The benchmark S&P 500 index is up by about 26% over the past three years, but that doesn't mean every stock has had a great run. Over the same time frame, shares of W.P. Carey(NYSE: WPC), Verizon(NYSE: VZ), and Pfizer(NYSE: PFE) have tumbled by 15%, 18%, and 33%, respectively.
All three of these stocks offer yields above 5% at their beaten-down prices. You wouldn't know it by looking at their stock charts, but all three of these businesses have what they need to meet their present dividend obligations and raise them much further in the years ahead.
Here's how adding these stocks to a diversified portfolio could lead to heaps of passive income to fuel your retirement.
W.P. Carey
W.P. Carey is a diversified real estate investment trust (REIT) with a portfolio of 1,291 properties that it doesn't manage. Instead, it employs net leases that transfer all the variable costs of building ownership to its tenants.
You may have noticed that W.P. Carey's dividend payout decreased in 2023 after the REIT spun off a portfolio of 59 office buildings into a new company called Net Lease Office Properties. Now that it's out of the office-leasing business, 63.9% of expected rent payments come from industrial properties and warehouses.
At recent prices, the stock offers a 5.5% yield and perhaps much more by the time you're ready to retire. This year, management expects adjusted funds from operations, a proxy for earnings used to evaluate REITs, to reach a range between $4.63 and $4.73 per share. That's more than enough to cover a dividend currently set at $3.48 per share.
In addition to predictable rental revenue from existing tenants, W.P. Carey investors can look forward to gains driven by new properties. This year management expects to expand its portfolio by investing between $1.25 billion and $1.75 billion.
Verizon
In September, Verizon increased its dividend payout for the 18th consecutive year. That's the longest consecutive annual dividend-raising streak among America's three large 5G network operators. At recent prices, the stock offers a huge 6.1% dividend yield.
Verizon's equipment sales have declined due to longer smartphone-refresh cycles, but a recently launched iPhone 16 could lead to a sales bump in the fourth quarter.
Luckily, Verizon doesn't need customers to have new phones to continue collecting their monthly service payments. Q2 wireless-service revenue rose 3.5% year over year to $19.8 billion.
Investors can look forward to another significant dividend raise next year. During the first half of 2024, Verizon reported $$8.5 billion in free cash flow but needed just $5.6 billion to meet its dividend obligations.
Verizon probably isn't going to be the fastest-growing dividend stock in your portfolio. As one of just three nationwide 5G service providers, though, it might be the most reliable.
Pfizer
Pfizer's stock price is down about 51% from the peak it reached in 2021. At a glance, the business looks like a disaster because sales of its COVID-19 vaccine and antiviral treatment both collapsed.
This stock is way down from its previous peak, but Pfizer's overall business is booming. If we exclude COVID-19-related sales, Q2 revenue surged 14% year over year.
Last December, Pfizer raised its payout for the 15th year in a row. At recent prices, the stock offers a big 5.6% yield.
Even cautious investors can feel good about adding some Pfizer shares to their portfolios. Pfizer has a longer list of patent-protected medicines to sell than any of its Big Pharma peers.
In the first half of 2024, 11 of its products grew sales by a double-digit percentage, and new growth drivers are pouring out from an industry-leading development pipeline. Last year the Food and Drug Administration (FDA) approved nine new medicines from Pfizer. With plenty of new products for its global salesforce to market, Pfizer could keep raising its payout for another 15 years.
Should you invest $1,000 in W.P. Carey right now?
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Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Pfizer. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy.
