This story was originally published here.
Over the past few weeks, stocks across the board have had a hot run. But, as fears of a Second Wave begin to outweigh the V-shaped recovery thesis, it’s debatable whether indices such as the S&P 500 (NYSEARCA:SPY) will continue climbing to past highs.
But don’t let this uncertainty scare you off. There are other ways to find safe returns in today’s market, especially for income investors. Granted, with the Federal Reserve slashing interest rates, it’s tough to find yield. However, plenty of high-quality dividend stocks are still paying mouth-watering yields. That is to say, dividend yields above 5% per year.
On the other hand, these high-yielding stocks are not without risk. Sure, many of them are high quality, stable companies. But we’ve yet to see the full damage from the pandemic. As this commentator recently noted, even the most venerable companies may not be immune to dividend cuts and freezes.
However, we currently live in a low-interest rate world. Fixed-income investments like CDs, money market accounts, and even bonds don’t cut it much anymore. Dividend stocks are a necessity for any investor with income generation as their top priority.
So which high-yielding dividend stocks should you consider? Taking a look at large cap names, these five come to mind.
With dividend yields of 5% and above, these should be on any income investor’s shortlist. Also, with many of them still lower than where they traded pre-pandemic, there could be further upside potential as well.
Dividend Stocks: Altria Group (MO)
As I discussed in my May article about “sin stocks,” this is a name with high controversy, but high returns to match. Altria is the parent of tobacco giant Phillip Morris USA, producers of America’s top cigarette brand, Marlboro.
For most of the 2010s, MO stock produced strong returns for investors. But setbacks including the controversy related to its investment in vaping giant Juul have taken some wind of out of the stock in recent years. The pandemic has only further hurt the stock’s poor price performance over the past few years.
That being said, the company hasn’t fallen short when it comes to dividends. As a result, this dividend stock is one of the highest-yielding blue chips out there, with a 8.26% forward dividend yield.
Tempted? Of course, there’s good reason why this stock sports a higher yield than other types of blue-chip consumer products companies. As U.S. smoking rates continue to decline, future earnings may not be as strong as they are today. But for now, as a cash cow with a recession-resistant operating business, expect its strong dividend payouts to continue.
With this in mind, this remains a high-yield dividend stock to keep top of mind for any income investor’s portfolio.
Editor's Note: Click here for the rest of the dividend stocks.
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