Amid rising inflation worries, investors are turning to dividend stocks as a means to bolster their income without tapping into savings. Three such stocks that offer high yields and diverse payment schedules are Viatris, Verizon Communications (NYSE:VZ), and Altria Group (NYSE:MO). By spreading an investment of roughly $90,000 across these stocks, investors can generate a steady $500 in monthly dividends.
On Thursday, Viatris, a manufacturer of generic and branded drugs established in 2020 following a spinoff from Pfizer (NYSE:PFE)'s Upjohn segment and a merger with Mylan (NASDAQ:VTRS), was highlighted as a potential option for stable long-term investment. The company has been focusing on growth opportunities by streamlining its operations and reducing its debt load. Despite a modest 1% revenue increase for the period ending June 30, excluding divestitures and foreign exchange impact, Viatris forecasts generating $2.5 billion in free cash flow for 2023. This projection covers its less than $600 million annual dividend costs sufficiently. With the stock trading at less than seven times earnings, Viatris yields 4.8%, three times the S&P 500 average of 1.6%.
Telecommunications giant Verizon Communications offers an even higher yield at 7.8%. Despite concerns over potential cleanup costs for lead-covered cables and an economic slowdown leading to reduced travel and roaming-related fees, Verizon's business remains sturdy. The company maintains a payout ratio of around 50%, providing a sufficient buffer should earnings decline. Additionally, Verizon recently raised its dividend for the 17th consecutive year.
Altria Group, a tobacco firm, offers the highest yield among the three at approximately 8.8%. Despite challenges in the tobacco industry, Altria has been diversifying into smoke-free products including heated tobacco and e-vapor. However, smokable products still account for nearly 90% of its revenue. Despite a 0.5% year-over-year decrease in sales for the period ending June 30, Altria's adjusted diluted earnings per share rose by 4%. The company's strong recurring customer base and its diversification efforts make it a popular choice among income-oriented investors.
In summary, strategic investment across these three high-yield stocks with different payment schedules can create a steady stream of monthly dividends for investors, offering a buffer against inflation without the need to draw on their savings.
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