Passive income is essential in retirement, but building a dependable stream isn't easy. Fortunately, top-tier dividend stocks can do the heavy lifting. The key is focusing on companies with strong yields, reliable payouts, and recession-resistant business models.

In today's volatile market, where uncertainty is the only constant, dividend investing has regained its shine. High-quality stocks that return capital to shareholders offer income stability and a cushion against downside risk.

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 »

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The healthcare sector stands out in this environment. Its essential nature and steady demand make it a natural haven and a fertile ground for income investors.

Two healthcare heavyweights screen as particularly attractive buys in this turbulent market. With generous yields, durable business models, and products the world can't live without, these stocks deliver a potent mix of income and long-term upside. Here's why they belong on your radar right now.

Pfizer: Pharmaceutical giant with an exceptional yield

Pfizer (NYSE: PFE) shares currently offer an eye-catching 7.8% dividend yield, putting this pharmaceutical titan among the highest-yielding stocks in the healthcare sector. This exceptional payout level reflects the market's concerns about the company's growth trajectory following the pandemic revenue boom. With shares trading at just 7.5 times forward earnings, investors are essentially being paid handsomely to wait for the company's next phase of growth.

While Pfizer's payout ratio stands at an elevated 119%, high payout ratios are commonplace in the pharmaceutical industry due to its inherently cyclical nature. Moreover, the company maintains one of the strongest balance sheets in the industry following its COVID windfall, providing ample financial flexibility to sustain its dividend while investing in future growth. Pfizer's diverse portfolio of patent-protected drugs also generates enormous cash flows that support shareholder rewards and ongoing research initiatives.

What's the core value proposition? The drugmaker faces potential policy tailwinds under the new administration, which has signaled interest in correcting the "pill penalty" that currently gives small-molecule drugs just nine years of protection from Medicare negotiation versus 13 years for biologics. Such a change could enhance the economics of Pfizer's substantial small-molecule research programs.

Additionally, Pfizer's decision to divest its off-patent division has resulted in a more focused, innovative organization better positioned for long-term growth. So, with a promising pipeline of new drugs in cancer and immunology, Pfizer offers income investors not just an exceptional current yield but also the potential for meaningful capital appreciation as new blockbuster treatments leave the lab and enter commercial production.

AbbVie: Diversified pharmaceutical giant with steady income

AbbVie (NYSE: ABBV) offers investors a 3.9% dividend yield right now, with shares trading at a forward price-to-earnings ratio of just 14. For context, the benchmark S&P 500 trades at around 19 times forward earnings estimates. The drugmaker has successfully built a diversified portfolio spanning immunology, oncology, and aesthetics that generates consistent cash flow to support shareholder returns.

Humira's loss of exclusivity has created headwinds as biosimilar competition erodes market share. However, AbbVie's newer immunology treatments, Skyrizi and Rinvoq, have demonstrated stronger clinical outcomes for psoriasis, rheumatoid arthritis, and Crohn's disease than conventional therapies. The market has responded favorably to these medications, helping to counterbalance Humira's declining sales.

Beyond immunology, AbbVie maintains strong positions in aesthetics with Botox and oncology with Imbruvica, providing revenue diversification that strengthens the company's overall financial stability. This multifaceted portfolio approach reduces dependence on any single product while creating multiple avenues for future growth.

Despite an elevated payout ratio of 259%, AbbVie's dividend remains well supported by consistent cash-flow generation from its broad product lineup. For income investors seeking healthcare exposure with reliable dividends, AbbVie offers a generous yield with the potential for moderate capital appreciation, as it fortifies its core immunology franchise and expands into other lucrative market segments.

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George Budwell has positions in AbbVie and Pfizer. The Motley Fool has positions in and recommends AbbVie and Pfizer. The Motley Fool has a disclosure policy.

If you're a dividend investor, now can be an ideal time to go bargain-hunting. The stock market is in the midst of a broad sell-off, with investors dumping all types of stocks, both bad ones and good ones. Fear has taken over, and while it may seem like a terrible time to buy, it may actually be a great one, especially if you're looking for stocks to buy and hold for the long haul.

Three dividend stocks that are near their 52-week lows and which may make for solid income-generating investments are Pfizer (NYSE: PFE), Lockheed Martin (NYSE: LMT), and Rogers Communications (NYSE: RCI). Here's what you need to know about these stocks and why they are worth buying for their dividend income.

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 »

Pfizer

One of the most attractive dividend yields you can find on the markets right now comes from Pfizer. At 7.5%, it's paying you more than five times the S&P 500 average of 1.4%. It's a mouthwatering payout, and the big question for investors comes down to whether it's safe or if it's too good to be true and due for a cut.

Based on the stock's more than 16% decline this year (as of Monday), investors don't appear convinced that Pfizer's dividend is safe, not with the new government potentially taking a tough stance on healthcare and vaccines in general.

The stock's payout ratio is more than 100%, which may also be concerning. But that's due to multiple one-time expenses, including asset impairment charges and restructuring costs. The healthcare company is expecting its top line to be fairly stable in 2025 and says it's on track to generate $4.5 billion in cost savings by the end of the year due to its Cost Realignment Program.

CEO Albert Bourla previously referred to the company's dividend as a "sacred cow," suggesting that it is an important priority to keep it going. While there will be some risk as Pfizer faces patent expirations on key products, it has been investing in developing and growing its pipeline of future drugs.

Pfizer is a bit of an underrated, contrarian pick that investors can get at an attractive valuation. Not only did it recently hit a new 52-week low, but it's also trading at less than 8 times its estimated future earnings (based on analyst expectations).

Lockheed Martin

Defense and aerospace stock Lockheed Martin makes for another solid, high-yielding option for investors to buy right now. Its dividend yield isn't as high as Pfizer's, but at over 3%, you're still getting a fairly attractive payout from the company.

While President Donald Trump has been vocal about cutting costs from government spending, he's also been a strong proponent of securing the country's borders and focusing on defense -- priorities that Lockheed Martin can benefit from. The company is expecting single-digit growth this year and for free cash flow to total at least $6.6 billion, up from $5.3 billion in 2024.

The stock's payout ratio is fairly modest at 57% of earnings, and with stable growth ahead, it looks like one of the safer income stocks to own right now. As of Monday, the stock was down 12% since the start of the year, but that may be primarily due to the broader market sell-off, as this still looks like a solid investment to buy and hold.

Rogers Communications

Canadian-based telecom giant Rogers Communications yields 5.4%. It is down 17% this year and hit a new 52-week low recently, but overall, its operations are stable, and historically, this has been a low-volatility stock to own. Concerns about the economy and high interest rates are weighing on the stock, but the company's fundamentals are strong.

Rogers has reported a profit totaling 1.7 billion Canadian dollars over the trailing 12 months, which is more than 8% of its top line (CA$20.6 billion). Its payout ratio of 63% is fairly modest and sustainable, even if it experiences a slowdown due to challenging economic conditions ahead.

Telecom stocks as a whole have been struggling in recent years, and Rogers' stock is trading at levels it hasn't been at since 2009. But as a top Canadian operator, there's little worry about its competitiveness and ability to generate strong results in the long run. This is a deep-value buy that investors shouldn't overlook.

Should you invest $1,000 in Pfizer right now?

Before you buy stock in Pfizer, 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 Pfizer wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $578,035!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*. 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 5, 2025

David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Pfizer. The Motley Fool recommends Lockheed Martin and Rogers Communications. The Motley Fool has a disclosure policy.