Dividend Stocks Expected to Outperform in Coming Decade

Investors are eyeing W.P. Carey, AT&T, and Pfizer for their dividend yields and growth potential amidst changing market dynamics. These stocks offer robust cash flows and are positioned favorably for future growth, despite some challenges.

Date: 09-09-2024

AI Rating: 7

This text discusses the benefits of investing in dividend-paying stocks, particularly highlighting three companies: W.P. Carey, AT&T, and Pfizer. It mentions that stocks in the S&P 500 that pay dividends have historically outperformed non-dividend payers.

W.P. Carey

W.P. Carey is noted as a large real estate investment trust (REIT) that expects adjusted funds from operations (FFO) to range between $4.63 and $4.73 per share. This amount significantly exceeds their current dividend obligation of $3.48 per share. This positions the company favorably for dividend growth and indicates a strong profit margin.

Despite current challenges, including past property sales and a dividend cut, the diversification of their tenant base and the shift to industrial and warehouse properties for revenue provides a solid outlook for future performance.

AT&T

AT&T is highlighted for its 5.3% dividend yield. The company reported a strong free cash flow of $20.9 billion, while only needing $8.2 billion to meet its dividend, allowing for potential debt reduction and future raises in dividend payouts. However, its current debt levels are substantial at $126.9 billion.

Pfizer

Pfizer, despite a drop in COVID-19 product demand, continues to offer a dividend yield of 5.9%. The company’s second-quarter sales showed a 3% year-over-year increase, but a more promising 14% increase when excluding COVID-related products. Despite some struggles with aging blockbusters, Pfizer's diverse new product pipeline and recent FDA approvals present a strong foundation for sustained profitability and continued dividend increases.

Conclusion

Overall, dividends from these companies can provide a steady passive income for investors and a hedge against market volatility. The highlighted metrics—FFO for W.P. Carey, strong free cash flow for AT&T, and rising sales for Pfizer—suggest potentially attractive investment opportunities.

Stocks: WPC T PFE