Key Points

• Pfizer stands as one of the largest pharmaceutical companies in the world.

• Although it has an attractive 7.1% yield, it has a big blemish in its dividend past.

• Investors looking at drug stocks would be better off with this lower-yielding competitor.

• 10 stocks we like better than Pfizer ›

One of the big reasons to like Pfizer (NYSE: PFE) today is its huge 7.1% dividend yield. To put that yield into context, the S&P 500 index is yielding roughly 1.3% and the average healthcare stock a bit over 1.7%. Pfizer competitor Merck (NYSE: MRK) is yielding a little more than 4%, yet dividend investors will probably be better off with Merck. Here's why.

Pfizer and Merck have similar business models

While Pfizer's dividend yield is clearly much higher than Merck's, both have relatively attractive yields today. And you could easily make the argument that the two pharmaceutical companies basically do the same thing. Thus, you might as well buy the higher-yielding stock here. That isn't an unreasonable position to take.

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 »

Essentially, these two industry giants make drugs. They make different drugs, of course, but both are focused on conducting research intended to create new blockbuster drugs that they can sell exclusively until the patents run out. Both have massive and well-funded research and development teams. Both have global distribution systems and strong marketing groups. And both have the scale to buy smaller competitors with promising drugs, if they need to.

In the short term, there will be differences between the two with regard to the drugs they have. So at times Pfizer will be better positioned than Merck, and vice versa. Given their vastly different yields, it is pretty clear that Wall Street believes Merck is better positioned right now.

The problem with Pfizer is the dividend, not the yield

Right now, Pfizer has a streak of 15 consecutive dividend increases. Merck's streak is also 15 years long. The issue is what happened roughly 15 years ago. As the chart below shows, Pfizer cut its dividend and Merck did not.

PFE Dividend data by YCharts

That was a long time ago, of course, and the business environment was much different. The cut came in the middle of the Great Recession, when there were very real concerns that global financial systems would collapse. Notably, Pfizer cut the dividend at the same time it made a large acquisition.

And yet Merck didn't cut its dividend; it has also made large acquisitions in the past, including its own sizable merger in 2009. To be fair, Merck's dividend was static for a long period of time, but going without a dividend increase is much more attractive for an income investor than suffering through a dividend cut.

Why investors buy Pfizer and Merck

If you are like me, you are not a healthcare specialist. Buying small drugmakers with novel products that are still in the testing phase is likely a non-starter. I just don't know enough to understand what is going on at such companies. And I certainly don't know how to analyze the likelihood that a new drug will get approved.

Pfizer and Merck both have portfolios of already approved drugs. So there's a core business supporting their research efforts. On that front, they have both proven over time that they can successfully perform the R&D needed to find new drugs. And if their drug pipeline is soft, they have proven that they will go out and buy smaller companies to bolster it. In essence, Pfizer and Merck let you own a pharmaceutical company without having to spend a huge amount of time and effort trying to dig deeply into the drug business.

But if you are trusting a company in this way, which is perfectly fine to do, you need to make sure you can trust it in other ways, too. If you are a dividend investor, Pfizer's dividend cut during the deep 2007 to 2009 recession just doesn't provide the same level of trust that Merck's steadily, though not annually, growing dividend does. Most investors will probably be better off erring on the side of caution here and buying Merck over Pfizer.

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 Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $652,133!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,056,790!*

Now, it’s worth noting Stock Advisor’s total average return is 1,048% — a market-crushing outperformance compared to 180% 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 July 15, 2025

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Merck and Pfizer. The Motley Fool has a disclosure policy.

Key Points

• Verizon and Realty Income may not offer much growth, but their ability to fund growing dividend payments is rock-solid.

• Pfizer struggled following the wind-down of the coronavirus pandemic, with nothing offsetting declining sales of Paxlovid. That's changing.

• Exchange-traded funds are an easy diversification solution for at least a portion of your dividend portfolio.

• 10 stocks we like better than Pfizer ›

Does the prospect of economic uncertainty have you rethinking your portfolio? Perhaps you'd like to collect a little more cash while the economic headwinds are blowing? It's not an unreasonable concern. Plenty of other investors are already thinking more defensively than they've felt they needed to in a while.

To this end, here's a closer look at five high-yielding dividend stocks to consider adding to your portfolio sooner rather than later, until it's clear the worst is behind us.

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 »

1. Verizon Communications

Dividend yield: 6.2%

Verizon Communications (NYSE: VZ) is, of course, one of the country's biggest wireless service providers, boasting well over 100 million paying customers who collectively handed over nearly $135 billion worth of revenue last year alone. Of that, $18 billion was turned into net income, $11.25 billion of which was dished out to shareholders in the form of dividends. That's in line with the company's long-term norms.

