Does your portfolio need some new income investments? Maybe you're looking for a little more certainty -- and defensiveness -- now that a few too many risky growth stocks are overbought as well as overvalued? Whatever your goal is, here's a rundown of my five favorite dividend stocks to buy right now.
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1. PepsiCo
Coca-Cola is one of the top go-to dividend names within the consumer goods space, and for obvious reasons. Not only is it the biggest beverage company (as measured by market cap), but it owns some of the most entrenched brand names.
If you're looking to step into one dividend-paying consumer staples name today, however, I'd opt for rival PepsiCo (PEP 0.28%) while its forward-looking dividend yield is 3.5% versus Coke's 2.6%. Although PepsiCo's higher yield is ultimately the result of the stock's relative underperformance stemming from weakness with its food and snack business (PepsiCo owns Lay's as well as Quaker Oats), several initiatives like chips without artificial dyes and higher-protein options are finally starting to make a positive impact on its top and bottom lines. This success just isn't yet being fully reflected in this ticker's price.
2. Pfizer
You may already know that pharmaceutical outfit Pfizer (PFE 1.28%) hasn't been able to match its COVID-driven 2022 revenue of just over $100 billion. It was so focused on responding to the pandemic that it let its pipeline and portfolio get a little thin. The stock has paid the price ever since.
NYSE: PFE
Key Data Points
The company hasn't simply been sitting on its hands, however. Although it's still got work to do, after some acquisitions and continued research and development (R&D) efforts, Pfizer expects to launch eight new blockbuster drugs (drugs with annual revenue in excess of $1 billion) by 2030, with new drugs expected to produce a total of $20 billion worth of yearly revenue by 2030. That should pump its annual top line up from around $60 billion now to $80 billion then, with recent acquisitions like 2022's purchase of Arena Pharmaceuticals and 2023's $43 billion acquisition of oncology specialist Seagen setting the stage for continued revenue growth beyond 2030.
The point is, the future looks brighter than the recent past, and brighter than the stock's recent performance suggests. You can get in while Pfizer's forward-looking yield stands at 6.3%.
3. Realty Income
Realty Income (O +0.51%) technically isn't a stock. Rather, it's a real estate investment trust, or REIT for short. That just means the organization owns a bunch of revenue-bearing real estate, like office buildings, hotels, and apartment complexes. And as long as most of its rental income is passed along to shareholders in the form of dividends, this profit isn't first taxed at the corporate level. This ultimately means more net cash flow for investors.
And Realty Income has done a fantastic job of passing profits along to investors. Not only has it paid a monthly -- yes, monthly -- dividend like clockwork since 1969, it's raised its per-share payment every year for over 31 years. Newcomers would be getting in at a yield of right around 5%.
Realty Income's specialty is brick-and-mortar retailing, by the way. Its top tenants include 7-Eleven, Dollar General, FedEx, and Home Depot. While this can be alarming in light of the retail industry's ongoing headwind stemming from the proliferation of online shopping, this REIT's occupancy rate of 98.7% underscores the fact that it's working with the retailing business's most resilient names.
4. Verizon
You may never see a great deal of capital appreciation with a stake in wireless telecom giant Verizon Communications (VZ +0.03%). What it lacks in raw growth firepower, however, it more than makes up for with income. The stock's forward-looking dividend yield right now is 5.8%, and its per-share quarterly payment has now been upped for 19 consecutive years.
NYSE: VZ
Key Data Points
This growth streak isn't apt to end anytime soon, either, if ever.
See, for better or worse, the 98% of American adults who say they own a mobile phone are wildly dependent on them, if not outright addicted to them. Harmony Healthcare IT reports Americans spend an average of more than five hours per day looking at the smartphone's screen. It's unlikely most of these people are going to give up their mobile connection to the rest of the world now. They'll gladly pay a monthly fee over and over again to maintain this service.
5. IBM
Last but not least, I'm adding International Business Machines (IBM 0.54%) -- you know it as IBM -- to my list of favorite dividend stocks to buy right now.
Yes, this technology stock is one of the few that pays a respectable dividend. It's currently yielding 2.6%, but more than that, it's raised its payment every year for the past 30 years.
More of the same is likely, too. Why? It's the company's largely overlooked business model.
NYSE: IBM
Key Data Points
While you may know it as a hardware company, nearly half of IBM's revenue actually comes from software that's run on its systems, while another 30% of its sales comes from consulting services... much of which is also about its own hardware. This is high-margin revenue, too.
Perhaps of more interest to income-minded investors, a great deal of this high-margin revenue is recurring. The company's software subscriptions' annualized recurring revenue run rate now stands at $23.6 billion, or roughly one-third of IBM's total top line. This steady cash flow supports an equally steady dividend.
