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Got $1,000 to Invest? Buying This Simple ETF Could Turn It Into a More Than $40 Annual Stream of Passive Income.

Investing in the stock market can seem like a daunting task. There are so many options available. Making matters worse, there's so much uncertainty in the air these days with tariffs and their potential impact on the economy and stock market.

If you're feeling nervous about stocks and picking individual ones, one solution is to invest in a top exchange-traded fund (ETF). These investment vehicles can provide broad exposure to the market's long-term upside with less risk. A simple one to start with is the Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD). It holds a portfolio of high-quality dividend stocks that can provide investors with a tangible return during uncertain times in the form of dividend income. For example, investing $1,000 into this fund would at its current payout produce about $40 of dividend income each year. That's only part of the draw, which is why it's such a great fund to buy right now.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Turning cash into cash flow

The Schwab U.S. Dividend Equity ETF has a very simple strategy. It tracks an index (Dow Jones U.S. Dividend 100 Index) that screens companies based on the quality of their dividends and financial profiles. The result is a list of 100 companies with higher dividend yields, strong dividend growth rates, and healthy financial profiles.

For example, the fund's top holding is Coca-Cola (NYSE: KO). The beverage giant currently has a dividend yield of nearly 3%, which is about double the yield of the broader market (the S&P 500's dividend yield is less than 1.5%). Coca-Cola increased its dividend payment by 5.2% earlier this year. That marked the 63rd consecutive year it increased its dividend. It's part of the elite group of Dividend Kings, companies with 50 or more years of annual dividend growth. The company backs its dividend with strong free cash flow and a top-notch balance sheet.

At the fund's annual rebalancing last month, its holdings had an average dividend yield of 3.8%. That yield has crept up as the stock market (and the ETF's value) has declined in recent weeks and is now up over 4%. At that rate, a $1,000 investment in the fund would produce more than $40 of annual passive income.

Meanwhile, the current group of holdings has delivered an average dividend growth rate of 8.4% over the past five years. Because of that, the ETF should steadily pay out more cash as its holdings continue increasing their payouts:

SCHD Dividend Chart

SCHD Dividend data by YCharts

Dividend income is only part of the draw

The likely growing stream of dividend income supplied by the Schwab U.S. Dividend Equity ETF provides investors with a solid base cash return. While the payment will ebb and flow each quarter based on when the underlying companies make their dividend payments, it should continue to steadily head higher as they grow their dividends. Given the strength of their financial profiles, these companies should continue increasing their payouts even if there's a recession.

That rising income stream is only part of the return. The share prices of the companies held by the fund should increase in the future as they grow their earnings in support of their rising dividends.

Over the long term, dividend growth stocks have historically produced excellent total returns. According to data from Hartford Funds and Ned Davis Research, dividend growers and initiators have delivered an average annual return of 10.2% over the past 50 years. That has outperformed companies with no change in their dividend policy (6.8%), non-dividend payers (4.3%), and dividend cutters and eliminators (-0.9%).

The Schwab U.S. Dividend Equity ETF has delivered similarly strong returns throughout its history. It has produced an 11.4% annualized return over the past decade and 12.9% since its inception in 2011. While there's no guarantee it will earn returns at those levels in the future, its focus on the top dividend growth stocks puts it in an excellent position to continue delivering strong returns for investors.

A great fund to buy right now

With the stock market slumping this year, shares of the Schwab U.S. Dividend Equity ETF are down about 15% from the high point earlier in the year. That's a great entry point for this high-quality fund. It positions investors to generate lots of dividend income while potentially capturing strong total returns over the long term.

Should you invest $1,000 in Schwab U.S. Dividend Equity ETF right now?

Before you buy stock in Schwab U.S. Dividend Equity ETF, consider this:

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Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $591,533!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $652,319!*

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*Stock Advisor returns as of April 21, 2025

Matt DiLallo has positions in Coca-Cola and Schwab U.S. Dividend Equity ETF. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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According to This Critical Number, AT&T's 4%-Yielding Dividend is Now on Rock-Solid Ground

There have been a lot of questions surrounding AT&T's (NYSE: T) dividend in recent years. The telecom giant already cut its payout by nearly 50% in 2022 to retain additional cash for debt reduction and to reinvest in expanding its fiber and 5G networks. Despite that cut, its leverage ratio remained elevated, causing concerns that another cut could be forthcoming.

