Dividend stocks can be a wealth-building "cheat code." Your dividend stocks work around the clock, earning the profits that get paid to you simply for being a shareholder.
Suppose you invest the money and time to collect dividend stocks and reinvest your income to keep buying more. In that case, you can unleash a snowball of passive income that could eventually cover your living expenses. Every snowball starts as a snowflake, and getting started in dividend stocks doesn't need to cost a lot. Here are four great dividend stocks you can buy for a total of under $400.
1. A high-yielding oil titan
ExxonMobil (XOM 0.39%) is one of the largest energy companies in the world. It's an integrated oil major, which touches both the exploration and production of oil and natural gas and the refining and distribution of it. The company is a Dividend Aristocrat that's been able to pay and increase its dividend annually for the past 38 years and offers a dividend yield of 4.5% today.
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Its massive size and balance sheet have helped it endure low oil prices through much of the past decade. Now that oil prices have rebounded, Exxon is coming back as strong as ever. It produced $48 billion in cash flow from operating activities in 2021's fourth quarter, its highest since 2012. Some green technologies like electric vehicles, have become hot investing themes, but ExxonMobil's role in meeting the world's energy needs should be secure for the foreseeable future.
2. A smoking hot dividend
Altria Group (MO 0.70%) is a tobacco and nicotine products company that sells Marlboro branded cigarettes in the United States, as well as nicotine pouches, chewing tobacco, and cigars. The company also has minority stakes in alcohol company Anheuser-Busch InBev, cannabis company Cronos Group, and electronic cigarette company Juul Labs. Altria has raised its dividend for 51 years, making it a Dividend King that offers investors a 7.2% yield.
Fewer people smoke in the United States each year; Altria shipped 126.6 billion cigarettes and cigars in 2014, but just 95.6 billion in 2021, a 24% decline. However, the company's operating income grew from $7.6 billion in 2014 to $10.4 billion in 2021, a 37% increase. Altria leans on the addictive properties of its products to gradually raise its prices to make up for falling volumes. As long as this continues, investors can probably expect this large dividend to keep coming.
3. Calling all dividend investors
Verizon Communications (VZ 2.85%) is part of the wireless oligopoly in the United States, where a small group of telecom stocks controls the industry. Verizon owns roughly 29% of the market, making it the second-largest carrier in the U.S. The satellites, towers, and cables that wireless networks operate on cost many billions of dollars to build and maintain over the years, making it unlikely that a competitor would invest the money needed to enter the space and pose a threat.
And as people become increasingly reliant on smartphones in everyday life, the phone bill has become almost like a utility, getting similar priority in a household budget to the electric and water bill. Verizon's business has proved resilient through many tough times like the pandemic, enabling it to raise its payout for the past 17 years. Investors can get a 4.8% yield from Verizon today.
4. Peanut butter and jelly time
The J.M. Smucker Company (SJM 0.20%) is a consumer and pet foods company that makes a variety of nut butter, fruit spreads, coffee, and pet food products. These small products are purchased by consumers every week or month, creating stable revenue streams. Consumer products can be competitive, and generic brands can put pricing pressure on name brands like what J.M. Smucker sells. However, the company has shown brand power over the years, managing to grow its revenue 5% on average each year for the past decade.
The stock is also on the verge of becoming a Dividend Aristocrat; its dividend-growth streak currently stands at 24 years, and it offers a yield of 2.9%. The company has faced challenges in this high-inflation environment, where rising commodity and shipping costs have pressured profit margins. Still, the business only spends half of its cash flow on the dividend. Hence, the payout appears perfectly safe through these headwinds that should prove temporary.
