When it comes to dividend-paying stocks, Pepsico (PEP -0.04%) stands out. The beverage and snack food giant has increased its dividend payout for 46 years in a row, is steadily growing sales, and has more than $5 billion in the bank.
But this dividend stalwart may not be the best investment for income-seeking investors. Is it a safe bet? Sure. But is it a big income generator? Not with a yield of 2.8%.
If you want more income out of your investments and are comfortable with some risk, consider stocks like Broadcom (AVGO -0.17%), Verizon (VZ -0.43%), and Tanger Factory Outlet Centers (SKT -1.65%), all of which pay more than Pepsi does on a dividend yield basis. Let's take a closer look at these three dividend-producing stocks.
1. Broadcom poised for a strong 2020
Semiconductor stocks have taken a hit in recent months as the U.S.-China trade war continues to be fought.
But with tensions easing and a smartphone replacement cycle expected this year driven by the 5G buildout, the situation looks good for Broadcom. It doesn't hurt that the chipmaker for the networking, broadband, and wireless markets has been investing in the data center segment of its operations, which is a growing segment with higher margins. Put those together, and shares are poised to appreciate in 2020.
Broadcom regularly reports growth in earnings and revenue. It enjoyed record profits for 2019, generating free cash flow of more than $9 billion during the year.
With all that cash on hand, the chipmaker also announced it was raising its dividend by 23% in fiscal year 2020 to $3.25 a share, generating a 3.97% yield. It's not the first time Broadcom raised its dividend. It has a history of upping the payout for nine years in a row. Bulls think Broadcom's full-year dividend, which stands at $13 a share, will be north of $15 by 2021.
2. Verizon has 5G to hang its dividend on
Broadcom isn't the only dividend-paying stock that will benefit from the buildout of 5G. So will Verizon Communications, the telecommunications company which is the first of its rivals to launch 5G service.
Verizon has been pouring billions of dollars into building its 5G network footprint, which is already available in portions of five U.S. cities, with more to come this year. Partnerships with professional sports stadiums have provided Verizon with a large audience to show off its 5G chops and cement its leadership position. Then, there's its deal with Disney. Verizon is offering the Disney+ streaming service free of charge to new and existing customers.
All of those moves position Verizon for growth in 2020.
That's not to say Verizon hasn't had its fair share of tough times in the past few years. Take its $4.83 billion purchase of Yahoo! in 2016: two years later, it wrote down $4.6 billion of the deal. It's also been suffering from a U.S. smartphone market that's saturated, forcing it into cost-cutting mode.
But 5G is expected to spark a new cycle of growth as people pay up to access speedier connections, boosting its fortunes and stock price along the way.
On the dividend front, there is a lot to like about Verizon Communications. Take its 4% yield, for starters. Then there's the fact that it has consistently raised its dividend for the past 14 years, most recently in September.
3. Tanger Outlets buck the trend
As e-commerce grabs more retail market share each year, mall owners have become less appealing to investors. With more shoppers going online, traditional brick-and-mortar stores have had trouble competing, resulting in record closures in recent years.
But Tanger Factory Outlet Centers, the real estate investment trust (REIT), is different. It's bucking the retail trend, and even has a dividend that pays out a yield of 9.54%. The company has consistently raised its dividend each year since it went public 27 years ago.
There's no doubt that risks abound with Tanger Outlets, but there are also a lot of things playing in its favor. The REIT owns 39 high-end outlet centers in Canada and the U.S. What makes Tanger stand out is that its real estate is used as the discount stores for popular brands. While traditional retail is struggling, outlets, particularly for coveted brands, are still doing well.
As a result, Tanger isn't stuck with vacancies that last long. It reported an occupancy rate of 95.9% in the third quarter. Some of its success lies in its rewards program. Customers pay to join, and in return get perks such as preferred parking.
As for its dividend, Tanger said it was "well covered," as it expects to generate $95 million in free cash flow to help cover its 2019 dividend payments. It also has close to $600 million in an unused line of credit. Tanger Outlets may not be for the risk-averse, but with a dividend yielding more than 9%, it's hard to overlook this one.