High-growth AI stocks are undoubtedly the most attractive investments right now. But you can’t ignore the peace of mind that passive income stocks offer when high-growth stocks go through their rollercoaster ride. Long-term income investors looking to snap up some quality stocks now might want to take a look at these three high-yield dividend stocks with yields above 5%.
#1 Dividend Stock: Altria
Tobacco giant Altria (MO) has made its name among passive income investors with its high yield of 5.7%, making it one of the highest-yielding blue-chip dividends on the market. It’s not just the yield that has made Altria a reliable dividend stock. The company has spent decades rewarding shareholders with huge dividends, steady cash flow, and steady payout increases. It has a 56-year history of dividend increases, earning it a place among the “Dividend Kings.”
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Altria Group owns several of the best-known tobacco brands in the US, and Marlboro remains its flagship cigarette brand. Despite long-term declines in cigarette volumes across the industry, the company has maintained strong profitability through pricing power, brand loyalty and disciplined cost management. It has also expanded into the oral nicotine and electronic vapor products market with brands such as on! nicotine pouches and NJOY products.
Its high forward payout ratio of 76% has often raised questions about the sustainability of the dividend. But in the recent first quarter, adjusted earnings rose 7.3% and the company paid $1.8 billion in dividends. For the full year, Altria expects adjusted EPS growth of 2.5% to 5.5% year over year. That leaves room for Altria to continue funding its dividend while also supporting buybacks and investments in smoke-free products.
On Wall Street, MO stock has a consensus rating of “Moderate Buy.” Of the 14 analysts covering the stock, five rate it a “Strong Buy,” seven have a “Hold” rating, one has a “Moderate Sell” and one recommends a “Strong Sell.” MO shares are up 25% year to date, surpassing their average price target of $68.82. However, the high price estimate of $82 implies the stock could rise 11% from current levels.
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Dividend Stock #2: Pfizer
Pharmaceutical giant Pfizer (PFE) has also earned a reputation as a reliable dividend stock. Pfizer offers a dividend yield of around 6.6%, making it one of the highest-yielding large-cap healthcare stocks on the market. Pfizer became an even more recognized health stock during the COVID-19 pandemic thanks to its vaccines and antiviral products. However, investors began to wonder whether it can maintain such a high dividend yield after the sharp drop in COVID-related earnings in the post-pandemic era.
But Pfizer continues to generate enormous cash flow from its diversified pharmaceutical business. It has developed a diverse portfolio of medicines and vaccines in oncology, immunology, cardiovascular diseases and rare diseases. This diversification helps stabilize revenue even when certain drugs face patent expirations or weaker demand. In the most recent first quarter, while Pfizer’s revenue rose 5% to $14.5 billion, adjusted EPS declined 18% to $0.75. However, the company paid $2.4 billion in cash dividends.
Additionally, Pfizer has increased its dividend consistently over the past 17 years. Its forward payment ratio of 56% also remains reasonable, leaving room for reinvestment in pipeline development.
Wall Street rates PFE stock a “Hold” overall. Of the 28 analysts covering PFE, eight rate it a “Strong Buy,” one rates it a “Moderate Buy,” 16 rate it a “Hold,” and three suggest a “Strong Sell.” The average price target of $29.28 suggests the stock can rise 13% from current levels. However, its high price target of $36 implies 39% upside potential over the next 12 months.
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Dividend Stock #3: Verizon Communications
Telecommunications giant Verizon Communications (VZ) has long been considered one of the market’s classic dividend stocks. It offers a forward dividend yield of 5.9%, significantly above the S&P 500 average, and remains attractive for income-focused portfolios.
Verizon operates one of the largest wireless communications networks in the U.S. It provides wireless phone services, high-speed Internet, broadband, 5G network services, and business communications solutions for consumers and businesses. Since wireless connectivity is an essential service, it generates constant cash flows for the company. This stability has allowed Verizon to maintain its dividend payments for years.
In the first quarter, Verizon’s adjusted earnings rose 7.6% to $1.28 per share and generated $3.8 billion in free cash flow (FCF). The company expects adjusted earnings to increase between 5% and 6% in 2026. It also expects to generate FCF of around $21.5 billion, which would potentially be the highest level since 2020. Importantly, Verizon has increased its dividend for the past 22 years. The company is about to join the “Dividend Aristocrats”, that is, companies that have increased their dividends for 25 consecutive years.
Additionally, Verizon’s forward payout ratio sits comfortably at 57%, leaving room for further dividend increases and also allowing the company to pay down its debt and reinvest in the business.
Overall, Verizon stock has earned a “moderate buy” rating on Wall Street. Of the 29 analysts covering the stock, nine rate it a “Strong Buy,” two recommend a “Moderate Buy” and 18 suggest a “Hold.” The stock’s average price target of $51.92 suggests a potential upside of 7.4% from current levels. But its highest Street estimate of $71 implies that VZ stock can rise as much as 47% over the next 12 months.
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On the date of publication, Sushree Mohanty had no (directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are for informational purposes only. This article was originally published on Barchart.com
