Investing $125,000 in These 4 High-Yield Dividend Stocks Could Add $10,000 in Passive Income to Your Portfolio in 2024

Investing $125,000 in These 4 High-Yield Dividend Stocks Could Add $10,000 in Passive Income to Your Portfolio in 2024

Exploring the pros and cons of four high-dividend yield companies that could provide a steady source of income for investors in 2024.

Seeking out high-growth businesses that can generate market-beating returns can be exciting, but the volatility that often accompanies these stocks can be unnerving. Investing in steady, slower-growth businesses with high dividend yields can be a more prudent option. By splitting a total investment of $125,000 into four high-dividend yield companies, investors have the potential to add as much as $10,000 of passive income to their portfolio in 2024. Let’s delve into the pros and cons of each company and assess why they present a great opportunity for investors.

Rithm Capital: 9.7% dividend yield

Rithm Capital, a real estate investment trust (REIT), offers a 9.7% dividend yield. REITs generally have high dividend yields because they are required to distribute a significant portion of their taxable income to shareholders. Rithm Capital has a unique advantage in the current macroeconomic environment, as traditional banks have become more stringent in their lending standards. This has opened up opportunities for Rithm in commercial real estate, mortgage loans, and rentals. With a price-to-book (P/B) multiple well below its 10-year average, Rithm Capital appears to be an overlooked investment opportunity. Despite concerns about interest rate policies set by the Federal Reserve, long-term investors in Rithm have enjoyed impressive returns over the past decade.

Altria: 9.5% dividend yield

Altria, a tobacco giant, offers a 9.5% dividend yield. While demand for traditional tobacco products has been declining due to health consciousness and macroeconomic conditions, Altria has found ways to combat this trend. The company is diversifying its product offerings by entering the smokeless tobacco and vaping markets. Altria’s stock is currently trading at a low forward price-to-earnings (P/E) multiple compared to the S&P 500. What sets Altria apart is its esteemed position among the Dividend Kings, companies that have raised their dividends for 50 consecutive years or more. Despite the decline in popularity of tobacco products, Altria has consistently rewarded loyal shareholders.

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Verizon Communications: 6.8% dividend yield

Verizon Communications, a telecommunications provider, offers a 6.8% dividend yield. While the telecommunications sector may not be the most glamorous, Verizon consistently generates robust free cash flow, allowing the company to reward shareholders. Despite a challenging competitive landscape and a slight decrease in stock price over the past year, Verizon has raised its dividend for the 17th consecutive year. The company’s financial flexibility and commitment to rewarding shareholders make it an attractive option for dividend investors.

AT&T: 6.4% dividend yield

AT&T, a competitor of Verizon, offers a 6.4% dividend yield. Unlike Verizon, AT&T is actually increasing its revenue and improving its net debt position. Despite a drastic move to cut its dividend in 2022, AT&T’s improving financials and low stock price present a buying opportunity. While investors may question management’s operating capabilities, the dividend appears relatively safe. With a 6.4% yield, AT&T can provide a steady source of income for investors.

Conclusion: Investing $125,000 in these four high-dividend yield stocks could potentially add $10,000 of passive income to an investor’s portfolio in 2024. Rithm Capital, Altria, Verizon Communications, and AT&T offer attractive dividend yields and unique opportunities for long-term investors. While growth stocks may offer excitement, the stability and income provided by these dividend stocks can be a prudent choice for investors seeking a reliable source of income.