3 Dividend Stocks Yielding 5% To 11% To Scoop Up Now

In a volatile market, investors often seek safe harbors for their capital. Dividend stocks typically emerge as a reliable option, providing consistent and regular income contrary to the often erratic performance of growth stocks. While growth stocks can generate significant returns over an extended period, dividend stocks offer a degree of stability. However, not all dividend stocks are created equal, and some stand out by offering attractive yields. Here, we explore three dividend stocks that investors might consider acquiring now.

1. Pfizer: Dividend Yield of 5.7%

With a market capitalization of $164.8 billion, Pfizer (PFE) is a renowned pharmaceutical company recognized for its pivotal role in developing the COVID-19 vaccine. However, its product offerings extend well beyond this achievement, encompassing various therapeutic areas such as oncology, immunology, cardiovascular health, and rare diseases. Year-to-date, Pfizer stock has realized a modest increase of 0.5%, notably lagging behind the S&P 500 Index, which has gained 20.8% during the same period.

The diversity of Pfizer’s product portfolio features blockbuster drugs like Vyndaqel (for nerve damage), Eliquis (a blood thinner), Nurtec ODT (for migraines), Ibrance (for breast cancer), Xeljanz (for rheumatoid arthritis), and Prevnar 13 (a pneumococcal vaccine). The company’s robust pipeline of new drug candidates, particularly in oncology and immunology, bodes well for future growth opportunities. Investors seeking income should take note of Pfizer’s attractive 5.7% dividend yield, significantly higher than the healthcare sector’s average of 1.6%. In the first half of 2024, Pfizer distributed $4.8 billion in cash dividends, reaffirming its commitment to rewarding shareholders.

With a payout ratio of 58.7%, Pfizer appears well-positioned to sustain its dividend payments, especially with projected earnings growth of 44.2% to $2.65 in 2024, followed by an additional 7.8% in 2025. On Wall Street, Pfizer maintains a “moderate buy” rating, with 21 analysts covering the stock. Of these, nine have rated it as a “strong buy,” while 12 rated it a “hold.” The stock carries an average price target of $33.26, suggesting a potential increase of 14.9% from current levels, while a high target price of $45 implies an upside potential of 55.5% over the next 12 months.

2. Walgreens Boots Alliance: Dividend Yield of 11%

Walgreens Boots Alliance (WBA) is renowned as one of the world’s largest retail pharmacy chains, with operations across the U.S., Europe, and other international markets. Valued at $7.8 billion, Walgreens has seen a staggering decline of 65.6% year-to-date, in stark contrast to overall market trends.

The company has faced mounting challenges, particularly amid fierce competition from retail giants like Amazon. Yet, despite these hurdles, Walgreens remains a solid dividend-paying option, boasting a yield of approximately 11%—far surpassing the consumer sector average of 1.8%. In fiscal Q3, adjusted earnings plummeted by 36.6% to $0.63 per share, attributed to a challenging retail landscape in the U.S., but the company still managed to distribute $1 billion in cash dividends.

While Walgreens’ high yield is appealing, the forward payout ratio of 54.3% raises concerns about sustainability, especially in light of expected earnings declines of 28.4% in 2024. Analysts have rated WBA stock as a “hold,” with 15 analysts covering it. The consensus includes two “strong buy” ratings, ten “hold” ratings, and two “strong sell” recommendations. The average price target of $11.73 implies an increase of 30.9% from current markets, while a high target of $19 suggests a staggering potential upside of 112% over the next year.

3. Altria Group: Dividend Yield of 7.9%

The Altria Group (MO) has long been an attractive choice for dividend investors, offering an annualized forward dividend yield of 7.9%, which exceeds the consumer sector average significantly. Altria is valued at $87.6 billion and has experienced a notable gain of 26.5% year-to-date, outpacing broader market performance.

Although the cigarette market is facing contraction due to public health efforts and evolving consumer preferences, Altria has maintained resilience through diversification into cannabis, wine, vaping, and smokeless tobacco products. In Q2, the company distributed $1.7 billion in dividends, sustaining an adjusted earnings rate of $1.31 per share. Analysts forecast a modest earnings growth of 3.1% in 2024 and another 3.8% in 2025.

The high payout ratio of 76.9% warrants caution among investors regarding the sustainability of dividends. However, Altria has reassured stakeholders by announcing plans to increase dividends by mid-single digits annually until 2028. Additionally, MO recently raised its dividend by 4.1% to $1.02, marking its 59th consecutive dividend increase. Often regarded as a Dividend King due to its ongoing dividend increases over the past 50 years, Altria currently holds a “hold” rating on Wall Street. Among the 10 analysts covering MO, three recommend a “strong buy,” five opine it’s a “hold,” while two suggest a “strong sell.” The average price target stands at $48.94, with a potential high target of $57 indicating an 11.7% upside over the next 12 months.

In Conclusion

These three dividend stocks—Pfizer, Walgreens Boots Alliance, and Altria Group—illustrate the varying potential within the dividend space. Each has its own set of challenges yet offers compelling yields that attract income-focused investors. As always, potential investors should evaluate these stocks within the context of their individual investment strategy and risk tolerance.