Dividends are a great way for investors to judge how much money a company is able and willing to return to shareholders each year. Finding stocks with strong cash flows and a solid dividend can also be a great way to find market-beating investments.
Three companies built for any market environment are Verizon (VZ -0.53%), Blackstone (BX -0.43%), and Walgreens (WBA -1.33%), and they pay dividends that exceed a 5% yield.
Wireless is a great business for dividends
There are only three major wireless providers in the U.S., and Verizon is one of them. The company has a premium position in the market and a leading position in 5G cellular networking.
Investors have been concerned by Verizon's losses in the lower end of the market after buying Tracfone, but the future for Verizon isn't fighting for low-end customers. It's keeping high-margin wireless customers and adding in-home wireless broadband customers, which Verizon calls fixed wireless. In the second quarter, the company added 256,000 fixed wireless customers, and it can now start to bundle its services to give customers an even bigger offering. Streaming content could be the third leg of a new triple play that includes wireless and home broadband.
Verizon's 5.8% dividend yield is high for today's market; given the oligopoly the company is in for wireless service in the U.S., I like its value and its future.
Asset management at scale
Blackstone is an industry leader in private equity and alternative investments; that gives investors exposure to both fee revenue and performance-based revenue. But the end goal is increasing assets under management.
Total assets under management increased 38% to $940.8 million in the most recent quarter, despite the down market. That's because it had $88.3 billion of investment inflows in the second quarter of 2022 and $339.7 billion coming in over the past year. As investors search for yield from all types of investments, Blackstone's funds have found an even wider audience.
The dividend yield of 5.8% is solid among financial companies. The private equity and real estate business may go through some ups and downs, but this is a market leader with a strong dividend, and that's why it's a top pick.
The convenient pharmacy
Is there anything that's going to disrupt Walgreens' current pharmacy and convenience store business? The company has valuable real estate across the country, ties with insurance companies and doctors that are difficult to break, and it's a go-to shop for millions of customers looking for quick shopping.
There are potential threats from online pharmacies and telemedicine, but these services have taken a lot longer to take market share than many investors thought. Even if they do grow, Walgreens could move into online pharmacy services and will always have the convenience factor over upstarts.
The business may not be in high growth, but its dividend yield of 5.2% is enough to make it an attractive stock.
Moats and dividends to hold long-term
Each of these companies is a market leader, which gives them a moat that would be very hard to disrupt. That's what drives the financials that enable a dividend yield of over 5%, and that's a great reason to buy and hold on to these stocks long-term.
