The average dividend yield in the S&P 500 Index remains low at around 1.6%. As a result, income investors largely have to settle for less dividend income when buying stocks. However, there are still quality companies with high dividend yields.These 3 stocks have leadership positions in their industries, dividend yields above 5% and secure dividend payouts.
Verizon Communications (VZ)
Verizon is one of the largest wireless carriers in the country. Wireless contributes three-quarters of all revenues, and broadband and cable services account for about a quarter of sales. The company’s network covers ~300 million people and 98% of the U.S.On January 23rd, 2024, Verizon announced fourth quarter and full year results for the period ending December 31st, 2023. For the quarter, revenue decreased 0.6% to $35.1 billion, but this was $550 million more than expected. Adjusted earnings-per-share of $1.08 compared unfavorably to $1.19 in the prior year, but this was in-line with estimates.For the year, revenue fell 2.1% to $134 billion while adjusted earnings-per-share of $4.71 was down from $5.18 a year ago. For the quarter, Verizon had postpaid phone net additions of 449K, an improvement from a loss of 51K in the preceding quarter. Retail postpaid net additions totaled 1.46 million. Wireless revenue grew 3.2% to $19.4 billion while the Consumer segment increased 0.7% to $27 billion. Broadband totaled 413K net new customers during the period, the fifth consecutive quarter of at least 400K net adds.One of Verizon’s key competitive advantages is that is often considered the best wireless carrier in the U.S. This is evidenced by the company’s wireless net additions and very low churn rate. Verizon has increased its dividend for 19 consecutive years and the stock has a high dividend yield of 6.6%.
Altria Group (MO)
Altria Group was founded by Philip Morris in 1847. Today, it is a consumer staples giant. It sells the Marlboro cigarette brand in the U.S. and a number of other non-smokeable brands, including Skoal, Copenhagen, and more. Altria also has a 10% ownership stake in global beer giant Anheuser Busch InBev, in addition to large stakes in Juul, a vaping products manufacturer and distributor, as well as cannabis company Cronos Group (CRON).Altria Group announced its Q4 2023 earnings on February 1, 2024. The company reported net revenues of $5.97 billion, marking a 2.2% decrease from the previous year, while adjusted EPS remained flat at $1.18, slightly outperforming analyst expectations.To counteract the decline in smoking in the U.S., Altria has made investments in ancillary businesses. During 2023, Altria focused on expanding its smoke-free product portfolio, including the integration of NJOY into its family of companies and launching on! PLUS internationally in Sweden. Altria has taken steps to strengthen NJOY’s supply chain, close inventory gaps at retail, and expand the distribution of ACE to over 75,000 stores.Altria also provided an outlook for 2024, expecting adjusted diluted EPS in the range of $5 to $5.15, representing a growth rate of 1% to 4% from a $4.95 base in 2023.Altria has pricing power and brand loyalty. In addition, tobacco companies enjoy low manufacturing and distribution costs, thanks to its economies of scale. This has fueled Altria’s tremendous dividend growth, enabling it to boast an impressive dividend growth streak of 54 years. MO yields 9.1%.
Northwestern Corp. (NWE)
NorthWestern Corp. is a Sioux Falls, South Dakota based electricity and gas utility. It has 1,530 employees, and primarily serves the states of South Dakota and Montana. The company’s largest source of power generation is currently coal. However, it does produce 27% of its power from hydro and another 6% from wind in addition to contracting additional renewable electricity from other suppliers.On February 14th, 2024, NorthWestern announced its Q4 2023 earnings. The results were strongly favorable and confirmed our prior belief that the company is at a positive inflection point. Earnings per share of $1.38 increased from $1.13 year-over-year and greatly exceeded expectations. Revenues declined 16% year-over-year to $356 million due to impacts from the weather, but the company’s earnings surged anyway thanks to a sharp decrease in operating expenses.In light of management’s announcement of the favorable rate review this past quarter, we are forecasting more upbeat 6.0% intermediate-term earnings growth as the company’s EPS turns upward once again starting in 2024.Utilities, as an industry, are highly resilient and tend to fare relatively well during economic duress. NorthWestern aims to have its dividend payout ratio be between 60% and 70%. NWE has increased its dividend for 19 years and currently yields 5.1%.More By This Author:3 Business Development Companies With Dividend Yields Over 5%
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