Want Over $1,100 in Annual Dividends? Invest $6,000 in These 3 High-Yielding Stocks
You need money to make money. But if you focus on high-yielding dividend stocks, you don’t need as much to generate a lot of recurring cash flow. While some high-yielding stocks can be risky, others are safer than they look.
Three dividend stocks with payouts exceeding 5% that can be excellent options for income-seeking investors today are Verizon Communications (VZ +1.70%), United Parcel Service (UPS -6.06%), and General Mills (GIS +2.88%). Here’s how by investing $6,000 into each one of these stocks, investors could generate $1,100 in dividend income, and why doing so may not be as risky as it might appear to be at first glance.
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Verizon Communications
At 6%, Verizon offers investors a generous yield at a time when payouts are incredibly low due to rising stock valuations. The S&P 500, for example, yields just 1.1%. That means, with Verizon, investors are getting more than five times the dividend income as with a typical stock in the broad index.
It’s a great deal for income investors, especially since Verizon’s business is doing just fine. It may not be a growth machine, but it’s still doing well and generating single-digit growth, the kind investors might expect from a telecom company. Margins remain good, and Verizon’s payout ratio is manageable at around 70% — there’s no cause for alarm regarding its dividend.
Today’s Change
(1.70%) $0.81
Current Price
$48.13
Key Data Points
Market Cap
Day’s Range
$47.80 – $49.01
52wk Range
$38.39 – $51.68
Volume
22.8M
Avg Vol
27.1M
Gross Margin
45.71%
Dividend Yield
5.91%
Investing $6,000 into the stock at such a high yield would produce around $360 per year in dividends. And with it trading at less than 10 times its estimated future earnings, based on analyst projections, it’s still a fairly cheap buy right now.
United Parcel Service
United Parcel Service (UPS) is another high-yielding stock that many investors may be overly worried about. At 5.8%, its yield is nearly as high as Verizon’s.
Investors may be spooked that its payout ratio is over 100%. But that doesn’t always tell the whole story. UPS reported earnings today, and while net income was down more than 50% in the period ending June 30, the company also incurred restructuring expenses as it looks to improve its operations and efficiency. Its adjusted net income actually rose by 14%.
Today’s Change
(-6.06%) $-6.84
Current Price
$106.11
Key Data Points
Market Cap
Day’s Range
$103.09 – $109.20
52wk Range
$82.00 – $122.41
Volume
12.7M
Avg Vol
5.6M
Gross Margin
18.32%
Dividend Yield
5.81%
CEO Carol Tomé says the business “launched a major transformation” but that it’s now “through those bumps” and on a stronger path forward. The company beat expectations for the most recent quarter and also raised its outlook for the year.
Another $6,000 invested in the transportation stock could generate roughly $350 in annual dividend income. Combined with Verizon, that would total about $710.
General Mills
The highest-yielding stock on this list belongs to General Mills, the iconic food company. At 6.7%, a $6,000 investment in the stock would produce approximately $400 in annual dividends. Combined with the other investments, that would bring the total to about $1,110.
General Mills posted its year-end results at the start of July, showing minor but stable 1% growth in the last three months of its fiscal year (which ended May 31). It posted a loss for the year overall, as it is also in the midst of restructuring efforts, divesting certain businesses to focus on higher-growth opportunities. By fiscal 2030, General Mills is aiming to achieve $3 billion in cumulative cost savings through its transformation initiative.
Today’s Change
(2.88%) $1.06
Current Price
$37.67
Key Data Points
Market Cap
Day’s Range
$37.18 – $38.52
52wk Range
$31.75 – $51.33
Volume
7.5M
Avg Vol
10.5M
Gross Margin
33.59%
Dividend Yield
6.66%
The company has paid dividends consistently to its shareholders for 127 years, without interruption. While it faces challenges, its free cash flow remains strong, totaling $1.6 billion over the past fiscal year — more than the $1.3 billion it paid in dividends.
General Mills stock is down 19% this year, but with strong brands in its portfolio, a focus on cost reduction, and strong free cash flow, its dividend doesn’t look to be in any imminent danger. With the stock also trading at just 12 times its estimated future earnings, it could be a good value stock to buy today.
