3 high yield dividend stocks that will double your money in a decade
What time it is to be an investor. Years from now we will begin our stories with the words “Back to 2020 …” and instantly remember how volatile things were then due to the 2019 coronavirus disease pandemic (COVID-19 ).
But amid the chaos and surprising outperformance of work-from-home stocks, investors would do well not to forget dividend stocks.
To be frank, dividend-paying stocks have failed to keep pace with high-growth tech stocks since the start of 2020. Then again, we shouldn’t expect them to, as Dividend payers are generally proven companies. designed to ensure regular cash flow and income. While dividend-paying stocks can often be boring, there is beauty and money to be found in most boring companies.
This is what makes the following three high-yielding stocks (that is, those that return at least 4% per annum) so attractive. If you give these high income stocks a decade, I think they’ll double your money through a combination of their payouts and the appreciation in their stock price.
Despite the fact that its high growth days have long been in the rearview mirror, investing in the telecommunications giant AT&T (NYSE: T) continues to be one of the the safest ways for conservative and income-seeking investors to make money. With a yield of 6.9% – AT&T is a dividend aristocrat who has increased their earnings for 36 consecutive years – AT&T can double your money by reinvesting in about 10.4 years. This means that you would only need a very small appreciation in the AT&T share price to double your money over the next decade.
AT&T is in favor of rolling out the first wireless infrastructure upgrades in about a decade. To be clear, upgrading the company’s wireless infrastructure to 5G won’t come cheap, and it won’t happen overnight. But it is an exciting initiative for the company as it is expected to lead to a multi-year technology upgrade cycle that results in a significant increase in data usage. As data drives the margin for AT & T’s wireless division, this should lead to accelerated organic growth over the next two years.
Don’t overlook AT&T’s streaming capabilities, That is. While that’s not exactly igniting the world on fire on the streaming front like Disney, AT&T’s recently launched HBO Max offers more than 10,000 hours of premium content, and its collective streaming offerings have the potential to completely offset the cord cut that the DIRECTV subsidiary is facing. AT&T has enough cash on hand to tinker with its streaming offerings to optimize its product in the long run.
Additionally, AT&T halted its share buyback program earlier this year to address uncertainties surrounding COVID-19, as well as to ensure continuity of its dividend. The company’s projected payout ratio of around 65% in 2020 sits in that sweet spot where a reduction is highly unlikely (particularly with AT&T continuing to offload non-core assets and reduce its debt), but shareholders continue. to generate a significant portion of the total income.
Philip Morris International
The tobacco giant is another high yielding dividend stock that will give investors a great chance to double their money over the next decade. Philip Morris International (NYSE: PM). Currently showing a strong return of 6.6%, Philip Morris could, with reinvestment, double an individual’s initial investment in less than 11 years. Similar to AT&T, only a very minor appreciation in stock prices would be needed over the next decade to double investor money.
On the one hand, Philip Morris has its traditional tobacco operations. It is undeniable that commercialization has become more difficult for traditional tobacco products in developed markets, which is one of the main reasons why we have seen a drop in cigarette shipment volumes for most companies. tobacco producers. But Philip Morris takes advantage of the fact that he is geographically diverse, with a presence in more than 180 countries around the world. While some developed countries pose a challenge, there are many emerging markets where the burgeoning middle classes want simple luxury goods like tobacco. Plus, it doesn’t hurt that tobacco companies have strong pricing power due to the addictive nature of nicotine.
On the other hand, Philip Morris International has a rapidly growing Reduced Risk Product (RRP) segment which is evidenced by its IQOS Heated Tobacco System. In terms of net sales, the company’s RRP revenue increased from 0.2% in 2015 to almost 22% in the first quarter of 2020, with IQOS in the lead. Heated tobacco units (HTUs) for the IQOS device accounted for nearly 10% of all shipments in Q1 2020, with global HTU shipments volume up 45.5%. As IQOS is introduced and commercialized in new markets, Philip Morris will no longer have to rely so heavily on price increases from traditional tobacco brands to drive growth.
Tobacco stocks may not be the sexy investment they once were, but Philip Morris always will for long term investors.
Finally, how about a faster growing high yield stocks who can combine income and share price appreciation to double the investor’s money over the next decade?
Semiconductor behemoth Broadcom (NASDAQ: AVGO), which has increased its quarterly payout by more than 4,500% over the past 10 years to $ 3.25, currently earns 4.1% per year to its shareholders. This means that paying dividends alone, with reinvestment, will allow investors to double their money by just over half in a decade. If Broadcom can deliver an almost 50% share price return over the next decade – a number I find ridiculously conservative – that will double the investor’s money.
Behind the story of Broadcom’s growth lies none other than the 5G revolution. As AT&T is busy deploying its wireless infrastructure, Broadcom is gearing up for the influx of wireless device upgrades that will follow in the years to come. A considerable portion of Broadcom’s sales are based on chips and wireless components used in smartphones. While COVID-19 can hamper the release dates of these new devices in the very short term, we’ve seen first-hand just how strong the demand can be when innovation is on display in the tech space.
Broadcom is also expected to make a pretty dime by providing access and connectivity solutions for businesses looking to get started in the cloud. Remember, we were already seeing a remote working revolution before COVID-19. However, the need for social distancing has been a blow to the remote working movement. It only has increased demand for cloud and data center developments to store sensitive information. Broadcom should be able to turn this growing demand for data storage into strong earnings growth for the foreseeable future.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.