a low-interest-rate environment. As a diversified Canadian energy company, Enbridge operates a pipeline network, utility businesses, and renewable energy projects, generating steady profits from energy consumption. With a 28-year track record of annual dividend increases, Enbridge’s dividend is financially secure, with a payout ratio of just 65% of forecasted 2024 cash earnings.
Next, AT&T (NYSE: T) has undergone a significant transformation, shedding its media assets and focusing on wireless communications. With a 5% dividend yield, AT&T offers a robust return, supported by healthy financials. The company anticipates $18 billion in free cash flow this year, with a dividend payout ratio of just over 40%. Lower interest rates could provide an upside to earnings growth, making AT&T an intriguing option.
Lastly, Dominion Energy (NYSE: D) has shifted its focus to regulated electric utilities, positioning itself for long-term growth. With a 4.7% dividend yield, Dominion offers a attractive return, despite its massive spending plans. Management plans to wait for growth to bring the payout ratio down to under 70% before raising the dividend again. As the energy landscape evolves, Dominion’s strategic positioning could lead to higher-than-expected growth, making it an appealing dividend stock.
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