There is an arguable downside here. That's growth ... or lack thereof. The well-saturated U.S. wireless market doesn't offer much in the way of upside potential above and beyond simple population growth. Verizon is finding some inroads within the institutional/private 5G communications space, but that's a highly competitive market. There's just not a ton of expansion to be added here either.

What Verizon may lack in growth potential, however, it more than makes up for in consistency and sheer payout. Nobody's interested in giving up their mobile phones, which supports a sizable forward-looking yield of 6.2% that's based on a dividend that has now been raised for 18 consecutive years. Not bad.

2. Realty Income

Dividend yield: 5.6%

Realty Income (NYSE: O) isn't a stock in the traditional sense. Rather, it's a real estate investment trust, or REIT. That just means it owns a portfolio of rent-bearing real estate.

REITs trade just like ordinary stocks do, and pay dividends the same way that dividend stocks do, too. And Realty Income brings something else to the table that's pretty unique in addition to its sizable forward-looking yield of 5.6%. That's a monthly dividend payment, as opposed to the quarterly cadence you'll get with most other dividend stocks.

Realty Income's specialty is retailing real estate. In light of the so-called "retail apocalypse" that seems to never end, this focus seems like a liability. Just take a step back and look at the bigger picture. While numbers from Coresight Research point out that 7,325 U.S. stores were shuttered last year, 5,970 new stores were opened (or reopened). Realty Income further narrows this gap by serving the strongest survivors in the business. Its top tenants include 7-Eleven, Dollar General, Dollar Tree, and FedEx, just to name a few. Underscoring the quality caliber of its renters is the fact that its occupancy rate currently stands at an industry-beating 98.5%, and only fell to 97.9% in COVID-crimped 2020.

This resilience is one of the reasons the REIT has been able to raise its payout annually for the past 30 consecutive years.

3. SPDR Portfolio S&P 500 High Dividend ETF

Dividend yield: 4.6%

Speaking of dividend stocks that aren't actually stocks, add the SPDR Portfolio S&P 500 High Dividend ETF (NYSEMKT: SPYD) to your watch list, if not to your portfolio.

An ETF (or exchange-traded fund) is a basket of stocks with a common characteristic. In this instance, these tickers are all part of the S&P 500 High Dividend Index, which tracks the 80 highest-yielding names within the S&P 500.

These include Philip Morris, toymaker Hasbro, AT&T, and Ford Motor Company, for reference. None of these names has a great deal of growth firepower. All of them, however, are healthy dividend payers. Most of them also have a solid track record of dividend growth, even if it's not required for inclusion in the underlying index.

Sure, you can probably find higher dividend yields than the one SPYD offers. The aforementioned Realty Income and Verizon both boast bigger ones, for instance. The SPDR Portfolio S&P 500 High Dividend ETF is still an incredibly simple way of achieving a well-diversified mix of dividend stocks though, with a little more potential for capital appreciation than Verizon or Realty Income offer.

4. Pfizer

Dividend yield: 6.9%

It's no secret that drugmaker Pfizer (NYSE: PFE) has underperformed since the wind-down of COVID-19, which upended sales of its Paxlovid approved to treat the disease. The company's top line has slipped from 2022's $100 billion to only $64 billion last year, for perspective, and analysts aren't looking for any sales growth this year or next either. That's the chief reason Pfizer shares continue to flounder.

If you can look just a little further down the road though, some new blockbuster drugs are in the works -- drugs like vepdegestrant, for the treatment of ER+/HER2- metastatic breast cancer. While it will be competing with plenty of other therapies in this same space, it's noteworthy that the FDA fast-tracked this drug, which is being co-developed with Arvinas.

And that's just one. Pfizer got a total of four promising oncology drugs with its 2023 acquisition of Seagen, and now has over 100 clinical trials underway, 30 of which are in phase 3 (late-stage) testing. Indeed, the company believes it's got eight oncology candidates in its developmental pipeline that could become blockbusters by 2030. Little of this long-term upside is being reflected in the stock's present price, however, even though it arguably should be.

More to the point for interested income investors, this pharmaceutical stock's weakness has pushed its forward-looking dividend yield up to nearly 7% at a point where the pharma giant is on the verge of significant prolonged revenue and profit growth.

