Value and dividend stocks haven't been the market's favorites over the last few years, but after the recent market sell-off, there are some attractive stocks emerging. Rising interest rates have caused sell-offs in both growth stocks and dividend stocks because competing rates have gotten higher.
I think there are now some great companies available at reasonable prices that could generate cash flow for decades. My top dividend stocks today are Apple (AAPL 1.27%), Verizon (VZ -0.53%), and VICI Properties (VICI -0.53%).
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The tech dividend
Investors may not think about Apple as a dividend stock given its low yield of 0.5%, but this is a company with the potential to be a dividend aristocrat long-term. You can see below that Apple generates over $100 billion in free cash per year, and pays out less than $15 billion in dividends.
AAPL Revenue (TTM) data by YCharts
What makes Apple a great dividend stock is that it has such a strong moat for its business. The iPhone is a popular smartphone, which is the gateway to get people into Macs, Apple Watches, iCloud, and many other products and services the company sells. These are sticky businesses that should grow over time, and I think Apple will steadily increase its dividend, making this a dividend growth investment, not just a value dividend.
The future of broadband
If you're looking for a company with a higher dividend yield, Verizon's stock yields 4.8% today. This isn't necessarily a growth stock like Apple, but its business is a steady free cash flow generator (excluding the $45 billion 5G spectrum bid in 2021), as you can see below. And a lot of that cash flow goes back to shareholders in the form of a dividend.
VZ Free Cash Flow data by YCharts
Verizon has growth opportunities ahead too. 5G has already allowed the company to begin offering 5G Home internet, which will allow it to be a broadband provider for hundreds of millions of homes it hadn't previously reached. New products like autonomous vehicles and edge computing will also drive a growing need for fast, wireless internet. The tailwinds are behind Verizon's business, and with a high dividend yield, this is a stock I like for its value and growth potential.
The gambling REIT
The gambling business in the U.S. is booming as people go back to in-person entertainment, and one of the biggest casino owners is REIT VICI Properties. The company owns casinos operated by companies like Caesars Resorts, and is merging with MGM Resorts-controlled REIT MGM Growth Properties (MGP). Casino companies pay regular rent, and normally have price escalations built in if revenue grows over time.
In this REIT, investors are getting a 5.1% dividend yield backed primarily by Las Vegas casino operations. That's a region to be bullish on -- the Las Vegas Strip just reported an all-time record in gambling revenue in 2021, despite the pandemic. And in 2022 we will likely see more growth in room rates and the convention business.
Even if the casino business doesn't grow as much as investors hope, VICI will collect a steady stream of rent on its properties. And with a high dividend yield, this is a great place to look for stability and some growth upside.
Great dividends to own long-term
Apple, Verizon, and VICI Properties all have stable, positive-cash-flow businesses that should keep churning dividends out for the foreseeable future. If you're looking to add dividends to your portfolio, this is a great place to start.
