It can be tough to find reliable, high-paying stocks these days, as rising stock valuations have resulted in lower-than-average dividend yields throughout the market. However, just because a stock has a seemingly lousy dividend yield now doesn't mean that it isn't a great long-term income investment. Here's why I think that despite their relatively low payouts, Bank of America, Apple, and Wal-Mart  are worthy of a closer look.

Company

Dividend Yield

Payout Ratio (Forward)

Bank of America (NYSE:BAC)

1.79%

24%

Apple (NASDAQ:AAPL)

1.47%

22%

Wal-Mart (NYSE:WMT)

2.05%

44%

Data source: TD Ameritrade. Dividend yields and payout ratios obtained 11/17/17. Chart by author.

This bank could double its dividend, but I wouldn't bet on it

Bank of America has come a long way in the years since the financial crisis. Not only is the bank earning billions of dollars in profits, but it's beginning to do so consistently. In fact, because of its progress, the Federal Reserve has already approved several significant dividend increases over the past several years.

Even after those increases, however, the bank's dividend remains quite low in terms of both yield and payout ratio. In fact, at the current quarterly dividend rate, Bank of America will pay out less than one-fourth of its net income as dividends over the next year.

However, while Bank of America could potentially double its dividend, I wouldn't hold my breath. The bank has specifically said that its preferred way of returning capital to its shareholders is through buybacks. There are two big reasons for this. First, the bank doesn't want to be put in a position where it will have to cut its dividend, and since it's easier to reduce a buyback than slash a dividend, using most of the bank's capital on buybacks seems logical. Second, Bank of America's management feels that the stock is a good value right now, and buybacks are the best way to take advantage.

Jar of coins labeled dividends.

Image source: Getty Images.

You won't believe this tech giant's dividend-paying ability

For starters, Apple's forward payout ratio of 22% is the lowest on the list. Apple could double its dividend, and it still would be paying out less than half of its earnings. With the success of its recent products, I'd be surprised if Apple didn't give shareholders a big dividend raise in 2018, just based on its earnings. However, it's also worth pointing out that like Bank of America, Apple has a rather active buyback program, with more than $40 billion remaining on its current buyback authorization.

Earnings aside, the real reason I say that Apple could realistically double its dividend is if tax reform goes through. Specifically, Apple has $252 billion in cash sitting overseas, and the current GOP tax proposal calls for a special 10% repatriation rate. This means that if tax reform goes through, Apple could see its domestic cash balance rise by nearly $227 billion.

To put this amount of money into perspective, this means that Apple could pay a special dividend of $40 per share and still have about $23 billion left over. I don't think this is what Apple will do, but it is conceivable that having an influx of domestic, readily available cash could make Apple more willing to increase its ongoing dividend rate.

A rare brick-and-mortar winner in the e-commerce retail wars

Wal-Mart has been one of the only retailers willing to take on Amazon and other e-commerce giants, and it appears the company is winning its war. For the third quarter, Wal-Mart's earnings blew past expectations, with its best same-store sales growth in years, at a time when many retailers are struggling to survive. Perhaps even more impressively, this growth was fueled by a 50% spike in U.S. e-commerce sales.

At first glance, Wal-Mart's payout ratio of 44% may seem a bit on the high end for a company that could "double its dividend," but if the company continues to execute on its e-commerce strategy as well as it has been doing, profits could climb tremendously in the coming years, which could potentially result in a massive dividend increase.

Nobody knows if and when these dividends will double

To be clear, these are three stocks that could raise their dividends. I don't necessarily think they will, and in the case of Bank of America, I'm almost certain that they won't anytime soon. However, these are three excellent income stocks, and the point is that all three have plenty of room for growth over the long run, in terms of both their profitability and dividends.

Matthew Frankel owns shares of Apple and Bank of America. The Motley Fool owns shares of and recommends Apple. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.