It's a great time to be thinking about investing in some dividend-paying stocks. That's because many see our current economy as rather uncertain these days, with tariffs coming and going and the threat of high inflation looming. On top of that, with the S&P 500 index recently up more than 16% over the past year, it's not crazy to think that the stock market might take a breather in the coming months or year.
In such a scenario, healthy and growing dividend payers should be desirable, as they'll likely keep rewarding their shareholders with regular payouts -- no matter what the economy is doing. Here are some to consider.
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1. Chevron
Energy giant Chevron (CVX 0.60%) is a solid dividend payer, with a recent dividend yield of 4.5%. (Even Warren Buffett likes the stock -- and his company recently owned 7% of it.) Better still, the company has been buying back a lot of its stock, with its smaller share count leaving remaining shares more valuable. (When you combine dividend payments and share repurchases, Chevron's total yield for shareholders was recently 9.4%.)
NYSE: CVX
Key Data Points
The economic environment is uncertain when it comes to energy prices, too, but Chevron has navigated through such environments before, and has managed to increase its dividend annually for 38 years. The fact that it's an integrated energy company helps, too, as it's involved in upstream activities such as drilling for oil, midstream activities such as transporting energy, and downstream activities such as refining oil.
With its recent forward-looking price-to-earnings (P/E) ratio of 18.2 above its five-year average of 13.2, Chevron doesn't look bargain priced. So you're likely to get best results if you plan to hold for many years. (To play it safer, you might buy into it gradually or just add it to your watch list.)
2. Vici Properties
Vici Properties (VICI 0.73%) is a real estate investment trust (REIT), which means it's required to pay out at least 90% of its taxable earnings as dividends. And Vici pays out a lot in dividends, with a recent dividend yield of 5.8%.
NYSE: VICI
Key Data Points
REITs generally specialize in one or more parts of the real estate market, such as retail or medical properties or warehouses. VICI is focused on casinos and entertainment properties in the U.S. and Canada, including Caesars Entertainment, MGM Resorts, Penn Entertainment, and Century Casinos. Its typical lease term for its tenants is 40 years and there are built-in rent increases. Vici's portfolio includes 54 casinos, 60,000-plus hotel rooms, four championship golf courses, around 500 retail outlets, and more.
The stock has averaged annual growth of 10.9% over the past five years, and its dividend has grown, too, from $1 per share in 2018 to $1.75 currently. If you see the real estate and/or gambling industry growing, take a closer look at Vici. Its forward P/E ratio, recently 10.8, is below its five-year average of 12.5.
3. Verizon Communications
Verizon Communications (VZ +1.11%) has recently been sporting a fat dividend yield of 6.8%. That's clearly tempting, but know that Verizon is carrying a lot of debt -- which it probably can't pay down very quickly due to its dividend obligations. It faces competition, too.
NYSE: VZ
Key Data Points
Still, it has some upsides. For example, it's less affected by tariffs than many companies, and it's a prodigious producer of free cash flow. It also appears rather undervalued at recent levels, with a forward P/E ratio of 8.5 below the five-year average of 9.
Verizon's dividend seems safe at the moment, so you might consider buying the stock for the income. Don't expect it to be a powerful growth stock, though.
4. Schwab U.S. Dividend Equity ETF
Finally, since you might not be ready to study dividend payers and select the best ones, consider just buying the haystack instead of searching for needles. The Schwab U.S. Dividend Equity ETF (SCHD +0.02%) is a great choice, with a recent dividend yield of 3.8% and a 10-year average annual gain of 11.5%. It's invested in about 100 companies, such as AbbVie, Amgen, and Cisco Systems -- companies that tend to increase their payouts over time.
So do consider adding some dividend-generating securities to your portfolio -- for income, for growth, and for diversification.
