Investors all over the world are suffering. But times of unrest like this also present a sizable opportunity to invest money. The margin of safety for current share buyers has increased as valuations in the majority of sectors have decreased. Additionally, it raises the possibility of capital gains.
Due to the inverse relationship between a stock’s yield and price, dividend stocks now have higher yields. Let’s examine three high-yield stocks for long-term income since the list of high-dividend stocks is actually growing as the market declines and now includes some excellent dividend stocks:
Altria Group: Smoking Hot
In the United States, Altria (MO) primarily produces and distributes smokeable and other tobacco products. The business owns the highly profitable Marlboro brand, in addition to Black & Mild pipe tobacco and cigars, as well as Copenhagen and Skoal moist smokeless tobacco brands. Altria’s portfolio also includes Juul vaping products, On! oral nicotine pouches, and traditional tobacco products.
The 1822-founded business is attempting to branch out and move away from the sale of tobacco products with the goal of eventually going smoke-free. It has acquired sizable stakes in Cronos Group and Juul to make this possible. Altria has a market capitalization of $77 billion and generates annual revenues of about $21 billion.
Altria has increased its dividend for 52 years in a row, which is an exceptional record. As a result of increasing its dividend for at least 50 years in a row, Altria is now known as the Dividend King. Because tobacco products are defensive by nature, Altria’s dividend naturally has recession resistance built in. That has aided the business in the past with dividend safety and growth, and we anticipate it will do so for some time to come.
The average annual dividend growth rate for Altria over the last ten years has been quite strong at 7.8 percent. It is all the more impressive coming from a defensive company that has increased its dividend for 50 years. Given its already high payout ratio, we do not believe that pace to be sustainable, but we do believe Altria will maintain its dividend growth for many years to come.
Given that the company is actively working to gradually reduce its tobacco portfolio, we anticipate modest earnings growth in the coming years. However, given that the payout ratio is less than three-quarters of earnings, we believe that the company’s streak of dividend increases will likely continue.
One of the highest-yielding stocks on the market right now, Altria’s current yield of 8.8 percent is astounding. Given its long dividend history and high yield, Altria is a good choice for income-focused investors.
Keeping It Sticky: 3M Company
Our next stock is 3M (MMM), a multinational corporation that manufactures a variety of consumables and technology. Safety and industrial, transportation and electronics, health care, and consumer make up 3M’s four operating segments. The company provides thousands of unique products through these segments, including wound care products, tape, personal protective equipment, and more.
3M, which was established in 1902, has a market cap of $73 billion and generates annual revenues of about $36 billion. Additionally, 3M has a 64-year streak of dividend increases, ranking it among the best dividend stocks globally. It is a Dividend King as a result.
Despite its enormous longevity, 3M has experienced a very impressive dividend growth rate over the past ten years, much like Altria. The average growth rate for 3M over the last ten years has been 9.7%, but we don’t think that rate is tenable. As the payout ratio has risen above the historical range in recent years, we currently project a 2 percent annual dividend growth in the years to come. We believe 3M will correct this by growing the payout more slowly than earnings. In the years to come, 3M is expected to grow its earnings by 5%, so there should be enough money to keep increasing the payout indefinitely. Additionally, this year’s payout ratio is predicted to be just 54 percent, allowing 3M to maintain significant share repurchases while also increasing the dividend.
With a yield of 4.6 percent, which is well above 3M’s typical historical range, the stock is currently a relative bargain for income buyers.
Learn More About Intel Corporation
Our last stock is Intel (INTC), a company that creates, produces, and sells computer hardware internationally. Intel provides CPUs and chipsets, accelerators, boards, graphics products, memory and storage, among other things, through its various business segments. Through its Mobileye division, Intel sells to original equipment manufacturers and has a growing cloud service industry.
With a market cap of $149 billion and annual revenue of about $75 billion, Intel was founded in 1968. Despite being relatively new to dividend payments, Intel has increased its payout every year for the past eight years.
With an average annual increase of just over 6 percent over those eight years, dividend growth has been quite significant. We anticipate similar growth in the future, at 5%. Here is where we evaluate Intel’s potential for earnings growth, and we think management is content with the payout ratio as it stands right now. As a result, dividend growth and earnings growth ought to be comparable.
Since Intel’s payout ratio for this year is only 35% of earnings, the dividend is not only very safe but also has plenty of room for future growth.
Last but not least, Intel’s current yield is 4%, which is exceptionally high by both historical and absolute standards. We believe the yield to be a strong indicator of current stock value, much like Altria and 3M.
We consider all three of these names to be appealing today for investors looking to increase long-term income because they all offer low valuations and higher yields than we have seen in the past.
