Do you feel as if all the market volatility we've seen this year has you running in circles? If so, you might want to check out some of these dividend-paying stocks.
Stock prices rise and fall every time the wind blows, but earnings tend to be a lot more predictable. That's how companies like Verizon Communications (VZ 0.98%), AT&T (T -0.43%), and Chevron (CVX -0.86%) have been able to steadily raise their payouts for years to the delight of their shareholders.
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If you'd like to set up a passive income stream that delivers around $1,000 annually, just pour around $21,100 into these three stocks. Best of all, you can count on this income stream to grow steadily for the foreseeable future.
Verizon Communications
Shares of Verizon currently sit at nearly the same price they were trading at when COVID-19 lockdowns went into effect in March 2020. While the stock hasn't appreciated much, investors who held their shares through all the turmoil were able to collect dividend payments that have already climbed 4% above their pre-COVID levels.
At recent prices, Verizon shares offer a juicy 4.8% yield. That's a great deal more than the average stock in the S&P 500, which currently offers a 1.4% yield. At this price, you can buy enough shares to earn $300 in dividends annually for an investment of just $6,300 upfront.
When a company offers an above-average payout there's usually a reason and Verizon's is clear. While the company is reporting net income, heavy capital expenditures to support a neverending 5G rollout mean there's less than zero free cash flow available to make dividend payments or reduce a debt load that currently exceeds $150 billion.
VZ Net Income (TTM) data by YCharts
Luckily, the enormous expenses Verizon has been racking up to expand its 5G coverage also work as a barrier to new competition. The 5G rollout is also leading to strong uptake of fixed wireless broadband services. The total number of fixed wireless subscribers rose to 78,000 during the last three months of 2021 which was 42% more than the previous quarter.
AT&T
Now that AT&T is no longer in the film and television industry, it's looking like a reliable dividend stock. In March, the company completed its spinoff of WarnerMedia to form Warner Bros. Discovery, which should lead to more predictable cash flows for Ma Bell.
The slimmed-down company's reduced dividend payout works out to a tempting 5.7% yield. Plowing around $8,800 into AT&T stock at recent prices will produce $500 in dividend income each year at the outset and probably a great deal more down the road.
Now that AT&T is more of a pure play in the reliable telecom industry, investors can reasonably expect the company to make regular payout bumps. Dividend payments over the past year chewed through just 59% of the $25.4 billion in free cash flow generated by operations over the same time frame.
AT&T recorded a net loss of around 20,000 broadband and DSL subscribers last year. Luckily, its higher-speed fiber offering more than made up the difference by adding around 1 million net new subscribers in 2021.
Chevron
Rising oil prices are tough on consumers, but Chevron and its oil-producing peers are doing just fine. In fact, this has been one of the best-performing Warren Buffett stocks this year.
Even though this stock has skyrocketed 46% in 2022, it still offers an above-average yield of 3.3% at the moment. At recent prices, you can line up around $199 worth of dividend payments annually by putting up just $6,000 to purchase 35 shares for your portfolio.
Chevron rarely goes more than 12 months without raising its dividend and its payout has grown 8 times over the past decade. Investors may have had to sweat it out a couple of times, but the whopping 58% increase in its payout since 2013 made it all worthwhile over the long run.
While looking ahead to a greener future it's important to remember that electric vehicles (EVs) are their own worst enemy. Every EV that hits the road lowers the demand for oil, and eventually fuel prices. Lower fuel prices, in turn, make buying traditional vehicles more attractive. In other words, oil producer profits probably won't evaporate before this stock delivers heaps of dividend income to patient investors.
