The S&P 500 index (^GSPC +1.18%) is offering a minuscule 1.2% average yield today. That's not much to support a dividend-focused investor's income needs and speaks to a market that is richly valued. Don't give up on dividend stocks, though, because you can still find some great options if you dig a little. And if you do, you'll likely find you want to buy and hold monster stocks like PepsiCo (PEP 0.10%), Enterprise Products Partners (EPD 0.45%), and Medtronic (MDT +0.13%), with yields as high as 6.7%, for a decade or more.
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1. PepsiCo is an out-of-favor Dividend King
PepsiCo is one of the largest consumer staples companies on the planet. It has operations in the beverage, salty snack, and packaged foods areas, with leading brands in each. It has impressive distribution, marketing, and research and development skills, and it has the size to act as an industry consolidator. Buying other companies is a key part of the company's long-term strategy, as acquisitions allow it to keep its brand portfolio relevant.
The company's impressive 53-year streak of dividend increases speaks to PepsiCo's core strengths. You simply can't become a Dividend King without a good business model that gets executed well in good times and bad. But, like any well-run company, bad times do come. And that's the exact situation today, with PepsiCo's growth slowing down of late. Management is cutting costs, working on innovation, and buying smaller, on-target brands to refresh its portfolio. If history is any guide, it will muddle through this period and get back on the growth path again.
NASDAQ: PEP
Key Data Points
If you can take that long-term view, this consumer staples giant is offering a historically high dividend yield of 4.3% today. That's a yield that is well worth the risk for even risk-averse investors.
2. Enterprise Products Partners has a huge 6.8% yield
Enterprise Products Partners is one of the largest midstream energy businesses in North America. It owns energy infrastructure assets, like pipelines, that help to move oil and natural gas around the world. Although energy commodity prices can be volatile, Enterprise largely generates income from fees it charges for the use of its assets. Its cash flows tend to be very consistent and, given the importance of energy to the world, resilient even during energy downturns.
NYSE: EPD
Key Data Points
Enterprise, which is a master limited partnership (MLP), has increased its distribution for 26 consecutive years. The yield today is a very attractive 6.7%. With a yield that high, some conservative investors might be worried about the sustainability of the payout. You don't need to worry, Enterprise has an investment-grade rated balance sheet, and its distributable cash flow covered its distribution 1.7 times over in 2024. There's a lot of room for adversity before the distribution would be at risk. That said, the yield here is likely to make up the lion's share of an investor's return over time, but that probably won't bother income-focused investors.
3. Medtronic is a medical device giant working to up its growth and profits
Medtronic is one of the largest medical device makers on Earth. It operates in the cardiovascular, neuroscience, medical surgical, and diabetes sectors, with leading positions in each area where it competes. Healthcare is a complex sector, but Medtronic has proven its ability to survive, noting it has a 48-year streak of annual dividend increases behind it.
NYSE: MDT
Key Data Points
The problem with Medtronic today is that growth has been sluggish of late. That's not unusual, given the lumpy nature of medical innovation. After a dry spell, Medtronic is bringing attractive new products to market again. And it is working to streamline its portfolio to enhance growth and profitability. There have been some small divestitures, but the next big move will be to spin off the diabetes business. This move is expected to be accretive to earnings from day one and could be a catalyst for investors to assign Medtronic a higher valuation. But if you act today, you can get this healthcare giant while it still has a historically high yield of 3.2%.
Three giants and three giant yields
If your goal is to buy industry-leading companies and hold them for 10 or more years, then high-yield PepsiCo, Enterprise, and Medtronic will be right up your alley. Even conservative investors will like these monster stocks, noting that Enterprise is in the least volatile sector of the energy industry. Take some time to get to know this trio of income stocks, and at least one will likely end up in your portfolio today.