Those worries should disappear now that AT&T has finally reached its target leverage ratio. It has the flexibility to start returning more cash to investors, which it initially plans to do by repurchasing shares. That also means the company's more than 4%-yielding dividend is on rock-solid ground.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Reaching the target range

AT&T has been following a well-defined capital allocation strategy. The telecom company has been using its strong cash flow to invest heavily in growing its 5G and fiber networks while also maintaining its attractive dividend. It has been using any remaining excess free cash flow to repay debt, aiming to get its leverage ratio down to the 2.5 range.

While it took a few years, AT&T has finally reached its leverage target. The company produced $3.1 billion in free cash flow during the first quarter, more than covering its $2.1 billion dividend outlay. That provided it with excess free cash flow to continue whittling down its debt. As a result, its leverage ratio was a little more than 2.6 at the end of the first quarter, down from more than 2.9 in the year-ago period, as it has delivered a $9.6 billion reduction in its net debt over the past year.

The company noted that leverage has continued to fall in the early part of the second quarter and is now at its target. AT&T now expects to begin returning more cash to shareholders by starting to repurchase shares. The company plans to buy back as much as $20 billion of its stock over the next several years.

The dividend will only grow safer

AT&T expects to generate at least $16 billion in free cash flow this year. That will easily cover its dividend outlay, which is currently over $8 billion per year. Meanwhile, the company expects its free cash flow to grow by about $1 billion per year in 2026 and 2027, putting it on track to generate over $18 billion in annual free cash flow by 2027.

That growing free cash flow will steadily reduce the company's dividend payout ratio. Meanwhile, unless it starts increasing the dividend, which isn't currently in the plans, its actual cash payments will fall as the company starts repurchasing shares. That's because its outstanding shares will decline, meaning it will need less cash to fund its current per-share payment. As a result, the company anticipates its dividend outlay will be around $20 billion over the next three years.

Finally, with its leverage target achieved, AT&T will have additional borrowing capacity over the next few years while maintaining its current leverage ratio. When added to its free cash flow, the company estimates it will have over $50 billion of financial capacity it can deploy over the next three years. With $20 billion of anticipated dividend payments and another $20 billion of share repurchases expected, it will have about $10 billion of additional financial flexibility. The company could hold on to that flexibility by allowing its leverage ratio to fall below its target. It could also use it to opportunistically buy back more stock or to make an accretive acquisition that grows its cash flow. Any of those options would further enhance the sustainability of its dividend in the coming years.

A very bankable dividend

AT&T's capital allocation strategy has worked as expected. The telecom giant has now reached its leverage target, which positions it to start returning more cash to investors by repurchasing shares, putting the company's 4%-yielding dividend on an extremely safe foundation. That makes it a rock-solid option for those seeking a bond-like income stream from a high-quality company.

Should you invest $1,000 in AT&T right now?

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Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $566,035!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $629,519!*

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*Stock Advisor returns as of April 21, 2025

Matt DiLallo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Up 35% in a Down Market: Is This 6%-Yielding Dividend Stock Still a Buy?

Shares of Medical Properties Trust (NYSE: MPW) have defied the market downdraft this year. The real estate investment trust (REIT) has rallied about 35%, significantly outperforming the roughly 10% decline in the S&P 500. That's a welcome turn for investors, given the stock's struggles in recent years.

Even with that big rally, shares of the healthcare REIT still offer a compelling dividend yield of more than 6%. Here's a look at whether it still has more upside ahead.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

What drove this year's rally?

The past few years have been very challenging for Medical Properties Trust. The REIT has battled tenant issues and higher interest rates. Those headwinds made it difficult for the company to refinance debt as it matured.