5. Global X Nasdaq 100 Covered Call ETF

Dividend yield: 14%

Finally, consider adding a stake in the Global X Nasdaq 100 Covered Call ETF (NASDAQ: QYLD) to your dividend portfolio.

It's not a stock. It's an exchange-traded fund. And an unusual one at that. While it holds the same tickers that make up the tech-heavy Nasdaq-100 index, serving as an index fund isn't its primary purpose.

Rather, this ETF's purpose is to generate reliable income that's regularly distributed to shareholders by selling covered calls against the ETF's stock holdings. It's an income-generating process called "buy-write," in fact -- you're buying a stock, and then "writing" (or selling) call options on those shares, essentially using them as collateral.

And the process works. Although the income generated by writing covered calls over and over again can be erratic (don't count on that trailing 14% yield going forward), the resulting reliable yields are typically big even if they're not precisely predictable.

There's also a big downside, though. That is, this fund is almost certainly guaranteed to underperform the Nasdaq-100 itself, even after factoring in all of its sizable dividend payments. That's just the nature of selling covered calls -- the strategy doesn't let you fully participate when the market's rallying the most. Writing options is just a means of monetizing stock holdings when they're mostly moving sideways, or losing ground.

Still, with a double-digit yield, even only capturing a portion of the Nasdaq-100's long-term upside isn't a bad bet. It's just arguably not the only dividend-paying investment you'd want to own at any given time, mostly due to its inconsistent payments.

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 Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $652,133!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,056,790!*

Now, it’s worth noting Stock Advisor’s total average return is 1,048% — a market-crushing outperformance compared to 180% 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 July 15, 2025

James Brumley has positions in AT&T. The Motley Fool has positions in and recommends FedEx, Pfizer, and Realty Income. The Motley Fool recommends Hasbro, Philip Morris International, and Verizon Communications. The Motley Fool has a disclosure policy.

Key Points

• Buffett's Berkshire Hathaway portfolio includes only one ultra-high-yield stock.

• However, his "secret portfolio" is loaded with ultra-high-yielders.

• The best of the bunch has increased its dividend for 30 consecutive years and has solid growth prospects.

Warren Buffett is known as a value investor, not as an income investor. However, that doesn't mean the "Oracle of Omaha" doesn't own stocks that many income investors would find highly attractive.

You might be surprised that Buffett even has positions in nine ultra-high-yield dividend stocks. By the way, the threshold used for a dividend yield to qualify as "ultra-high" is four times the yield of the SPDR S&P 500 ETF. Here are all of Buffett's ultra-high-yield dividend stocks, along with which one is the best of the bunch.

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 »

Berkshire Hathaway's sole ultra-high-yielder

Buffett's Berkshire Hathaway portfolio features only one ultra-high-yield dividend stock: Kraft Heinz (NASDAQ: KHC). The food and beverage company pays a forward dividend yield of 6%.

Kraft Heinz's dividend yield isn't so high because the company has increased its dividend payout. Instead, it's the result of a steadily deteriorating share price over the last few years, combined with maintaining the dividend at the same level during the period.

Berkshire does have stakes in a couple of other stocks with yields that aren't too far away from meeting the ultra-high threshold. Oil and gas giant Chevron offers a forward dividend yield of 4.61%. Satellite radio and podcast provider Sirius XM Holding's yield is 4.45%. However, the stocks didn't quite make the cut for our list.

Buffett's "secret portfolio"

Where can Buffett's other seven ultra-high-yield dividend stocks be found? In his "secret portfolio." I'm referring to the stocks owned by New England Asset Management (NEAM).

Berkshire Hathaway acquired General Re in 1998, which had acquired NEAM three years earlier. While NEAM reports its stock holdings to the U.S. Securities and Exchange Commission separately from Berkshire, Buffett owns all of the stocks in its portfolio just as much as he does any stock listed in Berkshire's SEC filings.

NEAM's two highest-yielding stocks are both business development companies (BDCs). Globus Capital BDC (NASDAQ: GBDC) pays an especially juicy forward dividend yield of 11.17%. It's followed by Ares Capital, the largest publicly traded BDC, with a yield of 8.57%.

A couple of big pharma stocks in Buffett's secret portfolio pay great dividends. Pfizer's (NYSE: PFE) forward dividend yield is 6.78%, while Bristol Myers Squibb (NYSE: BMY) offers a forward yield of 5.29%.

There's one ultra-high-yield overlap between Berkshire's and NEAM's portfolios -- Kraft Heinz. NEAM also owns another food company with an exceptionally high dividend payout. Campbell's (NASDAQ: CPB), which is best known for its soups, pays a forward dividend yield of 4.99%.

