Desire to Reap a Dividend Every Month? Consider Investing in These Three High-Reward Dividend-Paying Stocks.
Gathering regular dividend earnings can enhance your financial stability and reduce your reliance on other income sources. However, the disadvantage is that numerous dividend shares dispense income only every three months, resulting in prolonged waits for subsequent payments.
A workaround is to maintain a minimum of three dividend shares in your portfolio. By selecting stocks that pay out at different times throughout the year, you can be assured of receiving dividends monthly. Three high-earning stocks that may serve this purpose are Merck (MRK with a 1.13% yield), AT&T (T offering a 0.71% yield), and Chevron (CVX providing a 1.24% yield). Their businesses are robust, making them suitable long-term investments.
1. Merck
Drug manufacturer Merck pays dividends quarterly in January, April, July, and October. Its yield is noteworthy at 3.2%, surpassing the S&P 500 average of 1.2%. The lucrative payout is stable, as Merck's payout ratio is around 64% of its earnings.
Investors might be reluctant to invest in Merck due to its reliance on cancer drug Keytruda, which accounts for about 45% of its revenue. While its primary drug's key patents will expire in 2028, Merck has been expanding its drug portfolio through acquisitions and has focused on developing other treatment options.
Early this year, the Food and Drug Administration approved Winrevair, an effective treatment for pulmonary arterial hypertension. It's predicted to generate up to $5 billion in revenue for the company by 2030, according to analyst estimates.
Merck has ample time to diversify its treatment offerings, and its strong financials, with $14.8 billion in free cash flow within the past 12 months, position it well to invest in new opportunities. It has allocated $7.7 billion towards the dividend over the past year.
Trading at a forward price-to-earnings (P/E) multiple of only 10, Merck is an appealing discounted stock suitable for income generation.
2. AT&T
Telecommunications giant AT&T is another high-yielding dividend stock worthy of consideration. It makes dividend payments in February, May, August, and November. At 4.9%, it boasts the highest yield on this list.
Shares of AT&T have performed well this year, as the company demonstrated better financial stability than anticipated, generating strong cash flow and proving its high-yielding dividend's sustainability. As of the closing on Monday, the stock has increased by 36% year-to-date.
Through the first three quarters of the year, the company has generated $2.4 billion more free cash flow than during the same period the previous year. While AT&T's business growth has not been especially rapid, the company demonstrates stability and safety as an investment choice. Management anticipates further growth potential and plans to repurchase $20 billion worth of shares over the next three years as a means of benefiting its shareholders, decreasing the share count and improving investor returns.
3. Chevron
Oil and gas producer Chevron concludes this list of strong dividend stocks. It distributes dividends quarterly in March, June, September, and December, providing a regular income stream. At 4.4%, this is also a noteworthy yield to add to your portfolio.
Chevron is well-established in the oil and gas industry, and its dividend is highly reliable. The company's free cash flow over the past four quarters totaled $18.8 billion, comfortably surpassing the $11.7 billion it paid out in dividends during this period.
The company has a streamlined cost structure, enabling it to offer a high and consistently growing dividend. The stock's current quarterly dividend of $1.63 has climbed by 37% over the past five years, and further dividend growth is likely in the future.
This is a Warren Buffett stock that appears reasonably valued, trading at a forward P/E of 12.
- To diversify your investing portfolio and ensure a steady income stream, consider adding Merck (MRK) to your holdings. As a pharmaceutical company, Merck pays dividends quarterly and offers a higher-than-average yield of 3.2%, exceeding the S&P 500 average.
- To boost your finance strategy, AT&T (T) is another dividend-paying stock that warrants consideration. This telecommunications giant distributes dividends four times a year, with a yield of 4.9%, the highest on this list.