Medical Properties Trust has worked hard to address its tenant and balance sheet issues. It has sold several properties, which provided it with cash to repay debt as it matured. Meanwhile, even though two of its top tenants have filed for bankruptcy protection over the past year, the REIT has been working through those events to preserve the value of its real estate. It regained control of most of its real estate from one tenant last year, enabling it to sign leases with five new financially stronger operators.

Those new tenants have started paying rent this year. The rental rate will slowly escalate over the next two years, reaching the fully stabilized rate at the end of 2026 at about 95% of what that former tenant was paying on the properties. Meanwhile, its improving financial situation enabled it to capitalize on lower interest rates earlier this year to refinance about $2.5 billion of debt set to mature over the next two years, giving it more financial breathing room. That has taken some pressure off its balance sheet and stock price.

Is there any more upside potential left?

While shares of the REIT are up more than 30% this year, they're still down almost 80% from their peak a few years ago. That decline in its market value, along with asset sales and debt repayments, have driven down Medical Properties Trust's enterprise value from its peak of more than $24 billion to less than $12 billion.

That market valuation is worth noting because it's much lower than the underlying value of the REIT's real estate portfolio. Medical Properties Trust ended last year with $14.3 billion of total real estate assets. The value of its portfolio has held up relatively well because its facilities are crucial to providing care to their local communities. That has enabled the company to sell properties at strong valuations to repay debt in recent years. This valuation disconnect alone suggests that the stock has additional upside potential.

Meanwhile, its valuation doesn't currently reflect the income-generating capacity of its portfolio. The company reported $0.80 per share of normalized funds from operations (FFO) per share last year. That was down from $1.59 per share in 2023 because of rent collection issues, higher interest rates, and asset sales. Even at that lower rate, Medical Properties Trust only trades at about 6.5 times its FFO, which is a very low level for a REIT. With its FFO expected to rise steadily over the next two years as new tenants pay increasingly higher rents, the REIT's valuation will only get cheaper.

That rising rental income will also make its dividend safer. At its current quarterly rate of $0.08 per share, Medical Properties Trust's dividend payout ratio is 40% based on last year's normalized FFO, which is already a very low level for a REIT. Because of that, and the expected increase in its FFO this year, Medical Properties Trust could start rebuilding its dividend following two deep cuts in recent years. That would provide investors with an even higher base return from dividend income.

Still worth buying for income and upside

Shares of Medical Properties Trust have started to recover from their steep slide over the past few years. They still have a long way to go, given the underlying value of the REIT's real estate and the expected improvement in its income. Add in its high-yielding dividend, which could start growing in the future, and the REIT looks like a compelling buy right now, even after its rally. While it's riskier than other REITs, it also has a much higher total return potential as its recovery continues.

Should you invest $1,000 in Medical Properties Trust right now?

Before you buy stock in Medical Properties Trust, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Medical Properties Trust wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $566,035!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $629,519!*

Now, it’s worth noting Stock Advisor’s total average return is 829% — a market-crushing outperformance compared to 155% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 21, 2025

Matt DiLallo has positions in Medical Properties Trust. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stock Market Volatility Got You Down? Buy These Top Vanguard Dividend ETFs to Help Lessen the Blow.

The stock market has been rocked by volatility this year. The S&P 500 was recently down by about 10% since the calendar flipped the page to 2025. That volatility likely has your portfolio down deep in the red.

While you can't eliminate market volatility from your portfolio, you can reduce its sting. One way to do that is by investing in dividend stocks. They provide you with a tangible return in the form of income. On top of that, companies that grow their dividends have historically been less volatile than the S&P 500 as a whole.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Vanguard makes it easy to add dividend stocks to your portfolio through its many exchange-traded funds (ETFs). Three top Vanguard dividend ETFs to buy to help mute volatility are Vanguard Utilities ETF (NYSEMKT: VPU), Vanguard High Dividend Yield ETF (NYSEMKT: VYM), and Vanguard Real Estate ETF (NYSEMKT: VNQ). As the chart below showcases, they haven't slumped nearly as much as the S&P 500 this year:

^SPX Chart

^SPX data by YCharts

Real estate helps diversify a portfolio and reduce volatility

The Vanguard Real Estate ETF focuses on owning real estate investment trusts (REITs). These companies own income-generating real estate. They use that rental income to pay dividends and invest in additional income-generating real estate.