Two real estate investment trusts (REITs) are also in the mix. Realty Income's (NYSE: O) forward dividend yield is 5.6%. Lamar Advertising's (NASDAQ: LAMR) yield is 4.99%.

Finally, Buffett owns a stake in telecommunications giant Verizon Communications (NYSE: VZ) via NEAM's portfolio. Verizon's forward dividend yield is a lofty 6.22%.

The best of the bunch

How can we determine which of these ultra-high-yield dividend stocks owned by Buffett is the best of the bunch? We should obviously consider the dividend yield. In addition, the ability of the company to continue paying (and preferably increasing) its dividend is important. Growth prospects and valuation should be included, too. Based on these criteria, I think three of the nine stocks stand out above the rest.

Ares Capital's sky-high yield is a big plus. The BDC has either maintained or grown its dividend for 63 consecutive quarters (almost 16 years). It's the leader in the fast-growing private capital market. Ares Capital has also trounced the S&P 500 since its initial public offering in 2004.

Verizon is a longtime favorite for income investors. Its juicy dividend appears to be safe with the company's growing free cash flow. Verizon has also increased its dividend for 18 consecutive years. The biggest knock against the telecom provider is that its revenue and earnings growth haven't been spectacular. However, Verizon could enjoy stronger growth going forward once its acquisition of Frontier Communications closes.

The best stock overall of the group, in my opinion, is Realty Income. Its dividend yield is very attractive. Even better, the REIT pays its dividend monthly and has increased its dividend for an impressive 30 consecutive years.

Realty Income has delivered a positive total operational return every year since its IPO in 1994. Its diversified real estate portfolio, with nearly 1,600 clients representing 91 industries, helps make the company's cash flow stable. The REIT also has strong growth prospects, particularly in Europe, where it faces minimal competition.

The main drawback with this stock is its valuation. Realty Income's shares trade at 43 times forward earnings. However, I think the company's sterling track record justifies a premium price tag.

Should you invest $1,000 in Realty Income right now?

Before you buy stock in Realty Income, 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 Realty Income 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 $699,558!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $976,677!*

Now, it’s worth noting Stock Advisor’s total average return is 1,060% — a market-crushing outperformance compared to 180% 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 June 30, 2025

Keith Speights has positions in Ares Capital, Berkshire Hathaway, Bristol Myers Squibb, Chevron, Pfizer, Realty Income, and Verizon Communications. The Motley Fool has positions in and recommends Berkshire Hathaway, Bristol Myers Squibb, Chevron, Pfizer, and Realty Income. The Motley Fool recommends Campbell's, Kraft Heinz, and Verizon Communications. The Motley Fool has a disclosure policy.

Though indexes have rebounded, the first half of the year has been rocky for investors. The market had to digest a variety of uncertainties, from geopolitical problems to mixed economic data and the U.S. plan to tax imports. All of these factors -- particularly the import tariff announcements -- have weighed on investors' appetite for stocks.

But in recent weeks, trade talk progress has lifted investor optimism, and this, along with strong corporate earnings reports, has helped the S&P 500 return to positive territory for the year. Many great bargains still exist though, making now a fantastic time to invest. Here are my five dirt cheap favorites to buy before the second half, which starts next Tuesday.

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 »

1. Alphabet

Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) is the cheapest of the "Magnificent Seven" technology stocks that led market gains last year but tumbled this year amid concerns about tariffs and their impact on the economy. Today, the stock trades for 17 times forward earnings estimates, a steal considering the company's earnings track record, strong moat, and prospects across its main businesses.

This tech giant is the owner of something many people use every day: Google Search. It's the world's No. 1 search engine, and its presence in our daily routine and Alphabet's moves to use artificial intelligence (AI) to continually improve results should help it remain on top. This is key because Alphabet generates most of its revenue through advertisements across the Google platform.

Alphabet's Google Cloud also is proving to be a huge part of the revenue picture, generating double-digit quarterly growth in recent times. Again, AI is part of the story as Alphabet makes available a wide range of AI tools for customers. With AI growing in leaps and bounds and Alphabet's price low, now is the perfect time to invest.

2. Viking Therapeutics

Viking Therapeutics (NASDAQ: VKTX) doesn't yet have products on the market so we can't use traditional valuation metrics to assess the stock price. Instead, it's important to look at pipeline progress, the potential market for its products, and Viking's financial health.

