Whether you want to retire early, work less, or just have extra money to fund a vacation, dividend stocks can provide you with the cash flow to help you achieve your goals. The key is to find high-yielding stocks that aren't too risky to ensure you aren't setting yourself up for disappointment later on.
Three stocks that can be great dividend-paying investments to build your portfolio around are Pfizer (NYSE: PFE), BCE (NYSE: BCE), and Western Union (NYSE: WU). They all pay you more than four times what you would get with the average S&P 500 yield of 1.3%. Here's how investing $23,000 into each of these stocks can allow you to receive more than $5,000 in annual dividend income.
1. Pfizer
One of the best dividend stocks you can get right now is Pfizer. The healthcare giant yields about 5.9%, which is unusually high for the stock, and that's partly due to its struggling share price. Down 13% during the past five years, investors have become worried about the company's long-term prospects now that it's not getting a boost from COVID-19-related revenue and with multiple patent expirations looming.
However, Pfizer has been investing in strengthening its growth prospects with many acquisitions in recent years. One exciting opportunity could be slicing out a piece of the lucrative anti-obesity market, which could top more than $100 billion by the end of the decade. Pfizer doesn't have an approved treatment yet, but it has a once-daily pill that has been generating encouraging results thus far. There could still be a lot of growth on the horizon for the business in the future. With more than 110 programs in its pipeline, investors shouldn't be too bearish on the stock, as there's still lots of potential for Pfizer.
The company has posted some underwhelming quarters recently due to asset impairment charges, but Pfizer still has a promising future and the payoff could be significant for investors who are willing to remain patient with the healthcare stock. Investing $23,000 into Pfizer today would give you about $1,360 in dividends during the course of a full year.
2. BCE
Another good and dependable dividend stock to own is BCE. The Canadian telecom company is an industry leader, and what is attractive about its operations is consistency. The company has steadily increased revenue from 22.9 billion Canadian dollars ($16.9 billion) in 2020 to CA$24.7 billion in 2023.
As long as you aren't expecting fast growth and are primarily investing in the stock for its stability and dividend income, you likely won't be disappointed with this investment. BCE averages an incredibly low beta value of about 0.50, meaning it doesn't move much with market fluctuations, making it an attractive option for risk-averse investors.
Telecom stocks haven't been exciting buys in a high-interest rate environment, but as rates fall, that could change. In the meantime, buying BCE stock for its hefty 8.5% dividend yield could net you a whole lot of recurring income. A $23,000 investment in the company would bring in more than about $1,950 in dividends for a full year.
3. Western Union
Investors can also buy another great dividend stock in Western Union. Although consumer have a growing number of payment options to choose from these days, Western Union remains a trusted international brand. One area where it is doing particularly well is in digital transactions. In its most recent quarter, which ended June 30, consumer money transfer transactions rose by 4% year over year. However, in its branded digital transactions, the growth rate was even higher at 13%.
The company expects to generate solid operating margins of about 20% this year with its per-share earnings expected to be at least $1.62, which is more than enough to cover its annual dividend payments of $0.94 per share. That's a great sign of resiliency for the business, as Western Union's revenue has been falling this year due to weakness in some international markets.
Given its modest share price of less than $12, buying the stock today means you can earn a yield of 8%. That would generate $1,840 in annual dividend income from a $23,000 investment. When combined with the other investments on this list, that would put your total annual dividend income at about $5,150 based on a total of $69,000 invested. And with each stock focused on a different sector, you'll also get some excellent diversification with these investments.
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David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Pfizer. The Motley Fool has a disclosure policy.
Want Over $5,000 in Annual Dividends? Invest $23,000 in Each of These 3 Stocks was originally published by The Motley Fool