Investing in real estate is a great way to diversify your portfolio and insulate it from some of the risks of investing in stocks and bonds. REITs have historically been much less volatile than the broader stock market. For example, of the 16 REITs that have been members of the S&P 500 over the past three decades, all but two have betas less than the S&P 500, meaning they've historically been less volatile than that index.

A big driver of the lower volatility of REITs is their dividends, which tend to grow over the long term. The Vanguard Real Estate ETF currently has a dividend yield of around 3.5%, which is a lot higher than the S&P 500's 1.4% yield. That higher income yield provides investors with a higher base return, which also helps cushion some of the impact of volatility.

High-quality, high-yielding dividend stocks help a port

The Vanguard High Dividend Yield ETF focuses on companies that pay high-yielding dividends. The fund currently has a dividend yield of around 2.7%, nearly double the S&P 500's dividend yield. Because of that, it provides investors with a higher base return.

While the fund focuses broadly on stocks with higher dividend yields, most of its top holdings also have excellent records of growing their dividends, which helps mute volatility. For example, its top holding is semiconductor and software giant Broadcom. The technology company currently offers a dividend yield right around the S&P 500's level. However, Broadcom has a terrific record of delivering above-average dividend growth. Late last year, Broadcom hiked its payment by 11%. That extended its dividend growth streak to 14 straight years. The company has boosted its payout by a jaw-dropping 8,333% during that period.

Another top holding is oil giant ExxonMobil. The big oil company currently offers a much higher dividend yield of around 4%. Exxon has a fantastic record of growing its dividend. The oil giant raised its payment by another 4% earlier this year, its 42nd straight year of increasing its dividend.

Energize your portfolio with these defensive stocks

The Vanguard Utilities ETF owns companies that distribute electricity, water, or gas to customers or produce power that they sell to other utilities and large corporate customers. Most utilities generate very stable cash flow because government regulators set their rates while demand for their services tends to be very steady, even during a recession. In addition, many utilities and utility-like companies produce additional revenue backed by long-term, fixed-rate contracts, providing them with additional sources of stable cash flow.

The low-risk business models of most utilities enable them to generate stable cash flow to pay dividends and invest in expanding their operations. As a result, utilities tend to have a higher yielding dividend (The Vanguard Utilities ETF yields 2.9%) that slowly rises.

For example, Duke Energy, one of its top holdings, has paid dividends for 99 straight years. While Duke Energy hasn't increased its payment every single year, it has raised its payment for the past 18 years in a row. That growth should continue as Duke invests heavily in supporting the growing demand for electricity in the regions it serves.

Dividend stocks can help lessen the impact of stock market volatility

Adding one or more Vanguard ETFs focusing on dividend stocks to your portfolio is a great way to reduce volatility. Dividend stocks have tended to be less volatile because their growing income payments help cushion the blow. That can help you sleep a little better at night knowing your portfolio has some added downside protection.

Should you invest $1,000 in Vanguard World Fund - Vanguard Utilities ETF right now?

Before you buy stock in Vanguard World Fund - Vanguard Utilities ETF, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Vanguard World Fund - Vanguard Utilities ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $495,226!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $679,900!*

Now, it’s worth noting Stock Advisor’s total average return is 796% — a market-crushing outperformance compared to 155% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

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*Stock Advisor returns as of April 10, 2025

Matt DiLallo has positions in Broadcom. The Motley Fool has positions in and recommends Vanguard Real Estate ETF and Vanguard Whitehall Funds-Vanguard High Dividend Yield ETF. The Motley Fool recommends Broadcom and Duke Energy. The Motley Fool has a disclosure policy.

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Concerned About a Recession? These Dividend Stocks Deliver Durable Growth During Downturns.

Recessions can be really challenging periods. A contracting economy causes companies and consumers to pull back on spending. One of the first cuts many economically cyclical companies make is to their dividends.

