It makes a lot of sense to seek dividend-paying stocks for your portfolio. That income, after all, can be reinvested into more shares of stock, and healthy dividend payers tend to increase their payouts over time, too. On top of that, there's potential share-price appreciation.
Better still, if and when the stock market slumps, many or most dividend payers will keep paying their shareholders, offering a way to profit even when stock prices are stagnant or falling.
Here, then, are three high-yielding dividend stocks to consider for your long-term portfolio.
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1. United Parcel Service
For starters, there's United Parcel Service (UPS 0.98%), recently yielding a fat 7.8%. Its shares are down about 33% this year (as of Sept. 22), explaining the big dividend yield to some degree. (When share prices drop, dividend yields rise, and vice versa.)
The company is a well-known delivery giant, with about 490,000 employees, and delivering more than 22 million packages a day in more than 200 countries and territories. But it's been struggling lately.
Part of the problem is that its business declined after the height of the COVID-19 pandemic, when more people and businesses than ever were ordering items delivered. Another issue is more self-inflicted, as UPS reduced its business with Amazon, which has gone on to become a major delivery business in its own right.
There are signs that UPS is turning itself around. And Chief Executive Officer Carol Tomé recently noted that "We are making meaningful progress on our strategic initiatives, and we're confident these actions are positioning the company for stronger long-term financial performance and enhanced competitive advantage."
The stock looks attractively valued at recent levels, with a forward-looking price-to-earnings (P/E) ratio of 11.3, lower than its five-year average of 15.8. Give it some consideration if you're confident it can return to its glory days. If you buy, enjoy that fat dividend, but understand that it could be reduced if necessary, though even a 50% cut would leave its payout ahead of many others.
2. Pfizer
Next up is pharmaceutical giant Pfizer (PFE 6.79%), recently yielding 7.2%. It, too, has lost ground in the past few years -- about 8% in the past year. What's the problem? Well, like UPS, Pfizer's fortunes are not as glorious as they were at the height of the pandemic, when there was great demand for its vaccine and its Paxlovid treatment. (But those two products are still selling, as COVID-19 isn't going away.)
All good pharmaceutical companies have to keep developing new treatments, hoping some will end up approved and selling briskly, and Pfizer is no exception. It boasts a robust pipeline of drugs in development: "With over 50+ programs, 80+ clinical trials worldwide and 40% of our R&D budget dedicated to oncology, we're committed to advancements in cancer care," the company says.
Pfizer has lots of growth potential, but it's also facing a very uncertain U.S. healthcare environment, with eroding support for vaccines and potential tariff headwinds. That largely explains its low price -- which is why we're looking at an attractive dividend opportunity.
Pfizer may end up shrinking or suspending its dividend, but until it does (if it does), it deliver some hefty income. Its shares seem undervalued, with a recent forward P/E ratio of 7.7 well below the five-year average of 10.
3. Altria Group
If you're in the market for fat dividend yields, you might consider tobacco giant Altria (MO 0.35%), which sports a juicy dividend yield of 6.5%. It's been hiking that payout, too. Its total annual payout was recently $4.12 per share, for example, up from $3 in 2018 and $2.17 in 2015. (It hasn't risen dramatically in the past few years, though.)
The company is very much facing some headwinds, such as falling smoking rates in the U.S. But it's been preparing for that by investing in smokeless products, which could make up for losses in cigarettes. (It has also been raising prices for its offerings.)
Altria's shares seem roughly fairly valued to somewhat overvalued at recent levels, with a recent forward P/E ratio of 11.6 a bit more than the five-year average of 9.6.
Dig deeper into any of these stocks that interest you, and know that there are plenty of other attractive dividend payers out there -- and excellent dividend-focused exchange-traded funds, too.
