Many dividend stocks lost their luster in 2022 and 2023 as rising interest rates drove jittery investors toward safer CDs, Treasury bills, and other fixed-income investments. However, many of those high-yielding dividend stocks stabilized in 2024 as the Federal Reserve finally implemented three interest rate cuts.
The 10-year Treasury yield is still hovering near 4.7% as of this writing, but the Fed plans to cut interest rates at least two more times in 2025. As that happens, more investors will likely rotate back toward the market's high-yielding dividend stocks.
Image source: Getty Images.
But before that rotation occurs, you should probably buy some of those stocks while they're still trading at historically low valuations with high yields. If you have at least $1,000 to spare, you can easily churn out $40-$70 in extra annual income with these underappreciated dividend stocks: Verizon Communications (VZ +1.78%), Vici Properties (VICI 0.80%), and Opera (OPRA 1.31%).
Verizon
Verizon might initially seem like a lousy dividend stock. Over the past five years, the telecom giant's share prices have tumbled 36%. Even after including its reinvested dividends, it delivered a negative total return of 14% over that timespan. It struggled to grow its core wireless business, fend off its competitors, and meaningfully reduce its debt.
But after that decline, Verizon stock looks dirt cheap at just 8 times forward earnings and pays a hefty forward dividend yield of 7.1%. That low valuation and high yield should limit its downside potential if it turns its business around.
NYSE: VZ
Key Data Points
In 2023, Verizon's revenue fell 2% as its consumer segment struggled to gain new wireless subscribers and its business segment faced tougher macro headwinds. But in the first nine months of 2024, its total revenue rose 0.3% year over year as the growth of its consumer segment offset its business segment's declining revenue.
That recovery was driven by its localized incentives and marketing campaigns, customizable "myPlans," distribution partnership with Walmart, and the recent acquisition of the prepaid wireless provider TracFone. The wireless segment's earnings margins are also stabilizing as it cuts costs to offset its lower-margin promotions.
For the full year, analysts expect Verizon's revenue to stay flat as its adjusted earnings per share (EPS) dips 2%. But for 2025, they expect its revenue and adjusted EPS to grow 2% and 3%, respectively. So, if you believe this telecom giant is finally due for a turnaround, it would be smart to buy its high-yielding stock at this discount valuation.
Vici Properties
Vici Properties is a real estate investment trust (REIT) that owns casinos and entertainment properties in the U.S. and Canada. As a REIT, it buys up properties, rents them out, and splits the rental income with its investors. To maintain a favorable tax rate, it also must distribute at least 90% of its taxable income as dividends.
Vici owns 93 properties, including three of the Las Vegas Strip's most iconic casinos: Caesars Palace, MGM Grand, and the Venetian. Its top tenants include Caesar's Entertainment, MGM Resorts, Penn Entertainment, and Century Casinos.
NYSE: VICI
Key Data Points
Vici is more resilient than other REITs for two reasons: It locks its tenants into multi-decade leases, with rent increases mostly pinned to the Consumer Price Index (CPI) to hedge against inflation, and most casinos are resistant to recessions. That's why it's maintained an occupancy rate of 100% since its initial public offering in 2018, even as the pandemic, geopolitical conflicts, inflation, and rising interest rates rattled the global economy.
From 2018 to 2023, Vici's adjusted funds from operations (AFFO) per share rose at a compound annual growth rate (CAGR) of 8%, and it expects that figure to grow 5% in 2024. At $29, its stock looks like a bargain at 13 times that AFFO estimate, and it pays a high forward dividend yield of 6%. That makes it a great play for value-minded income investors.
Opera
Opera develops web browsers and a news app. It controls only about 2% of the global web browser market, according to StatCounter, but it still served 296 million monthly active users (MAUs) across all its apps in the third quarter of 2024.
NASDAQ: OPRA
Key Data Points
Opera has been struggling to gain new users in a market dominated by larger browsers, but it's locking in its existing users with new artificial intelligence (AI) tools and rolling out more integrated ads to grow its average revenue per MAU. Its latest browser, Opera One, bundles generative AI tools from OpenAI with its own integrated AI assistant, Aria.
For 2024, analysts expect Opera's revenue and adjusted EPS to grow 20% and 32%, respectively. For 2025, they expect its revenue and adjusted EPS to increase another 16% and 21%, respectively, as it rolls out more AI and advertising features. Those are stunning growth rates for a stock trading at just 8 times forward earnings.
Opera also started to pay semiannual dividends in 2023. It currently pays a forward yield of 4.4%, surprisingly high for a smaller growth stock. Therefore, Opera looks like a uniquely appealing play for value, dividend, and growth investors.
