A stock’s dividend yield is a key metric to consider when shopping for long-term, sustainable income picks. Dividend payments are a delicate dance for investors; offering a dividend that’s too high could put the future of the company at risk while cutting dividends too severely could put off long-term investors.
If you’re investing for income, it’s important to select stocks that offer a sustainable dividend and company operations. These dividend stocks combine high dividend yield rates with inclusion in the S&P 500 index, a curated list of the 500 most influential publicly traded U.S. companies. These features may make these stock picks best for long-term income investors looking for value shares.
Altria Group Offers a Competitive Dividend, P/E Ratio
One of the largest international tobacco companies, the Altria Group, Inc. (NYSE: MO), currently offers a competitive 7.65% dividend yield to complement its $53 share price.
The company has increased its dividend payment for the past 56 years, with a three-year growth rate of 4.35%. This consistent dividend growth makes Altria a reliable income stock, even amid shifting consumer trends and regulatory pressures in the tobacco industry. Even more impressive than Altria’s dividend is its P/E ratio of 8.15, which could indicate that the stock is currently undervalued by the market. This valuation suggests that investors may not be fully pricing in the company's steady cash flow and ability to navigate market headwinds.
Analysts give this stock a Hold rating, and though analysts forecast that share prices are likely to remain the same for the next year, earnings are expected to increase by 4.14%. If earnings continue to trend upward, Altria could have room for further dividend increases, making it an attractive option for long-term income investors.
Verizon Rings in With a 6.42% Dividend Yield
The United States' largest provider of mobile phone services, Verizon Communications (NYSE: VZ), has carved out a solid customer base that allows it to pay back investors while maintaining a solid potential upside.
It maintains a 6.44% dividend yield and has grown its dividend for 20 consecutive years, with an average annual increase of 0.64%.
Verizon maintains a Moderate Buy rating from expert analysts, with a predicted 9.34% potential upside in the next year. This price potential is bolstered by recent institutional investment interest from buyers like ING Groep NV and Hussman Strategic Advisors.
As the stock trades close to a 50-day high, now could be the time for savvy long-term investors to keep an eye on Verizon. The company's steady dividend track record, coupled with its strong market presence, makes it a reliable choice for income-focused investors.
With ongoing investments in 5G expansion and broadband services, Verizon could see further growth opportunities in the coming years.
EOG Resources Offers Consistent Dividend Growth
EOG Resources, Inc. (NYSE: EOG) is a Texas-based oil and gas company with a robust history of dividend growth.
While the company’s current 2.90% dividend yield and $0.975 quarterly payment aren’t as high as other picks on our list, it also offers a three-year dividend growth history of 23.07%. It maintains this payout with a 31.40% payout rate, paying less than 22% of its cash flow back as dividends.
This lower payout rate is a positive sign for long-term investors because it leaves the company with more financial leeway to maintain dividend payments during periods of economic stress. With a conservative payout strategy, EOG can continue reinvesting in growth opportunities while still rewarding shareholders with consistent income.
EOG’s financials are solid in other areas as well, with a 10.82 P/E ratio and Moderate Buy rating consensus from analysts. As global energy demand remains strong, EOG’s efficient operations and disciplined financial management could position it well for future growth.
Simon Property Group Offers REIT Benefits, 4.51% Dividend Yield
Known for premier shopping and dining destinations, the Simon Property Group (NYSE: SPG) offers investors access to international luxury property exposure. It pays a massive $8.40 annual dividend, equaling a dividend yield of 4.51%. The company has also seen an impressive 11.46% three-year dividend growth rate.
Simon Property Group may be a riskier buy for investors due to its high payout rates. The company currently supports its dividend by paying out 115.70% of its earnings and 68.56% of its cash flow as dividends, which analysts do not consider sustainable. This contributes to the company’s Hold consensus rating and -5.97% expected one-year return. If you decide to invest in SPG, be prepared for potential volatility. A dividend cut may be imminent unless earnings improve, making this stock more suitable for investors willing to take on added risk in exchange for high yield potential.
That said, Simon’s strong real estate portfolio and ability to adjust rents in prime locations could help stabilize its long-term outlook if the commercial real estate sector remains resilient. Despite concerns, Simon has demonstrated an ability to adapt to changing retail trends, including redeveloping spaces for mixed-use properties and experiential tenants. Investors should also watch for macroeconomic factors like interest rate changes, which can impact borrowing costs and profitability for REITs.
Morgan Stanley Sees 60% Price Growth in One Year, 2.78% Dividend Yield
Another solid pick for consistent dividends, financial institution Morgan Stanley (NYSE: MS) offers a 2.78% dividend yield supported by a 19.13% annualized three-year dividend growth. The company has raised its dividend for the past 12 years and features one of the largest market capitalizations on our list at $214 billion. This blue-chip status can appeal to investors looking to limit portfolio volatility.
Morgan Stanley is another stock with split analyst opinions. It maintains a Hold rating consensus, with a 1.74% predicted downside. Short interest increased by more than 9% since last month, which could be another red flag. Rising short interest may indicate growing skepticism among investors, suggesting potential near-term weakness in the stock.
However, Morgan Stanley’s diversified business model and focus on asset management could provide stability in uncertain market conditions. Investors should watch upcoming earnings reports and broader market trends to assess whether the stock’s dividend growth remains sustainable.
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