This biotech is working on a variety of candidates for metabolic conditions but the one that's captured investors' attention is VK2735 for weight loss. An injectable candidate is set to start phase 3 trials, and the oral formulation has already started phase 2 trials. Earlier trials have produced strong results, and demand for weight loss drugs is booming -- the market is set to approach $100 billion by the end of the decade.

Though pharma giants Eli Lilly and Novo Nordisk already share the market, demand suggests there's room for additional companies to generate significant growth too. Viking is well positioned to be one of them thanks to its candidates and cash position of more than $800 million to support development. That's why it looks like a bargain today.

3. Target

Target's (NYSE: TGT) revenue growth has stumbled in recent years as shoppers favored essentials over discretionary spending, but this retailer is well positioned to excel over the long term for a few reasons.

Target has built up a strong online presence, and that's helping digital sales advance even if overall sales have stagnated. The company also has invested in its stores through remodels and new openings, and revamped stores generally have delivered higher sales. Target also is known for its owned brands, many of which generate billions of dollars in revenue annually, for example, the Cat & Jack children's clothing line. Owned brands are an important asset for Target as the company has more control over the cost structure and therefore is able to generate higher profits on sales.

On top of this, Target is making moves to focus on growth. In the recent quarter, it announced the creation of an "accleration office" to supercharge decision making and the development of its strategy.

Target stock is cheap, trading at 13 times forward earnings estimates, and could easily head higher with any progress in the coming quarters.

4. Pfizer

Pfizer (NYSE: PFE) is another company that's had a growth problem recently. This is as its top-selling products -- its blockbuster coronavirus vaccine and treatment -- saw declining demand and at the same time, some of Pfizer's older blockbusters headed for patent expiration.

But it's important to take a long-term view and imagine where Pfizer may be a few years from now. The company has brought several new products to market over the past couple of years, and it acquired oncology specialist Seagen as part of an effort to grow its presence in oncology. Importantly, Pfizer says its oncology products are generating high gross margin and operating margin.

Meanwhile, Pfizer also has been working to cut costs, a move to strengthen its business and prepare for a new wave of growth led by its newer products. In the recent quarter, Pfizer said it was on track to deliver $4.5 billion in cost savings by the end of this year. And it expects $500 million of research and development cost savings by next year, and will reinvest this to support pipeline growth.

All of this suggests Pfizer's growth could pick up at any moment, making the stock a bargain trading at about 8 times forward earnings estimates.

5. Carnival

Carnival (NYSE: CCL) (NYSE: CUK) suffered in the early days of the pandemic as it was forced to temporarily halt cruises, but over the past couple of years, the company has been recovering and returning to growth.

The world's biggest cruise operator has done this by focusing on efficiency -- for example, replacing fuel-intensive ships with ones that use less -- and the company also has prioritized paying down debt. It's made significant progress on that, as the chart below shows, and tackled variable-rate debt, a move that makes it less vulnerable to shifts in interest rates.

CCL Total Long Term Debt (Annual) data by YCharts

As for revenue and demand for sailings, they've been on the rise and have reached records in recent quarters. And advanced bookings, even at higher price points, have climbed, too. This is thanks to Carnival's strength in the market as well as the general popularity of cruise vacations.

So, right now, trading at 12 times forward earnings estimates, down from nearly 20 times, Carnival looks like a bargain to get in on before the second half as it continues along its new growth path.

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

Before you buy stock in Alphabet, 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 Alphabet 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 $664,089!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $881,731!*

Now, it’s worth noting Stock Advisor’s total average return is 994% — a market-crushing outperformance compared to 172% 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 June 23, 2025

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Adria Cimino has positions in Target. The Motley Fool has positions in and recommends Alphabet, Pfizer, and Target. The Motley Fool recommends Carnival Corp., Novo Nordisk, and Viking Therapeutics. The Motley Fool has a disclosure policy.

How would you like to get paid every quarter (and sometimes every month) to own a stock? That's exactly what happens when you invest in dividend stocks. Sometimes, the amount you are paid to own these stocks can be very attractive.

Three Motley Fool contributors believe they've found stocks you can buy right now that have mouthwatering dividends. Here's why they picked AbbVie (NYSE: ABBV), Bristol Myers Squibb (NYSE: BMY), and Pfizer (NYSE: PFE).

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 top dividend stock for the long haul

Prosper Junior Bakiny (AbbVie): Several factors make for an above-average dividend stock. AbbVie, a pharmaceutical company, checks many of those boxes. Consider the company's forward yield, which currently tops 3.5% versus the 1.3% average for the S&P 500. Although a stock can be attractive for dividends with a relatively low yield, income seekers often like juicy ones, and AbbVie's is.

