If putting your money to work on Wall Street is something you haven't started doing because it feels like a rich person's game and you're not one, I've got good news. Discount brokerages no longer charge the trading fees that made investing in small increments a losing proposition. These days, folks who invest in tiny increments are likely to receive identical returns to wealthier investors who make big trades.
At the moment, anyone with $100 to spare can scoop up shares of Healthpeak Properties (DOC 0.36%) and Pfizer (PFE -0.45%). Both of these stocks offer dividend yields above 6% at recent prices. Plus, there are good reasons to expect payout raises from these stocks in the near term. Read on to see why they look like great options for everyday investors who want to grow their passive income stream.
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1. Healthpeak Properties
This healthcare-related real estate investment trust (REIT) expanded last year when Physicians Realty Trust and Healthpeak combined. Going into the merger, Healthpeak was focused on laboratories that are rented out to drugmakers of all sizes.
Adding Physicians Realty Trust's portfolio of medical office buildings gave the REIT some diversification that investors appreciate. At the end of March, health systems and physician groups were responsible for 55% of annualized base rent. Drugmakers of different sizes were responsible for another 34% of annualized rent. Continuing care retirement communities and various other facilities rounded out the rest of the portfolio.
At 10.1% of annualized rent, HCA Healthcare, a publicly traded hospital operator, is Healthpeak's biggest tenant. Its next largest tenant, CommonSpirit Health, is responsible for 2.9% of rental revenue.
Investors can look forward to increasing dividend payouts from Healthpeak Properties stock in the near term. Management expects funds from operations (FFO), a proxy for earnings used to evaluate REITs, to land in a range between $1.81 and $1.87 per share this year. This is more than enough to support raising a payout currently set at an annualized $1.22 per share.
The vast majority of Healthpeak's properties are rented out under net leases that leave tenants responsible for nearly all the variable costs associated with owning its buildings. With annual rent escalators written into long-term leases, investors can reasonably expect this REIT's dividend payout to move steadily in the right direction over the long run.
2. Pfizer
Shares of America's largest drugmaker are down by about 60% from a peak they reached in 2021. The past four years have been disappointing from a principal-appreciation standpoint, but income-seeking investors are doing just fine.
Pfizer's dividend payout has grown every year since 2009. At its beaten down price the stock offers an eye-popping 6.9% dividend yield as I write this.
In addition to COVID-19-related revenue that collapsed faster than expected, Pfizer stock is way down because investors are worried about upcoming patent cliffs regarding top-selling medications.
Investors have good reasons to be concerned about Pfizer's future cash flows. Earlier this year, CEO Albert Bourla warned that market exclusivity losses would likely reduce revenue by $17 billion to $18 billion beginning in 2026 and ending in 2028.
With total sales that rose to $62.5 billion during the 12 months ended this March, filling the holes that exclusivity losses could punch in its income statement won't be easy. Luckily, the company reinvested much of its COVID-19 windfall into a productive development pipeline.
In 2023, the Food and Drug Administration approved nine new medicines from Pfizer. In 2024, the company received over a dozen FDA approvals for both new and existing treatments. By 2030, management expects new products that Pfizer acquired to deliver $20 billion in annual revenue. That's enough to keep pushing its big needle forward despite expected losses to patent cliffs.
Pfizer's $43 billion acquisition of Seagen in 2023 gave it access to several blockbuster cancer therapies. While their previous owner outsourced manufacturing, Pfizer's plan to bring manufacturing in-house could help profits expand faster than sales in the years ahead.
I wouldn't expect rapid dividend payout raises from this stock in the years ahead, but steady movement in the right direction seems likely. Adding some shares to a diversified portfolio now looks like a smart move for investors who want big dividend payments that could grow even larger.