However, other companies are more recession-resistant. One sector known for its recession resistance is utilities. That's evident by the dividend histories of top utilities like Consolidated Edison (NYSE: ED), NextEra Energy (NYSE: NEE), and Southern Company (NYSE: SO), which have all increased their payouts for more than 20 years in a row, periods which included some severe recessions. Because of that, they're great stocks to buy if you're concerned that a recession is nigh.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Dividend royalty

Through its various local utilities, Consolidated Edison provides electricity and natural gas services to the New York City region and surrounding areas. The company generates very stable earnings backed by government-regulated rate structures. Meanwhile, the region's electricity and gas demand has grown steadily, even during recessions.

That has enabled Consolidated Edison to increase its dividend very consistently. This year was the 51st consecutive year that it hiked its payout. That kept it in the elite group of Dividend Kings, companies with 50 or more years of annual dividend increases. It also extended its record for the longest consecutive yearly streak of dividend increases of utilities in the S&P 500.

Consolidated Edison is in a strong position to continue growing its dividend. It has a conservative dividend payout ratio for a utility (55% to 65% of its adjusted earnings) and a strong balance sheet. That gives it the financial flexibility to continue investing in expanding its utility infrastructure to support the growing demand for electricity and natural gas in the New York City area.

The powerful dividend growth should continue

NextEra Energy operates the country's largest electric utility (Florida Power & Light), which generates stable rate-regulated earnings. On top of that, the company has a leading competitive energy platform (NextEra Energy Resources), which owns an extensive portfolio of renewable energy assets that generate stable cash flow backed by long-term, fixed-rate contracts. Those stable and growing cash flow sources have enabled NextEra Energy to increase its dividend every year over the past three decades.

The company has grown its payout at a roughly 10% annual pace over the past 20 years, which should continue. NextEra Energy is targeting to deliver around 10% annual dividend growth through at least next year. It can deliver that robust dividend growth rate thanks to its lower dividend payout ratio and the earnings growth it has ahead. The company expects to grow its adjusted earnings per share by 6% to 8% annually through 2027.

Powering that growth is the strong and rising demand for power, especially from cleaner sources. NextEra Energy plans to invest a massive $120 billion into energy infrastructure like new renewable energy capacity over the next four years.

Decades of dividend stability and growth

Southern Company operates several electric and natural gas utilities across the South that generate very stable rate-regulated earnings. The company also has a competitive energy business and provides fiber and connectivity solutions. These businesses produce predictable cash flow from long-term, fixed-rate contracts and supply it with potential opportunities for additional growth.

The utility's stable and growing cash flow profile has been on full display over the decades. Southern Company has paid a dividend equal to or greater than the previous year for 77 years. Meanwhile, it has increased its payment for 23 years in a row.

That growth will likely continue. Southern Company plans to invest $63 billion through 2029 to maintain and expand its utility operations to support growing power demand in the South. These investments should power 5% to 7% annual earnings growth, which should support continued dividend increases.

Portfolio stabilizers

Utilities operate very recession-resilient businesses because demand for electricity and gas tends to rise steadily even in a recession. Meanwhile, governments set the rates they charge, which they increase over time to compensate utilities for their heavy investment in maintaining and expanding their infrastructure. Because of that, they produce stable and growing cash flow to support rising dividend payments. That durability makes utilities a great way to diversify your portfolio to help mute some of the impact of future recessions.

Should you invest $1,000 in NextEra Energy right now?

Before you buy stock in NextEra Energy, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and NextEra Energy wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $495,226!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $679,900!*

Now, it’s worth noting Stock Advisor’s total average return is 796% — a market-crushing outperformance compared to 155% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 10, 2025

Matt DiLallo has positions in NextEra Energy. The Motley Fool has positions in and recommends NextEra Energy. The Motley Fool has a disclosure policy.

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Buying the Dip: 3 Super Safe High-Yield Dividend Stocks I Added to My Retirement Account During the Stock Market Sell-Off.

