3 High Yield Dividend Stocks to Buy Now and Hold Forever

Building a portfolio of high-yielding dividend stocks can provide you with passive income for life. However, investing in dividend stocks is much more complicated than simply choosing the highest-yielding stocks. Finding ultra-high-yielding dividend stocks that are trading at a fair price and have the potential to consistently raise their dividends is key to unlocking sustainable passive income.

Buying a few stocks at a good price and holding them forever can be the cornerstone of a dividend portfolio. Here are three potential candidates to consider.

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1. Pfizer

Pfizer (NYSE:PFE) is one of the largest pharmaceutical companies in the world. The company’s stock price rose sharply in 2021 following the successful development and rollout of a COVID-19 vaccine. However, Pfizer’s COVID-19-related sales have failed to keep up with expectations. As a result, the stock is down significantly from its late 2021 highs.

But it could be a great opportunity for investors.

After increasing spending to support the development and sales of a COVID-19 vaccine and treatment, Paxlovid management is backing off that move and aggressively cutting costs. During its first-quarter update, management said it was on track to reduce net costs by $4 billion by year-end. That should help push operating margin back toward the 20% range.

Meanwhile, Pfizer’s broad portfolio of drugs and therapies ensures that it generates sufficient revenue to reinvest in research and development (R&D) while generating significant free cash flow. Its drug portfolio includes breast cancer drug atirmociclib, currently in Phase 3 trials, and oral weight-loss drug danuglipron in Phase 2b trials. Its strong pipeline of patent-protected drugs ensures that it can face competition from generics as patents expire.

Despite recent pressure on free cash flow amid declining sales, management reiterated its commitment to the company’s dividend during its first-quarter earnings conference call. “Our No. 1 priority from a capital allocation perspective is to both support and grow our dividend over time, and that’s not in jeopardy,” CFO Dave Denton told analysts. With a strong pipeline and cost-cutting measures, it’s only a matter of time before free cash flow improves and the dividend can grow even faster.

2. Enbridge

Enbridge (NYSE:ENB) operates a huge portfolio of oil and gas pipelines. In addition, it operates several gas plants. As a result, it generates a very consistent income year after year.

Its pipelines carry about 30% of all the oil produced in North America and 20% of all the gas consumed in the U.S. But Enbridge isn’t resting on its laurels. The company is currently building several projects that will expand its operations and provide healthy revenue growth when they come online. Management is forecasting 3% annual growth in distributable cash flow from the project backlog through 2025 and 5% growth from 2026.

Meanwhile, Enbridge is taking advantage of growth opportunities through acquisitions. It acquired three utilities last year Dominion Energynearly doubling its gas distribution business. The acquisitions help Enbridge scale its business while providing a moat against new competition entering the market.

With slow but predictable cash flow growth of 3% to 5%, Enbridge should be able to maintain a steady 7.3% dividend growth. The stock looks attractive at the current price, trading at an enterprise value to EBITDA ratio of just 12.5x. So investors could also get some capital growth.

3. Altria Group

Despite the decline in tobacco consumption in the United States, Altria Group (NYSE:MO) has managed to maintain revenues and grow dividends over the years. This is due to strong pricing power and the ability to adapt to changing times.

That said, it has had its share of stumbles. Massive investments in cannabis producer Cronos and vaporizer maker Juul Labs fell through. But its acquisition of NJOY, which makes cartridge-based vaporizers, helped it survive its shift away from cigarettes. It also built a premium nicotine pouch brand called !

It is worth noting that Altria’s focus on the U.S. market is an advantage compared to other tobacco companies. Cigarettes and other nicotine products are much more affordable in the U.S. than in other countries. This gives Altria the ability to raise prices to compensate for declining unit sales.

Despite the secular headwinds facing its iconic Marlboro and less exclusive cigarette brands, Altria has managed the company in a very shareholder-friendly manner, buying back stock using an accelerated share buyback program launched earlier this year. That has supported strong earnings-per-share growth and given it the ability to increase its dividend without increasing its total cash paid out.

The stock currently yields about 7.9%, and that dividend should continue to grow steadily each year as a result of the company’s strong free cash flow. With an enterprise value to EBITDA ratio of just 8.4x, the stock looks like a great value. Despite the market challenges, Altria is well-positioned to continue generating solid dividend growth for investors.

Is it worth investing $1,000 in Pfizer now?

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Adam Levy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Enbridge and Pfizer. The Motley Fool recommends Dominion Energy. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.