World Stock Watch

Unlock the Power of Dividend-Paying Stocks

As you navigate the world of investing, it’s essential to consider the benefits of dividend-paying stocks. These companies have a proven track record of generating reliable income, which can be a game-changer for long-term investors.

The Numbers Speak for Themselves

A recent report from Hartford Funds highlights the impressive performance of dividend-paying stocks. From 1973 to 2023, dividend growers and initiators averaged an annual total return of 10.19%, while dividend payers averaged 9.17%. In contrast, companies with no change in dividend policy averaged 6.74%, and those that didn’t pay dividends averaged a mere 4.27%.

Five Solid Dividend-Paying Stocks to Consider

1. Altria (NYSE: MO): With a current dividend yield of 8.2% and a 5-year average annual dividend growth rate of 4%, Altria is an attractive option for income-focused investors.
2. Chevron (NYSE: CVX): Chevron’s dividend yield of 4.3% and 5-year average annual dividend growth rate of 6.5% make it an appealing choice for those seeking a combination of income and growth.
3. Verizon Communications (NYSE: VZ): Verizon’s dividend yield of 6.5% and 5-year average annual dividend growth rate of 2% may not be the highest, but its strong free cash flow generation and improving profitability make it a solid contender.
4. AbbVie (NYSE: ABBV): AbbVie’s dividend yield of 3.3% and 5-year average annual dividend growth rate of 7.7% are impressive, especially considering its rapid stock price appreciation.
5. Realty Income (NYSE: O): As a real estate investment trust (REIT), Realty Income is required to pay out at least 90% of its taxable earnings as dividends. Its current dividend yield of 5% and 5-year average annual dividend growth rate of 3.7% make it an attractive option for income-focused investors.

ETFs: A Convenient Alternative

If individual dividend stocks aren’t your cup of tea, consider exchange-traded funds (ETFs) focused on dividends and income generation. Here are a few options:

1. SPDR Portfolio S&P 500 High Dividend ETF (NYSEMKT: SPYD): With a recent yield of 4.18% and 5-year average annual return of 8.67%, this ETF provides broad exposure to high-dividend stocks.
2. Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD): This ETF boasts a recent yield of 3.61% and 5-year average annual return of 13.05%, making it an attractive option for those seeking a balance of income and growth.
3. iShares Core Dividend Growth ETF (NYSEMKT: DGRO): With a recent yield of 2.24% and 5-year average annual return of 12.59%, this ETF focuses on dividend growth stocks with a strong track record of increasing payouts.

The Bottom Line

Incorporating dividend-paying stocks into your long-term portfolio can provide a stable source of income and potentially lower volatility. Whether you opt for individual stocks or ETFs, the benefits of dividend investing are undeniable.