4 Dividend Stocks to Double Right Now

If you’re looking to add more dividend-paying stocks to your portfolio, this is a good idea. For one thing, dividend-paying companies tend to be more established and reliable growth companies because they’ve reached a point where management is confident that they can commit to paying shareholders a regular dividend. Better yet, dividend-paying stocks tend to outperform non-dividend-paying stocks!

For example, a study by Hartford Funds and Ned Davis Research found that from 1973 to 2022, companies that increased or began paying dividends generated an annualized return of 10.3%, while those that did not pay dividends generated an annualized return of 3.95% and were equally weighted S&P 500 The fund has returned 7.7% annually. And dividend payers have also been less volatile than their peers.

Here are four well-known companies that have recently generated high dividend yields. You might consider including some of them in your portfolio or watchlist.

1. Verizon Communications

Verizon Communications (NYSE: VZ)whose market capitalization is around $180 billion, recently posted a high dividend yield of 6.6%. That yield hasn’t been rising quickly lately, but it’s pretty generous as it stands.

Verizon is optimistic about the strength of its wireless network and its chances of strengthening it further. Another promising factor: Verizon recently announced its acquisition Parent of Frontier Communications $20 billion to expand fiber optic services in the United States

Bears are concerned about the safety of the dividend, however, given Verizon’s significant debt load. This is something to keep an eye on, but for now, the company’s strong cash flow is enough to cover its dividend obligations. In a sign of confidence, management just increased the payout by 1.9%.

2. Citigroup

Citigroup (NYSE: C) runs one of the largest banks in the country and its recent stock market value is around $109 billion, after a recent 16% drop from its 52-week high. It’s important to understand that when a stock’s price goes down, its dividend yield goes up.

That’s part of the reason the stock’s dividend yield recently hit a healthy 3.6%. Better yet, that yield has been increasing over time, jumping 6% during its last increase.

Citigroup has 19,000 corporate clients, including 85% of the Fortune 500, and more than 100 million customers use its credit card, wealth management and banking services. Nearly $5 trillion passes through the company every day.

So why did the stock price drop? Well, the company has been lagging in terms of profitability and it is now turning around. That involves, in part, selling its consumer business in Mexico and investing more in wealth management and commercial banking.

3. CVS Health

CVS Health (NYSE: CVS) is another stock that has recently struggled, with its price recently falling 31% from its 52-week high, pushing its dividend yield to 4.7%. That payout has been increasing at an average annual rate of 6% over the past five years.

CVS recently posted a 45% payout ratio, meaning that 45% of its profits go to dividends. This suggests that the payout ratio is not in jeopardy and could still increase.

Why did the stock fall? While its pharmacy and health services divisions performed well, its health insurance business lagged. Still, overall revenue rose 2.6% year over year in the latest quarter, and earnings per share beat expectations.

CVS Health stock appears attractively valued at recent levels, with a forward price-to-earnings (PE) ratio of 7.8, well below its five-year average of 9.5.

4. United Parcel Service

United Parcel Service (NYSE: UPS) is another household name, with a recent market cap of $111 billion. The stock is down 21% from its 52-week high, pushing its dividend yield up to 5.1%. It’s an impressive delivery company, with over half a million employees and over 22 million packages delivered daily.

The dividend has seen robust growth of 11% on average over the past five years. But that trend may not continue in the near future, as the stock’s payout ratio is around 100%.

The company was hurt by Amazon UPS will now do more of its own deliveries instead of outsourcing them. However, as UPS cuts costs and welcomes the improving economy, its profits should improve. Our current habit of doing a lot of online shopping is not going to slow down, so deliveries will remain vital.

The stock also appears to be attractively valued, with a forward P/E of 14.1, well below the five-year average of 16.2.

Take a closer look at any of these stocks that interest you, and know that there are plenty of other interesting dividend payers out there – and dividend-focused exchange-traded funds.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Citigroup is an advertising partner of The Ascent, a Motley Fool company. Selena Maranjian holds positions at Amazon and Verizon Communications. The Motley Fool holds positions at Amazon and recommends Amazon. The Motley Fool recommends CVS Health, United Parcel Service, and Verizon Communications. The Motley Fool has a disclosure policy.