We can also point to AbbVie's fantastic track record. The company is a Dividend King with an active streak of 53 consecutive payout increases. That suggests AbbVie is unlikely to slash its payouts anytime soon, as doing so would force the company to start the streak from scratch and maybe rejoin this exclusive club in another 50 years. Of course, AbbVie might be forced to cut its dividends if the business faces significant headwinds. However, that's yet another area where the company excels, which makes it a top dividend stock.

AbbVie is a leading drugmaker with a deep lineup of products that generate consistent revenue and earnings. Some of the company's medicines continue increasing their sales at a good clip. AbbVie's two biggest growth drivers are Skyrizi and Rinvoq, a pair of immunology medicines. These therapies have surprised even the company's management, which recently increased Skyrizi and Rinvoq's combined 2027 guidance by $4 billion to more than $31 billion.

AbbVie's lineup features several other key products, including its Botox franchise. And although it will face patent cliffs, as every drugmaker does, AbbVie also has a deep pipeline of investigational compounds that will eventually allow it to move beyond its current crop of therapies. All these things (and more) make AbbVie an attractive dividend stock. Income investors can safely add shares of the company to their portfolios and hold on to them for a long time.

Bristol Myers stock pays 5% and has underrated growth potential

David Jagielski (Bristol Myers Squibb): A dividend stock that income investors might want to consider loading up on right now is that of pharma giant Bristol Myers Squibb. It currently yields 5.1%, which is a higher-than-typical payout for this top healthcare company. At such a high yield, you may be concerned that it's unsustainable, but that's not the case.

The company's fundamentals are sound. In the trailing 12 months, Bristol Myers generated free cash flow totaling $13.1 billion, which is more than double the amount it has paid out in cash dividends during that stretch ($4.9 billion). In each of the past four years, Bristol Myers' free cash flow has totaled at least $11 billion.

The company has been struggling with growth in recent years due to rising competition and the loss of patent protection on key drugs. But its growth portfolio has been giving investors a reason to remain optimistic. Through the first three months of the year, its non-legacy products generated year-over-year growth of 18% when excluding foreign exchange.

Bristol Myers has been a solid name in healthcare for years, and while it's facing adversity, it's still growing. Last year, it obtained approval for schizophrenia drug Cobenfy, which may generate peak sales of up to $10 billion, according to some analysts.

At 18 times trailing earnings, this can be a great, cheap dividend stock to add to your portfolio today.

A safer dividend than initially meets the eye

Keith Speights (Pfizer): Investors are right to be at least somewhat skeptical when they see a stock with a super-high dividend yield. For example, Pfizer's forward dividend yield is 7.38%. Is a dividend cut on the way for the big pharmaceutical company? I don't think so.

Granted, Pfizer's dividend payout ratio of 122.5% might seem worrisome. However, the company generates enough free cash flow to cover its dividend at the current level. The amount of free cash flow could also increase as a result of Pfizer's cost-cutting initiatives. The drugmaker's dividend is safer than initially meets the eye, in my view.

I believe Pfizer's underlying business is also stronger than it might look at first glance. It's easy to focus only on the negatives. There are several, including a steep decline in COVID-19 product sales, some notable pipeline setbacks, the upcoming loss of exclusivity for multiple top-selling drugs, and the Trump administration's threats of tariffs on pharmaceutical imports.

But Pfizer has plenty of positives that offset those negatives. For one thing, I think its valuation more than reflects all the challenges, with shares trading at only 8 times forward earnings. The company also has several new products with fast-growing sales and a robust pipeline.

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

Before you buy stock in AbbVie, 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 AbbVie 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 $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $868,615!*

Now, it’s worth noting Stock Advisor’s total average return is 792% — a market-crushing outperformance compared to 171% 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 June 2, 2025

David Jagielski has no position in any of the stocks mentioned. Keith Speights has positions in AbbVie, Bristol Myers Squibb, and Pfizer. Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AbbVie, Bristol Myers Squibb, and Pfizer. The Motley Fool has a disclosure policy.

There are a few things that Ford Motor Company (NYSE: F), Target (NYSE: TGT), and Pfizer (NYSE: PFE), have in common. They are all components of the prestigious S&P 500. The stocks all pay a dividend north of 4%, with two of them yielding a lot better than 5%. Finally, bucking the trend of the rallying market, they are all trading at least 30% below their 52-week highs.

There are worse fates than being a household name, declaring generous quarterly distributions, and being currently out of favor. Let's take a closer look at these three iconic dividend-paying S&P 500 stocks that you can buy at a discount, potentially holding on for the long haul.

