Whether you’re interested in outperforming the broad market or producing a passive income stream, dividend-paying stocks are what you want in your portfolio.
Nearly everyone knows that dividend payers deliver quarterly payouts, but that’s not all they’re good for. It’s a well-documented fact that companies committed to distributing their profits usually outperform companies that don’t have a dividend program.
During a 50-year period that ended in 2023, non-dividend-paying stocks in the benchmark S&P 500 index delivered a 4.27% average annual return. Over the same time frame, dividend payers in the same index delivered a 9.17% average annual return, or more than double that of their non-dividend-paying cousins, according to Hartford Funds and Ned Davis Research.
Investors who are nearing retirement, or simply eager to boost their passive income stream, may want to turn toward Pfizer (NYSE: PFE) and Ares Capital (NASDAQ: ARCC). Both offer ultra-high dividend yields that are more than triple the average yield of stocks in the S&P 500 index. Plus, there’s a good chance they can maintain and raise their payouts further.
1. Pfizer
At recent prices, Pfizer shares offer a big 5.5% dividend yield and the confidence that comes with 15 years of consecutive annual dividend raises.
The pharmaceutical giant has raised its payout by a modest 16.7% over the past five years. With a slew of recently approved drugs to market and one of the industry’s largest global sales forces to market them, more dividend raises could be on the way.
In the second quarter of 2024, Pfizer reported total sales that grew by just 3% year over year. If we exclude rapidly declining sales related to the company’s COVID-19 products, though, revenue soared by 14% year over year.
Products that Pfizer acquired with COVID-driven profits are performing well. Sales of Padcev, a cancer therapy Pfizer gained through the $43 billion Seagen buyout last year, soared to an annualized $1.2 billion and could climb much higher.
Padcev earned approval to treat first-line bladder cancer patients in combination with Keytruda…
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