You don’t need a fortune to invest in your future. Even with a modest budget, you can buy shares of three excellent dividend-paying companies that could provide you with a steady stream of passive income.
These stocks have affordable share prices, but their dividend programs are generous and reliable. They offer yields above 6%, and they have the potential to increase their payouts in the future.
AT&T AT&T (NYSE: T) is a telecom giant that offers a 6.2% yield and a solid track record of dividend growth.
In 2022, it separated its volatile media business and formed Warner Bros. Discovery. Now it focuses on its core telecom operations, which generate consistent cash flows from millions of mobile and broadband internet customers.
Landline customers are dwindling, but that revenue loss is more than compensated by the growing demand for internet services. Broadband revenues increased 8.1% last year, thanks to the ongoing expansion of AT&T Fiber. This was the sixth consecutive year that AT&T Fiber added more than a million net customers.
The company’s investments in 5G technology are also paying off. Mobility-service revenue grew 4.4% last year, resulting in record-high operating income for the segment.
AT&T also launched a fixed-wireless home-internet service last year, called AT&T Internet Air. The company added 67,000 subscribers in the last quarter of 2023, and this number could grow faster this year. The service is already available in 59 locations, up from 35 at the end of 2023.
Pfizer Pfizer (NYSE: PFE) is a pharmaceutical powerhouse that offers a 6.2% yield and a strong pipeline of new drugs.
Pfizer’s COVID-19 products, Comirnaty and Paxlovid, have been underperforming, but this company was a leader in developing new blockbuster drugs before the pandemic brought in huge cash inflows. The stock market seems to be overlooking the fact that Pfizer has reinvested a lot of its COVID-19 profits into a range of new growth drivers.
Last year, Pfizer bought Seagen for $43 billion in cash. The deal gave the company access to four commercial-stage cancer drugs, including Padcev.
The FDA approved Padcev to treat newly diagnosed patients with bladder cancer last December. Patients who are newly diagnosed with cancer tend to stay on treatment longer than those who have tumors that failed to respond to an initial treatment. This is why Padcev sales are projected to rise from $52 million in 2023 to over $7 billion by 2030.
Altria Group Altria Group (NYSE: MO) is a tobacco behemoth that offers a whopping 9.5% yield. The stock is facing a lot of headwinds because cigarette smoking is on the decline, and the trend is accelerating. Altria’s main challenge now is the rising popularity of Elf Bar and other flavored e-cigarettes that compete with its own products.
Altria has been trying to adapt to the changing consumer preferences by investing in alternative nicotine products, such as IQOS, a heated-tobacco device, and On!, an oral nicotine pouch. These products have been growing rapidly, but they still represent a small fraction of Altria’s total revenue.
Altria also owns a 10% stake in Anheuser-Busch InBev (NYSE: BUD), the world’s largest brewer, and a 45% stake in Cronos Group (NASDAQ: CRON), a Canadian cannabis producer. These investments could diversify Altria’s revenue sources and provide some growth opportunities in the future.
Despite the challenges, Altria has been able to maintain its profitability and cash flow, thanks to its pricing power and cost-cutting efforts. The company has been raising its dividend for 52 consecutive years, making it a Dividend Aristocrat. Altria expects to pay out 80% of its adjusted earnings per share as dividends, which suggests that its dividend is sustainable and could grow further.
