Investing

Want $5,000? Invest $10,000 in These 7 Dividend Stocks

John Seetoo

Published: July 17, 2024 10:04 am

24/7 Wall Street Insights

• An anticipated interest rate cut by the Federal Reserve to help the troubled real estate market will likely hike inflation further.
• Among the options for generating additional income, dividend stocks for those with investable assets may be the solution. 
• For investors seeking dividends, click here for a free report on two high dividend stocks. 

Peter Schiff is an internationally acclaimed economist who is unafraid to buck political convention in calling out the truth. He has been proven correct on numerous instances over the past decades with regard to fiat currency, inflation, employment numbers, and a host of other economic statistics. Schiff is especially adept at identifying discrepancies and intentional misrepresentations.

In particular, he recently cited how the economy is measured in 2024 vs. in 1994 as a reason for why the current employment and inflation statistics are not reflected in the real world, which is  clearly still in the financial doldrums.. 

Schiff, along with numerous other economists, anticipate that the Federal Reserve will attempt a rate cut to give the real estate market, which is struggling with high mortgage rates, a boost, going into the 2024 elections. However, they all also concur that a rate cut will further devalue the dollar and stoke higher inflation.

Millions of American households in every state are barely able to make ends meet, and are piling up credit card debt at a dangerous pace. Thus, the opportunities for additional employment that will solve the dilemma are slim. 

Dividend Stocks As the Most Versatile Asset Class For Investors

24/7 Wall Street has an extensive database of stocks from a wide range of industries with a broad spectrum of characteristics. The following list of seven stocks can be obtained, based on market price at the time of this writing, for $10,000 each, and would generate annual passive dividend income of over $5,000. Some of the names may be familiar; others more obscure. Nevertheless, an average annual yield north of 7% is considered on the “high-yield” side, so these or similar stocks are worth consideration from anyone seeking passive dividend income. 

Xerox Holdings Corporation

Stock #1 : Xerox Holdings Corporation (NASDAQ: XRX)

Yield: 9.34%

Shares for $10,000: 935.45

Annual Dividend Amount: ~$934.00

One clue as to the ubiquity of a company’s products or services is when its name becomes a verb. Some examples include “Google” for search engines and “Bloomberg” for messages among bond traders. In an earlier age, “Xerox” was synonymous with photocopying on paper. 

Today, Xerox Holdings has transformed itself into a global company. It supplies print, IT and other digital solutions and support services for office applications. The company has also expanded into a range of software, communication, and robotic automation  products and services.

While its 9.34% dividend is certainly attractive, it should be noted that Xerox has been undergoing restructuring. In May, its Board of Directors was revamped with 6 new members,  including executive management officers from Verizon, Mastercard, Dell, and other stalwarts. Analysts anticipate that Xerox will once again be profitable in the next 12 months, and its price target range is +90% on the bullish side and +35% on the bearish side. 

BCE Inc.

Stock #2 :  BCE Inc. (NYSE: BCE)

Yield: 9.01%

Shares for $10,000: 225.8

Annual Dividend Amount: ~$901.00

Headquartered in Quebec City, Canada, BCE Inc., better known as Bell Canada, is the Canadian cousin of US Bell legacy companies Verizon Communications, AT & T, and Lumen. All of these companies trace their origins to Alexander Graham-Bell, inventor of the telephone. Founded in 1880, BCE is a Canadian utility telecom behemoth catering to individuals, businesses, and government entities in both French and English..

BCE’s Bell Communication and Technology division provides both wireless and hardwired communications, internet and cloud services, satellite tv, and related products. Its Bell Media division handles broadcast, specialty, and pay-TV, digital media and streaming services, radio broadcasting, and advertising services, 

From an investor perspective, BCE has consistently paid its dividends since 1983, with increases every quarter since 2015. BCE recently announced it had acquired Stratejm to beef up its cybersecurity and CloudKettle for its Salesforce AI integration capabilities. 

