Generating thousands of dollars of recurring income can be a great way to make you less dependent on work income or retirement benefits. If you have money to invest in stocks, there are many high-yielding investments to consider right now. While many investors have been focusing on growth stocks and the hype surrounding artificial intelligence, stocks have been on the back burner, which could make now a good time to invest in them.
Three dividend stocks that can be the best long-term options are Bristol Myers Squibb (NYSE: BMY), Kraft Heinz (NASDAQ: KHC)and Enbridge (NYSE: ENB). By investing $20,000 in each of these stocks, you can earn more than $3,000 in annual dividends.
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The company Bristol Myers Squibb paid 4.3 %. S&P 500 an average of only 1.2%. If you invest $20,000 in stock, that will generate about $860 in dividends over the course of a full year.
Investors have been concerned about the company’s steep patent portfolio involving its top drugs. But the stock trades at a discount of 8 times its estimated future earnings, and the company has recently collected approvals for new drugs (such as Cobenfy and Breyanzi) and confirmed its long-term growth prospects. So it may be an oversold situation at the moment, making the Bristol Myers squibb an undervalued part of the supply chain to buy and hold. Most of the drugs in the company’s “growth portfolio” delivered growth of more than 30% through the first nine months of the year.
Bristol Myers Squibb generated more than $12 billion in free cash flow over the next 12 months, which is more than enough to cover its $4.8 billion dividend during that period. In the long run, this is a dividend stock that I feel comfortable holding on to, given the company’s track record of continued drug development and production.
One of the most underrated stocks today is Kraft Heinz. Strong brands and stable earnings make this an ideal dividend investment to buy and hold. At 5.1%, its yield is higher than Bristol Myers Squibb’s, and it can earn you more money — $1,020 based on a $20,000 investment.
While Kraft Heinz has experienced volatility in its earnings recently due to a recurring charge for the impairment, its cash flow appears to be strong. The company pays about $480 million in cash per share and often generates more than that in free flow, which indicates that the payout is safe. Over the next 12 months, Kraft Heinz’s free cash flow has reached $3 billion, compared to $10.9 billion in cash flow.
Kraft Heinz isn’t much of a growth stock these days, but it’s stable. It generated $26 billion in revenue in each of the past four years, and its operating income has been north of $5 billion in three of those years. If your priority is a good portion of distribution, Kraft Heinz should be a top choice to consider.
The highest share on this list is Enbridge, whose dividend is above 6.2%. Investing $20,000 in stocks puts you on track to accumulate about $1,240 a year in dividends. If you add that to the other stocks listed here, your total annual dividend income from the three investments will total about $3,140. Enbridge has been increasing its dividend payout for 29 straight years, making it a safe bet that your recurring payments will also increase over time.
The Canadian-based pipeline company recently completed the acquisition of several US natural gas utilities, which strengthens its long-term growth prospects. Management says this transaction “fits perfectly within Enbridge’s existing low-risk business model, provides reliable cash flow, and comes with established opportunities for quick-cycle growth opportunities.”
Enbridge is a good, stable stock to own. It says it should finish at the end of its guidance for the year of earnings before interest, taxes, depreciation, and amortization (EBITDA), and its distributed cash flow numbers (which it uses to evaluate its share) are in line. and last year’s performance. This is one of the safest oil and gas stocks to buy and hold.
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David Jagielski does not have a seat in any of the listed stocks. The Motley Fool has positions in and recommends Bristol Myers Squibb and Enbridge. The Motley Fool recommends Kraft Heinz. The Motley Fool has a disclosure policy.
Want Over $3,000 in Annual Income? Invest $20,000 in Each of These 3 Stocks was originally published by The Motley Fool.
