Eager for yearly dividends exceeding $3,000? Consider investing $20,000 into each of these three stocks.
Making a consistent income stream of thousands of dollars could reduce your dependence on work income or retirement benefits. If you have some spare funds to invest, there are numerous high-yielding dividend investments available now. Despite the popularity of growth stocks and AI buzz, dividend stocks have taken a backseat recently, which might make this an opportune time to invest in them.
Three long-term dividend stocks that could be valuable inclusions are Bristol Myers Squibb (BMY -0.89%), Kraft Heinz (KHC 0.44%), and Enbridge (ENB -0.33%). Investing $20,000 into each of these stocks could potentially generate over $3,000 in annual dividends.
1. Bristol Myers Squibb
Offering a dividend yield of 4.3%, Bristol Myers Squibb has a dividend that surpasses the S&P 500's average yield of just 1.2%. Investing $20,000 in the stock would yield about $860 in dividends in a year.
Despite investor worries about the company's numerous patent cliffs regarding its leading drugs, the stock is being sold at a substantial discount of 8 times its estimated future earnings. The firm has recently gained approvals for new drugs (such as Cobenfy and Breyanzi) and has been strengthening its long-term growth prospects, which may lessen the present concerns, making Bristol Myers Squibb an underpriced dividend stock to consider. Several drugs in the company's "growth portfolio" have shown growth of over 30% in the initial nine months of the year.
Bristol Myers Squibb has generated more than $13.8 billion in free cash flow in the past 12 months, sufficient to cover its total cash dividend payments equal to $4.8 billion during that period. With the company's history of continuous innovation and drug development, this is a dividend stock I'd feel assured holding for the long term.
2. Kraft Heinz
Another undervalued dividend stock to purchase and hold is Kraft Heinz. Strong brands and fairly stable earnings characterize this option as a suitable dividend investment. With a yield of 5.1%, it exceeds Bristol Myers Squibb's yield and could provide additional income, generating $1,020 based on a $20,000 investment.
While Kraft Heinz has experienced some turbulence in its earnings lately due to nonrecurring impairment charges, its cash flow remains robust. The company pays around $480 million in cash dividends each quarter and generally generates more than that in free cash flow, indicating that the payout is not at risk. In the past 12 months, Kraft Heinz's free cash flow has totaled $3 billion, versus $1.9 billion in cash dividends paid.
Kraft Heinz is not particularly a growth stock now, but it has maintained its stability. It has generated at least $26 billion in revenue in each of the previous four years, and its operating income has topped $5 billion in three out of those years. If your priority is a good dividend stock, Kraft Heinz should be a notable option to consider.
3. Enbridge
The highest-yielding dividend on this list is Enbridge, whose payout reaches 6.2%. Investing $20,000 in the stock will set you on a path to receiving approximately $1,240 per year in dividends. Adding this to the other stocks mentioned here, your total annual dividend income from these three investments would total approximately $3,140. Enbridge has also increased its dividend payment for 29 consecutive years, indicating that your recurring income is likely to rise over the long term.
The Canada-based pipeline firm recently completed acquisitions of multiple U.S. natural gas utilities, which will enhance its long-term growth prospects. Management asserts that these utilities complement Enbridge's existing low-risk business model, provide reliable cash flow, and offer embedded quick-cycle growth opportunities.
Enbridge is a secure stock to have. It anticipates ending the year at the high end of the guidance it supplied for earnings before interest, taxes, depreciation, and amortization (EBITDA), and its distributable cash flow numbers (used to assess its dividend) are in line with last year's performance. This is one of the more secure oil and gas stocks to invest in.
Engaging in dividend investing can be a strategic way to diversify your finance portfolio and supplement your income. With Enbridge offering a yield of 6.2%, investing $20,000 in their stock could potentially yield around $1,240 in annual dividends.
The increasing dividend payments for 29 consecutive years by Enbridge demonstrates its financial stability and commitment to investors. This consistent growth in dividends makes Enbridge an attractive option for those seeking long-term income growth in the context of oil and gas stocks.
