In today’s dynamic investment landscape, many individuals are seeking reliable avenues to grow their financial portfolios without breaking the bank. A particularly lucrative strategy is investing in dividend-paying stocks, which not only provide passive income but also a potential for long-term capital growth. Remarkably, over the past 50 years leading up to 2023, dividend-paying stocks listed on the S&P 500 have yielded an impressive annual return of approximately 9.17%. This figure predominantly eclipses the returns from non-dividend-paying stocks, which hovered around 4.27% during the same period, as highlighted by research from Ned Davis and Hartford Funds.
For investors looking to dip their toes in this rewarding investment strategy, here are three noteworthy stocks that present enticing dividend yields exceeding 5%, all priced under $100 for entry.
AT&T (NYSE: T) stands out as a significant player in the telecommunications sector. After restructuring its business by divesting less stable media assets in 2022, AT&T has shifted its focus back to its core telecom operations. This transformation promises more stable and reliable cash flows for dividend payouts. Currently, AT&T offers a robust dividend yield of around 5.2%. The company continues to evolve, witnessing growth through significant investments in its 5G infrastructure and a burgeoning fiber-optic network. Their second-quarter report showcased a 3.4% increase in mobility-service revenue year-on-year, alongside impressive additions of over 200,000 new fiber-optic subscribers for the 18th consecutive quarter.
Next on the list is Hercules Capital (NYSE: HTGC), a prominent business development company (BDC) known for its unique approach to financing. Through nearly complete distribution of earnings to shareholders as dividends, Hercules Capital flaunts a substantial yield, with its regular dividends currently offering an impressive 8%. Additionally, it recently announced a supplemental dividend, pushing yields up to a potential 9.7%. Their strategic focus on lending to early-stage companies in life sciences and tech, despite its inherent risks, has resulted in exceptional growth, with total funding increasing by 28% in the first half of 2024.
Lastly, Pfizer (NYSE: PFE) presents a compelling case for dividend investors. Although the pharmaceutical giant recently experienced fluctuations in sales from its COVID-19 vaccine and treatments, Pfizer maintains a strong track record of annual dividend increases since 2009. Currently, it offers a dividend yield of about 5.7%. The company has diversified its portfolio significantly beyond COVID-related products, focusing on new avenues for growth, like the $43 billion acquisition of Seagen. This acquisition facilitates access to a suite of cancer treatments, including the promising Padcev, projected to generate annual revenues of $8 billion by 2030.
For those considering a leap into the world of dividends, investing in these stocks can provide not only immediate income but also a longer-term source of financial stability. Embracing this investment strategy now has the potential to enhance your financial future, ensuring a well-rounded and resilient portfolio.
Investing doesn’t have to be daunting. By carefully choosing dividend stocks like AT&T, Hercules Capital, and Pfizer, even new investors can position themselves for financial success without significant upfront costs. These stocks are a prime opportunity for anyone looking to build wealth while enjoying a steady stream of dividend income.
As we navigate these challenging economic waters, it’s wise to keep an eye out for investment opportunities that offer both security and potential growth. With market volatility, dividend-paying stocks stand out as a beacon of reliability for generations of investors looking to secure their financial futures.