Dividend stocks with substantial yields tend to outperform when the Federal Reserve begins lowering interest rates. These moves reflect portfolio managers shifting capital away from bonds and into stable, income-producing equities.
Among companies paying dividends above 4%, five stand out for their market strength and sustainable payouts. With yields ranging from 4.5% to 8.7%, these businesses have the cash flow and competitive positions to maintain their attractive dividends. Read on to find out more about these five top dividend payers.
British American Tobacco (NYSE: BTI) is a global tobacco powerhouse, operating in over 180 markets worldwide. The company rewards shareholders with an exceptional 8.71% dividend yield, prudently supported by a 59.1% payout ratio.
Despite a robust 19.1% gain year to date, British American Tobacco shares remain remarkably affordable at just 7.29 times forward earnings. The company's strategic approach is twofold: maximizing profitability from traditional cigarettes through strong pricing power, while aggressively expanding into reduced-risk, next-generation products to ensure long-term sustainability.
With a commanding presence in emerging markets, the company is well-positioned for future growth. Its substantial investments in vapor and heated tobacco products underscore management's commitment to innovation and sustainable business practices in an evolving industry landscape.
Altria Group (NYSE: MO) dominates the U.S. tobacco market through its iconic Marlboro brand. Offering pure-play exposure to American tobacco, the company boasts an attractive 8.32% dividend yield. Even after a meteoric 24.1% rise year to date, Altria shares remain a compelling value at just 9.48 times forward earnings.
With Marlboro commanding over a 40% market share, Altria Group wields exceptional pricing power to counter volume declines. The company's strategic $2.75 billion acquisition of NJOY in 2023 -- one of few FDA-approved e-cigarette manufacturers -- demonstrates its commitment to expanding beyond traditional tobacco.
This proven business model combines premium pricing with operational efficiency to maintain robust profit margins. While U.S. cigarette volumes decline, Altria's sophisticated pricing strategy and targeted investments in smokeless alternatives position the company for sustained profitability.
Pfizer (NYSE: PFE), a global pharmaceutical leader, produces a broad range of medicines and vaccines. The company offers investors an attractive 5.81% dividend yield, while shares trade at a modest 10.3 times forward earnings.