Dividend Stocks Outperform Non-Dividend Stocks, Analysis Revealed

Dividend Stocks Perform Better. A recent analysis highlights the superior performance of dividend-paying stocks in the S&P 500, with an average annual return of 9.17% over 50 years. Realty Income, Pfizer, and Altria Group stand out for their strong dividend yields, offering promising investment opportunities.

Date: 22-02-2025

AI Rating: 7

**Dividend Stocks vs Non-Dividend Stocks**
According to the report, dividend-paying stocks in the S&P 500 index produced an impressive 9.17% average annual return from 1973 to 2023, compared to only 4.27% for non-dividend payers. This significant difference showcases the value that consistent dividends can bring to investment portfolios.

**Realty Income Analysis**
Realty Income, a real estate investment trust (REIT), has maintained a strong history of increasing its monthly dividend payouts, raised every quarter since becoming publicly traded. Currently, it offers a 5.8% dividend yield. However, its dividend payout growth has been slowed by rising interest rates, which increased in 2022 and 2023. The analysis hints at potential improvements in growth as the Federal Reserve has lowered interest rates four times in 2024, with more cuts anticipated by 2025. Despite recent challenges, there may be opportunities for growth in Europe.

**Pfizer Analysis**
Pfizer’s stock has declined about 57% since its peak in 2021, primarily due to shrinking sales from COVID-19 products and concerns about an impending patent cliff for its blood thinner, Eliquis. Nevertheless, at its current price, Pfizer offers a strong dividend yield of 6.7%. The company raised its dividend for the 16th consecutive year and expects adjusted earnings per share (EPS) of $2.80 to $3.00 in 2025. This is far above its current dividend commitment of $1.72 per share, indicating a positive outlook for dividend sustainability. Pfizer's total sales increased by 7% last year, and if COVID-19 sales are excluded, revenue jumps by 12%.

**Altria Group Analysis**
Altria Group continues to raise its dividends, with a recent increase marking the 59th in 55 years. The stock provides an attractive yield of 7.7%. Although cigarette sales fell by 10.2% in 2024, rising prices have offset volume declines, and smokable product sales only dipped by 0.8%. Furthermore, Altria's non-smokable products have driven growth, exemplified by the acquisition of the NJOY brand. The company projected adjusted earnings growth of 2% to 5% for 2025. This steady growth, while not rapid, offers potential for reliable returns.

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