The start of a new year can be a good time for investors to reevaluate their financial goals. Some might want to add quality dividend stocks for the income potential they can offer. The safest route is to look for solid businesses that have stood the test of time and sell products that people use every day.
It doesn't matter how much money you have to invest, but we'll look at three stocks that can pay you nearly $500 this year, with a total investment of $10,000 by you.
Coca-Cola: $103 in dividend income
Coca-Cola (KO) has been around for over a century and has increased its dividend for 62 consecutive years. The company benefits from a capital-light business model of turning syrups into carbonated beverages, and it generates profits like there's no tomorrow. It currently pays a dividend yield of 3.10% -- more than double the S&P 500 average of 1.47%.
Coca-Cola makes the syrups and concentrates, while its bottling partners create the finished product. This translates to a highly profitable business with a 24% profit margin that is still gradually improving with time.
Most importantly, the company has proven it can adapt to shifting consumer demand for low-calorie beverages. The company launched 246 low-calorie beverages in 2022 and has experienced double-digit growth with Coca-Cola Zero Sugar. Overall, adjusted revenue grew 11% year over year in the third quarter -- a strong result for this stalwart.
"Our leading portfolio of brands, coupled with an aligned and motivated system, positions us to win in the marketplace today while also laying the groundwork for the long term," CEO James Quincey said.
Based on its current yield, investors can earn $103 in income with a $3,333 investment in the stock.
Verizon Communications: $208 in dividend income
Verizon Communications (VZ 1.17%) is a popular dividend stock right now, after last year's sell-off that caused the yield on the stock to rise to an attractive 6.27%. The company has faced some hurdles recently, such as declines in wireline service revenue that contributed to lower profits last year. But the long-term fundamentals of Verizon's business should lead to many more years of dividend payments.
Large telecom operators are solid dividend payers because of their recurring revenue streams from wireless and broadband subscribers. There is not a viable alternative to the big three right now between T-Mobile, AT&T, and Verizon. Meanwhile, attractive offers like discounts on video streaming plans from Netflix are reeling in wireless customers, with wireless revenue up 3% year over year to $19.4 billion last quarter.
"With our vast network coverage and the largest base of loyal customers, we're uniquely positioned to provide targeted high-value deals that deepen relationships across connected devices, streaming, and more," CEO Hans Vestberg said on the fourth-quarter earnings call.
Even with lower profits from higher marketing expense, paying interest on its debt, and the decline in wireline revenue, Verizon was still able to increase its dividend last year, distributing about 59% of its free cash flow to shareholders.
With a high yield of 6.27%, a $3,333 investment at the current share price would yield $208 in income this year.
Realty Income: $186 in dividend income
Well-managed real estate investment trusts (REITs) are another great way to boost your passive income. These companies are required to distribute at least 90% of their taxable income to shareholders as dividends, and Realty Income (O -0.17%) has a solid investment strategy in place that has led to a stellar dividend record.
Realty Income has a diversified portfolio of over 13,000 real estate properties. Its tenants include big names like Walmart and Dollar General. It researches locations that will assist these companies and enable their long-term success. A key part of its process is targeting retail clients that have proven resilience to challenging economies and competition from e-commerce.
This strategy makes perfect sense for a dividend investor looking for safe income for their retirement account. Realty Income has paid a monthly dividend for 54 years and has increased the dividend every year over the last 31 years.
A strong third quarter, one in which the company invested $2 billion in acquisitions to further its long-term plans, led management to raise its full-year guidance for adjusted funds from operations (AFFO). AFFO is now expected to land between $3.98 to $4.01 per share, which is solid profitability to support the share price in the new year.
"Our third-quarter results demonstrate the consistency of our earnings profile through varying economic environments and the attractive internal growth of our high-quality real estate portfolio," CEO Sumit Roy said on the Q3 earnings call.
With a high yield of 5.60%, investors can rake in $186 in income this year with a $3,333 investment.