The stock market recently took a big dip, driven down by concerns about how much tariffs will affect the economy. One of the benefits of falling stock prices is that dividend yields move in the opposite direction. That allows investors to lock in even higher yields on some high-quality dividend stocks.

I recently capitalized on the dip in the market to deploy some cash in my retirement account to add to my position in several top-notch dividend stocks, including VICI Properties (NYSE: VICI), Verizon (NYSE: VZ), and Genuine Parts Company (NYSE: GPC). Here's why I think they are low-risk stocks to buy amid the current market turmoil.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

A low-risk wager on a steadily growing income stream

Amid the market downturn, VICI Properties' stock has dipped more than 10% from its recent peak. That has driven up the dividend yield of the real estate investment trust (REIT) to 5.7%, well above the S&P 500's 1.5% yield.

The REIT's high-yielding payout is on a very safe footing. It produces very stable cash flow from its portfolio of high-quality experiential real estate, like casinos and sports and entertainment complexes.

It leases these properties to operating tenants under very long-term triple net leases (NNNs), which currently have an average remaining term of 41 years. An increasing percentage of its leases index rents to inflation (42% this year, rising to 90% by 2035). Because of that, it generates very stable and growing rental income.

VICI Properties has a very strong financial profile that gives it the flexibility to continue investing in income-producing experiential real estate. Its growing portfolio enables the REIT to increase its dividend. It has raised it for seven straight years (every year since its formation), at a 7% compound annual rate, well above the 2% average annual rate of its net lease peers.

A cash flow machine

Verizon's shares have slumped more than 7% from their recent peak. That has pushed the telecom giant's dividend yield up to 6.3%. That high-yielding dividend is super safe.

Verizon produces lots of durable cash flow as businesses and consumers pay their wireless and broadband bills. The company earned $36.9 billion in cash flow from operations last year and $19.8 billion in free cash flow (FCF) after funding capital expenditures, which was more than enough to cover its dividend outlay of $11.2 billion. Verizon used the remaining excess FCF to strengthen its already rock-solid balance sheet.

The company is using some of its financial flexibility to acquire Frontier Communications in a $20 billion all-cash deal to bolster its broadband network. That deal and the continued capital investments to organically grow its fiber and 5G networks put Verizon in position to grow its revenue and cash flow in the future.

That should enable the company to continue increasing its dividend, which it has done for a sector-leading 18 years in a row.

Decades of dividend growth prove its resiliency

Genuine Parts Company has sold off sharply during the recent market downdraft, falling over 30%. That slump pushed the automotive and industrial parts distributor's dividend yield up to 3.7%.

There are some concerns that tariffs could have a meaningful impact on the automotive sector, given the volume of parts imported into the country. While this headwind could affect Genuine Parts' business, it has weathered adverse conditions before, demonstrating its resilience by increasing its dividend for 69 years in a row.

The company has a strong financial profile to support its high-yielding dividend amid the current market uncertainty. Last year, Genuine Parts produced $1.3 billion in cash flow from operations and $684 million in FCF. That was more than enough to cover the $555 million it paid in dividends.

It has a strong balance sheet with lots of liquidity ($2 billion, including $480 million of cash and equivalents). That gives it a lot of financial flexibility to continue investing in growing its business and making acquisitions, including buying independent NAPA Auto Parts stores in the top markets.

These investments should help grow its revenue and cash flow over the long term, supporting the continued rise in its dividend.

High-quality, high-yielding dividend stocks

Shares of VICI Properties, Verizon, and Genuine Parts Company have dipped during the recent stock market sell-off, which has pushed their dividend yields even higher. Given the durability of their cash flows and the strength of their financial profiles, those payouts are very safe. That's why I've capitalized on the recent sell-off to buy even more shares for my retirement account to increase the amount of their super-safe income that I will collect in the years to come.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

  • Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $244,570!*
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Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

Continue »

*Stock Advisor returns as of April 5, 2025

Matt DiLallo has positions in Genuine Parts, Verizon Communications, and Vici Properties. The Motley Fool recommends Genuine Parts, Verizon Communications, and Vici Properties. The Motley Fool has a disclosure policy.

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