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1. Ford

It's been four years since I unloaded my second Ford Flex. The now-discontinued crossover SUV was the first ride I replaced with the same make and model. The shares have fallen out of favor, trading 31% below last summer's high. I guess you can say that investors also miss the Ford flex.

The legendary automaker is doing better than its stock chart, with Ford shedding more than a quarter of its value over the past three years. Revenue growth has been positive in the first four years coming out of the pandemic. The top line did go the other way in this week's quarterly update, but even then investors found blue skies in Blue Oval's fresh financials.

Revenue declined 5% to $40.7 billion for the first three months of this year, but analysts were holding out for a 16% drop. Wall Street pros were modeling a profit of $0.02 a share, but Ford drove through that barrier wall to earn $0.14 a share for the first quarter. The bottom-line beats are accelerating, with Ford clocking in 3%, 20%, and now 557% ahead of market expectations in the last three quarters, respectively.

Ford did suspend its forward guidance given the trade war uncertainties, warning that it expects a full-year hit on its adjusted earnings before interest and taxes from tariffs to be around $2.5 billion. It's hoping to realize $1 billion in cost savings to partly offset that hit. Two days later it announced that it would be raising prices on three vehicles it makes in Mexico by as much as $2,000. However, there was some upbeat news later in the week when U.S. automakers became part of the framework of a potential trade deal with the United Kingdom.

The headlights are still bright for Ford and other automotive stocks despite the foggy windshield. The average age of passenger cars on the road is a record 14 years. The demand is there for a surge in auto sales. Consumers just need economic confidence and a climate of low financing rates to make the plunge. The stock's nearly 6% yield comes dangerously close to its projected free-cash-flow average in the next couple of years. If the economy softens or tariffs intensify the distributions won't be sustainable at the current level. However, don't underestimate the power of pent-up demand and the ability of the economy to course correct before hitting more potholes.

2. Target

The cheap chic discount retailer feels more cheap than chic these days. It's not resonating as the cool place for value-conscious shoppers, with sales declining in four of the past seven quarters. The top line has dipped slightly in back-to-back fiscal years. The stock also isn't resonating with investors, off a blistering 42% from its August peak.

The bullish news for investors is that the stock is well positioned for a possible economic brake tap. It offers non-discretionary grocery items, and has strong private-label sales elsewhere. Folks who shop at mainstream department stores may trade down to Target when money is tight. The 4.6% dividend -- near a historical high -- appears safe in the near term. The chain is trading for less than 11 times trailing and forward earnings, dropping to just 10 times next year's projected profit.

3. Pfizer

When a major pharmaceuticals company is packing a 7.6% yield it should be more of a red flag than an income party. It often means that many of its key products are coming off patent, rivals have better alternatives, or the pipeline is barely trickling for potential new treatments. There's a lot of that here. Analysts see revenue gradually sliding through at least the next five years with net income to follow suit after next year.

It doesn't have to go that way. Pfizer can strike gold with a new treatment, even though it did throw in the towel last month on a once promising oral weight loss drug candidate. Pfizer can also use its clout and leverage to acquire a smaller player with a brighter growth trajectory. Its streak of 16 consecutive years of hikes can be in jeopardy if its profits don't bounce back, but it's just the "P" in Pfizer that's silent. The drug giant itself still has a lot to say.

Should you invest $1,000 in Ford Motor Company right now?

Before you buy stock in Ford Motor Company, 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 Ford Motor Company 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 $617,181!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $719,371!*

Now, it’s worth noting Stock Advisor’s total average return is 909% — a market-crushing outperformance compared to 163% 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 May 5, 2025

Rick Munarriz has positions in Pfizer and Target. The Motley Fool has positions in and recommends Pfizer and Target. The Motley Fool has a disclosure policy.

Many income investors would love to have a low-maintenance portfolio that doesn't require constant attention. They'd prefer to buy great stocks and rake in the dividends without any hiccups.

Three Motley Fool contributors believe they've identified fantastic dividend stocks to buy and hold for the next decade. Here's why they chose Abbott Laboratories (NYSE: ABT), AbbVie (NYSE: ABBV), and Pfizer (NYSE: PFE).

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 »

A diversified dividend stock with a growing payout

David Jagielski (Abbott Laboratories): If you're looking for a solid, safe dividend stock you can buy and hold for years, Abbott Laboratories makes for an easy choice. The healthcare company has a terrific track record for paying and increasing its dividend, plus its diversified business makes it the type of buy-and-forget stock that long-term investors won't have to worry about.

