For investors seeking to build wealth and secure financial freedom, high-yield dividend stocks remain one of the most reliable avenues. By offering steady cash flow without the need for daily involvement, these investments can transform portfolios and provide a consistent income stream over time. In this context, two standout dividend stocks currently offer yields above 5%, making them strong candidates for long-term passive income: Verizon and Pfizer.
Investing in dividend stocks is a proven strategy for generating passive income, and success in this area often hinges on selecting companies that not only offer attractive yields but also have the financial stability to sustain and grow these payouts. Finding such companies can be a challenge, as only a few meet the criteria for financial strength, reliable cash flow, and long-term growth potential. However, for investors focused on income generation, these stocks can become cornerstone investments, delivering reliable returns for decades.
Verizon: A Telecom Leader with Impressive Yield
Verizon Communications, with a current dividend yield of 6.07%, stands out in the high-yield dividend landscape. Known for its strong position in the U.S. wireless market, Verizon holds approximately 40% of the postpaid phone market share, enabling the company to generate industry-leading margins and returns on capital. This financial stability supports Verizon’s 18-year streak of consecutive dividend increases, a testament to its commitment to rewarding shareholders. Recently, the company raised its quarterly dividend payout to 67.75 cents per share.
Despite its hefty 100% payout ratio, Verizon remains a compelling option for income-focused investors. The company’s stock has seen an 18% rise year to date, benefiting from investor rotation into high-yield dividend stocks in anticipation of potential interest rate cuts. Verizon’s strength lies in its expansive fiber-network assets and its forward-looking investments in 5G technology, which offer significant growth potential in the years to come.
In addition to its growth prospects, Verizon’s focus on wireless service revenue and free cash flow generation further enhances its ability to sustain high dividends. Trading at just 9.5 times forward earnings, the stock also offers investors a margin of safety in case of a broader market pullback. This combination of high yield, growth potential, and attractive valuation makes Verizon a standout option for those seeking steady passive income.
Pfizer: A Pharmaceutical Giant with an Attractive Yield
Pfizer, a global leader in the pharmaceutical industry, offers a substantial dividend yield of 5.69%. With a portfolio that includes over 350 marketed medicines and 113 clinical trial candidates, Pfizer’s global reach spans more than 200 countries. However, recent challenges, primarily linked to declining COVID-19 vaccine sales, have caused the company’s stock to drop over 50% from its three-year peak. While this may appear concerning, it could also represent a value opportunity for long-term investors.
Despite the decline in share price, Pfizer has maintained its 15-year streak of dividend increases, demonstrating the company’s dedication to delivering value to its shareholders. Although its current payout ratio of 436% raises concerns about sustainability, Pfizer’s management is addressing this by implementing a $4 billion cost-saving initiative aimed at improving the company’s financial position in the post-COVID era.
Looking forward, Pfizer’s future performance largely hinges on its clinical pipeline, particularly in the high-growth cancer treatment market. Success in this area could significantly improve the company’s financial outlook and bring its payout ratio closer to its historical average of 50%. Furthermore, Pfizer’s low valuation, currently trading at just 9.6 times projected 2026 earnings, offers a substantial margin of safety for investors looking to add stability and income to their portfolios.
A Strong Foundation for Passive Income
Both Verizon and Pfizer stand out as compelling options for investors seeking high-yield dividend stocks with long-term potential. Verizon’s dominant position in the telecom market and its investments in future technologies, paired with Pfizer’s leadership in the pharmaceutical industry and its promising clinical pipeline, make these stocks ideal candidates for a passive income portfolio.
These two dividend powerhouses offer not only high yields but also the financial strength and growth prospects that income-focused investors should prioritize when building a long-term portfolio. As both companies continue to grow and adapt to changing market conditions, their dividends could provide steady income for years to come.
