Investing in dividend stocks can be an excellent way to boost your income each year. But the challenge can be generating a good return while keeping your risk low. Exchange-traded funds (ETFs) can give you good diversification but many of them don’t offer high yields, and you also lose the ability to pick which stocks you want to hold. At the same time, you don’t want to be too dependent on just one or two dividend stocks, either.
Below are three high-yielding dividend stocks that can help get you started and give you a good mix of income investments for your portfolio. And if you invest $11,000 into each one of them, they can generate a total of $2,000 per year in dividends for you.
Here’s why Realty Income (O 1.29%), Organon (OGN 1.91%), and United Parcel Service (UPS 0.62%) are three good dividend investments to buy and hold today.
Realty Income
A diversified real estate investment trust (REIT) such as Realty Income can be an ideal option for income-seeking investors. What appeals to me about this stock is the diversity of its portfolio. It has more than 1,500 clients in 90 industries. And with an occupancy rate of around 99%, the REIT looks to be in a great position to continue paying and increasing dividends for the foreseeable future — it has increased its monthly dividend 128 times since it went public back in 1994.
This past year was a rough one for REITs in general due to elevated interest rates but it may only be a matter of time before investors start to pivot back into solid dividend stocks like Realty Income. If rates keep coming down, the REIT’s 6% yield could look very attractive to risk-averse investors who want a nice and safe return to count on. And while that yield may seem high, the payout looks safe. During the first nine months of 2024, Realty Income’s funds from operations (FFO) per share totaled $2.99, which averages out to $0.33 per month — higher than the rate of its monthly dividend ($0.264 per share).
Investing $11,000 into the stock would generate approximately $660 in dividends over the course of a full year.
Organon
The highest-yielding dividend stock on this list is that of women’s health company Organon. At 7.4%, it provides investors with a mouthwatering yield. And what’s great is that it’s well supported by solid financials. For dividend stocks that pay this much, investors often worry about whether the payout is sustainable. But Organon has consistently posted a profit in each of the past four quarters and its payout ratio is just 22%.
The stock may not be on many investors’ radars these days simply because it spun off from drugmaker Merck back in 2021 and is relatively modest in size — its market cap is just under $4 billion. The business is also modestly growing in the single digits, which isn’t likely going to attract many growth investors.
But for income investors, this could make for an underrated buy. Due to its high yield, an $11,000 investment here could net you approximately $810 in annual dividends.
United Parcel Service
Logistics giant United Parcel Service (UPS) makes for another solid dividend stock to own. It yields 5.2% and investing $11,000 into it could generate approximately $570 in annual dividend income. When combined with the other investments noted above, that would put your total dividend income over a full year at around $2,040.
The company has been struggling to generate positive growth for much of the past couple of years due to challenging macroeconomic conditions. But in its most recent quarterly update (for the period ending Sept. 30, 2024), UPS’ revenue rose by 6% to $22.2 billion as it got back to growing both its top and bottom lines. Stocks like UPS are attractive over the long haul because they benefit from the economy’s overall growth. As the economy grows, so too does e-commerce and the demand for logistics.
Being a leader in its industry, UPS can make for a solid investment to buy and hold. While its payout ratio is around 100% right now, that should improve as profits have been increasing and the company has been focusing on cutting costs. UPS could be due for a big bounce-back year in 2025, after falling 20% in value over the past 12 months.
David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Merck and Realty Income. The Motley Fool recommends United Parcel Service. The Motley Fool has a disclosure policy.