What makes Abbott Laboratories a great investment is the stability it offers. With the company announcing its latest dividend in February, this marks the 405th consecutive quarterly payout it will make to investors (the dividend is payable next month). That means the company has been making dividend payments to investors on a regular basis since 1924.

Amid all that has happened over the past century, the company hasn't interrupted its dividend. On top of that, the stock is a Dividend King, with Abbott having increased its dividend for 53 consecutive years. Currently, it yields 1.8%, which is better than the S&P 500's average of 1.5%.

The company reported its first-quarter numbers recently, and it was another stellar performance for the business. For the first three months of the year, Abbott's sales totaled $10.4 billion, representing a 4% year-over-year increase. Its pharma business grew, as did nutritional and medical device sales.

The only area where it didn't generate positive growth was diagnostics, which declined by 7% (largely due to a decline in COVID-19 testing). Even amid economic uncertainty, the company is forecasting an organic growth rate of between 7.5% and 8.5% for its entire business this year.

Abbott trades at 17 times its trailing earnings and is reasonably priced, given the dividend income and long-term stability you get from this top healthcare stock. It's a great stock to buy and hold for the next decade or longer.

A reliable dividend payer to hold for the long term

Prosper Junior Bakiny (AbbVie): Income-seeking investors want stocks that won't suspend their dividends or, better yet, will increase their payouts year after year. There are several factors to consider when determining whether a company belongs to this class, including its track record of dividend increases (or lack thereof) and its underlying business.

AbbVie, a leading pharmaceutical giant, excels on both counts. The company is a Dividend King -- it has now raised its payouts for 53 consecutive years, taking into account the time it spent under the wing of Abbott Laboratories.

Since splitting from its former parent company in 2013, AbbVie has increased its dividend by an impressive 310%. The company checks our first box, but what about the second?

One of the best pieces of evidence that AbbVie's underlying operations are rock-solid is that, despite losing U.S. patent exclusivity in 2023 for the most lucrative drug in the industry's history, it returned to top-line growth last year, an impressive achievement. It wouldn't have been odd (by industry standards) for AbbVie to see its revenue decline for even a couple of years, but thanks to newer products with fast-growing sales, it didn't have to. Over the next decade, expect AbbVie to continue doing what it has been doing since 2013.

Generate consistent revenue and earnings, develop and market newer products, and increase its dividends every single year. It's a great income stock to buy and hold through 2035.

A better story than meets the eye

Keith Speights (Pfizer): I'll readily admit that a quick glance at Pfizer's stock performance might raise questions about buying and holding its stock. Shares of the big drugmaker have plunged more than 60% since late 2021, when Pfizer enjoyed smooth sailing because of its COVID-19 vaccine. The pharma stock is also down by a double-digit percentage year to date.

Pfizer certainly faces some challenges. Its COVID-19 product sales will likely never be as high as they were three years ago. Several of the company's key drugs are set to lose patent exclusivity in the coming years. Pfizer has also experienced some pipeline setbacks, most recently due to safety data for danuglipron, which led the company to discontinue development of the experimental obesity drug.

But I think Pfizer has a better story than meets the eye. Its forward dividend yield stands at a lofty 7.57%. This dividend is also pretty safe, in my view, thanks to Pfizer's solid cash flow. The company's management has consistently reiterated a commitment to maintaining and growing the dividend.

Pfizer's valuation is attractive, with shares trading at only 7.6 times forward earnings. The average forward earnings multiple for the S&P 500 healthcare sector is roughly 16.4.

Don't rule out Pfizer's ability to deliver solid growth, either. The company has beefed up its product lineup and pipeline through investments in research and development, as well as acquisitions. I wouldn't be surprised if Pfizer makes another deal to pick up a promising weight-loss drug in the wake of the danuglipron flop.

Pfizer will be most appealing to income and value investors. However, I think any investor who buys and holds this beaten-down stock over the next decade will enjoy market-beating total returns.

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

Before you buy stock in AbbVie, 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 AbbVie 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 $594,046!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $680,390!*

Now, it’s worth noting Stock Advisor’s total average return is 872% — a market-crushing outperformance compared to 160% 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

David Jagielski has no position in any of the stocks mentioned. Keith Speights has positions in AbbVie and Pfizer. Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AbbVie, Abbott Laboratories, and Pfizer. The Motley Fool has a disclosure policy.

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 »

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.

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 Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $532,771!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $593,970!*

Now, it’s worth noting Stock Advisor’s total average return is 781% — a market-crushing outperformance compared to 149% 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

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.