I recently invested in these three high-yield dividend shares that offer substantial returns.
Dividend yields aren't always a cause for concern, even if they're sky-high. It's similar to climbing a tall ladder; sure, the steeper the climb, the scarier it may seem, but some of the tallest yields can lead to some of the most rewarding investments. Recently, I've dived into three stocks offering top-tier dividends, and I'd like to share why I've bought them.
1. Dominion Energy
I've steadily built a position in Dominion Energy (D) lately. The Virginia-based utility provides electricity to over 3.6 million homes and businesses, as well as natural gas to approximately 500,000 customers. A forward dividend yield of just below 5% may have some investors worried about the dividend's security. However, with a payout ratio of 98.5%, I view Dominion's dividend as relatively safe. The company has an impressive track record of delivering long-term operating earnings-per-share growth of 5-7% - plenty to maintain the dividend flow comfortably. And with a history of dividend cuts being a rare occurrence, I believe management is eager to avoid repeating such actions.
Despite a temporary pullback in 2025, Dominion had a strong showing throughout much of 2024, skyrocketing around 25%. Although the Federal Reserve hinting at fewer interest rate cuts in 2025 led to a slight dip in Dominion's shares, I remain optimistic about the company's long-term prospects. With growing populations in all three states where Dominion operates and Northern Virginia's leadership in data centers, this stock is well-positioned for future success.
2. Pfizer
I've owned a modest position in Pfizer (PFE) for quite some time now. I recently added to my stake, drawn to the forward dividend yield surpassing 6.5%. I don't rely on dividends for income, but Pfizer's high yield makes it easier to experience double-digit total returns. The company's stock price also appeared affordable, with a forward P/E ratio under 9 and a super-low 0.2 PEG ratio, which indicates a favorable growth outlook.
Although Pfizer loses patent exclusivity for several of its products in the coming years, I'm optimistic about the company's continued growth prospects. A robust lineup of new products and an active late-stage pipeline should help make up for the losses and maintain strong growth throughout the current decade.
3. United Parcel Service (UPS)
UPS is a more recent addition to my portfolio. I first bought shares in August 2024 and recently increased my position. UPS's forward dividend yield of 5.13% was certainly a factor, but it wasn't the only reason I made the purchase. The company boasts 15 consecutive years of dividend increases, making it an attractive choice for income investors. Additionally, UPS's turnaround is well underway, with the company returning to revenue and earnings growth in the third quarter of 2024, and overcoming the higher costs associated with its Teamsters Union agreement.
I'm a big fan of UPS's strategy of focusing on higher-margin packages. Furthermore, the company aims to become the world's leading healthcare logistics provider, a smart move that should drive future growth.
One thing is certain: each of these companies boasts impressive long-term prospects, supported by solid fundamentals, strategic positioning, and growth opportunities.
In the world of finance, I've found investing in companies with attractive dividend yields to be a fruitful endeavor. For instance, I've invested in Dominion Energy, whose forward dividend yield of almost 5% may seem high to some, but its track record of delivering long-term earnings growth and safe dividend payout ratio offer reassurance.
Similarly, Pfizer, with its forward dividend yield surpassing 6.5%, has been a part of my portfolio for a while. Despite potential patent loss challenges, the company's robust product pipeline and strong growth prospects make it an appealing option for income-focused investors.
