High-Yield Dividend Stocks: A Safe Haven for Investors in 2024

3 High-Yield Dividend Stocks to Buy and Hold Forever | The Motley Fool

If investors are worried about the economy, these three high-yield dividends could offer a safe haven. There are many reasons investors love dividends. For one, the companies that pay them are generally more stable because unhealthy companies aren't in a position to return value to shareholders in the form of dividends. Even during downturns or recessions, dividend stocks have historically shown growth, and long-term reinvestment of dividends is one of the best ways to generate wealth in a portfolio. With questions about the U.S. economy mounting, here are three high-yield dividend stocks that investors can buy and hold forever: Ford Motor Company (F 0.48%), AT&T (T 1.31%), and Kraft Heinz (KHC 1.26%). Let's first address the elephant in the room when it comes to Ford and the current economic uncertainty. The automaker's balance sheet is in a great position to weather a potential downturn with nearly $27 billion in cash and about $45 billion in liquidity at the end of the second quarter. Ford is also solving a major quality control problem after leading the U.S. automotive industry in recalls for three straight years, which drove warranty costs $800 million higher during the second quarter. J.D. Power recently reported that the company jumped 14 spots to No. 9 in its 2024 U.S. Initial Quality Study. It will take more than a year for its improvement to offset warranty costs, but things are moving in the right direction. Right now, a hot topic for Ford investors is its Pro division, the commercial van and truck segment that has seen its business soar. During the first half of 2024, Ford Pro generated $5.57 billion in earnings before interest and taxes (EBIT) with EBIT margins nearly reaching 16%. Those results brightly outshone its Blue segment, with its traditional gasoline vehicles, which generated $2 billion in EBIT on margins at 4.3%. In the near term, look for Ford to continue improving vehicle quality; expand its Pro business; and curb losses in its electric vehicle division, Model-e. As the company moves forward, long-term investors can reap the rewards of its dividend yield, which is nearing 6% territory. Some investors currently might be hesitant to buy shares of AT&T for its dividend. That's because in 2022, the company cut its quarterly dividend to pay down some of its debt. Besides paying some of that debt, it also generated $8.5 billion in free cash flow during the first half of 2024 and easily had enough left to pay out $4.1 billion in dividends. The payout now looks safe from further cuts. AT&T also delivered some strong signs of growth during the second quarter. The company added 419,000 postpaid phone net adds, well ahead of estimates calling for 285,000, and recorded 239,000 AT&T Fiber net adds, reaching 200,000-plus net adds for 18 consecutive quarters. Mobility service revenue increased 3.4% compared to the prior year, while consumer broadband revenue rose 7%. Potential catalysts could come from a phone upgrade cycle as new devices with artificial intelligence (AI) capabilities continue to come out, convincing consumers to replace their phones. Ultimately, long-term investors can expect stable and consistent results, and with a dividend yield of 5.7%, AT&T continues to be very attractive for income seekers. Kraft Heinz finds itself in an interesting turnaround position, while also offering income investors an interesting long-term opportunity. After years of cutting costs -- a challenge in a competitive consumer goods industry that requires marketing and innovation to grow -- the company is trying to refocus its strategy. Kraft has now separated its brands into three categories: Accelerate, Protect, and Balance. Management says its Accelerate brands have the potential for higher growth and margins, and therefore deserve more marketing spending and innovation. The company plans to drive growth by pushing resources into these brands, and it's possible stagnant brands in the Balance category could be sold off. Top-line growth has been challenging, but Kraft grew its gross profit margin by 180 basis points during the second quarter. Through the first half of 2024, the company's net cash provided by operating activities rose 8.1%, and its free cash flow increased 8.7% compared to the prior year. While investors wait on the turnaround to gain more traction, and for its emerging markets to help drive revenue higher, the company dished $1.5 billion back to shareholders through dividends and share buybacks during the first half of 2024. Its yield sits at a robust 4.5%. Various challenges have investors shying away from Ford, AT&T, and Kraft Heinz, but they all have historically strong brands and should continue to offer high-yielding dividends. The payouts aren't likely to diminish anytime soon and should provide returns even during a potential downturn.

Want Safe Dividend Income in 2024 and Beyond? Invest in the Following 2 Ultrahigh-Yield Stocks | The Motley Fool

These top stocks can significantly increase your passive income. Holding stocks of companies that make regular cash payments to shareholders can take the sting out of market volatility. Here are two strong businesses that have been around for decades and currently pay dividend yields that are at least three times the S&P 500 average of 1.32%. Realty Income (O 0.57%) owns more than 15,000 real estate properties in the U.S. and Europe. It partners with some of the largest companies in the world, including Walmart and FedEx, to open physical locations and expand their businesses. With higher interest rates pressuring the real estate market right now, the stock is trading 26% off its previous high, which has sent the trailing-dividend yield above 5%. Realty Income was founded in 1969 and has paid a monthly dividend for 54 consecutive years. It operates as a real estate investment trust (REIT), which means it must distribute at least 90% of its taxable income to shareholders. It currently pays a monthly dividend of $0.263 per share, bringing its forward yield to 5.22% -- nearly four times the S&P 500 average. Of course, the dividend is only as safe as the resiliency of the company's property portfolio. On that note, Realty Income only acquires real estate that its clients consider important to the success of their business, and it also seeks to partner with companies that are industry leaders that benefit from a competitive advantage. These factors explain why Realty Income has paid a dividend for so long and why it has delivered outstanding returns to shareholders. Over the last 30 years, the stock delivered a compound annual return of 13.5%, and it still has opportunities to grow. Management sees tremendous opportunities in Europe -- an addressable market worth $8.5 trillion. It's also starting to make investments in data-center properties, given the growing investment in expanding technology infrastructure for artificial intelligence (AI). Warren Buffett's Berkshire Hathaway has held a large stake in Kraft Heinz (KHC 1.26%) for several years. Berkshire originally invested in Kraft Foods more than a decade ago before it merged with H.J. Heinz in 2015. Buffett has favored strong consumer brands throughout his career, which is a good reason for investors to take advantage of Kraft's high-dividend yield. The stock has been flat over the last year, as sales are under pressure amid a weak consumer-spending environment. Kraft Heinz reported a decline of 2.4% year over year in adjusted sales in the second quarter. Most importantly, Kraft Heinz continues to generate plenty of cash to fund its dividend. In the first half of 2024, its free cash flow grew grew 9% year over year to $1.2 billion, so a temporary sales decline is not going to impact its dividend payments. The shares currently pay a quarterly dividend of $0.40 per share, which brings the forward-dividend yield to 4.62%. The company paid 66% of its free cash flow in dividends over the last year, and management's recent efforts to improve its capital efficiency should continue to produce healthy streams of free cash flow to reinvest in growth opportunities, particularly emerging markets, and pay dividends. The stock could offer upside once consumers are in a better spending position. The shares trade at a low forward price-to-earnings (P/E) ratio of 11. The stock could appreciate by at least 30% if the market decides to award the company a forward P/E of 15, which would still be below the S&P 500 average.