Note: as BCE is a Canadian company, the actual dollar value of the dividends that US investors collect will change with exchange rates.  US investors owe Canadian taxes on the dividends, which can generally be credited back when filing tax returns. This will hold true for any other Canadian company dividend stocks owned by US investors.

Walgreens Boots Alliance Inc.

Stock #3 :  Walgreens Boots Alliance Inc. (NASDAQ: WBA)

Yield: 8.70%

Shares for $10,000: 869.5

Annual Dividend Amount: ~$870.00

Walgreens in the US and Boots in the UK are two of  the most ubiquitous drugstore, cosmetic, and personal care products retail chains operating today. With 8,000 outlets, and 9 million daily customers, Walgreens Boots Alliance is a huge international enterprise, as it also has retail outlets or subsidiaries in Ireland, Germany, Thailand, Mexico, and Chile. 

Walgreens Boots stock has taken a recent price hit due to lowered earnings per share guidance, which is why the yield is currently high. The primary reason has been the price squeezes being imposed between pharmacies and health insurers by the benefit managers. Unlike rival CVS, for example, Walgreens Boots does not own an in-house benefits management company.  

With new CEO Tim Wentworth, Deerfield, IL based Walgreens Boots has strong upside potential, according to a number of analysts. The announcement of underperforming stores and streamlining aspects of its US healthcare portfolio to address the benefit manager issue was met with positive response. Walgreens Boots has a healthy cash position, with $605 million in operating cash flow and $334 million in free cash flow. 

As of Q1 2024, 41 hedge funds presently have investments in Walgreens Boots, up from 31 at the end of 2023. Prior to 2024, the company had 47 years of continual growth; Wentworth’s initiatives are expected to return Walgreens Boots to that trajectory. 

Enbridge, Inc.

Stock #4 :  Enbridge, Inc. (NYSE: ENB)

Yield: 7.43%

Shares for $10,000: 277

Annual Dividend Amount: ~$743.00

Headquartered in Calgary, Canada, Enbridge, Inc. is a midstream company energy infrastructure company with 5 separate divisions:

• Liquids Pipelines – Liquids Pipelines handles crude oil and liquid hydrocarbons transport and management of pipelines and terminals within Canada and the US.
• Gas Transmission and Midstream – This division invests in and manages natural gas pipelines and processing facilities.
• Gas Distribution and Storage – Tanker and delivery of natural gas utility operations throughout Ontario and Quebec to retail, commercial and industrial customers.
• Renewable Power –  This is the Green power division in charge of North American solar, wind, geothermal, waste heat recovery, and transmission assets. 
• Energy Services – This department provides logistics services and physical commodity marketing to energy producers, refiners, and other customers. 

Founded in 1949, Enbridge, Inc.has a dividend record stretching for almost 7 decades, while raising payouts for almost 30 years. Midstream companies are essential for the energy supply chain, since distribution to end users is where the true value of energy assets are realized. Through its Mainline and Express pipelines, Enbridge transports 3 million barrels of crude daily.  This allocation accounts for almost 63% of the Canadian crude oil production transported to the U.S. annually.

Enbridge, Inc. has recently been reaching out to Canada’s Indigenous tribes to include them in new renewable energy projects. The Seven Star Energy project  with Six Nations Energy Development (an Indigenous tribe consortium) announced a 200 MW wind power project in Saskatchewan. It is anticipated to supply emissions-free clean power to over 100,000 households. Six Nations will acquire a minimum 30% interest, giving the tribes a stable income stream. 

Vector Group Ltd.

Stock #5 :  Vector Group Ltd. (NYSE: VGR) 

Yield: 7.21%

Shares for $10,000: 901.7

Annual Dividend Amount: ~$721.00

While many holding companies involved in disparate business divisions may attempt to create internal synergies to maximize resources, such is not always a given. Case in point: smoking indoors at workplaces, restaurants or bars has been banned in 38 states. Miami headquartered Vector Group Ltd., a $1.7 billion market cap company with a primary component subsidiary founded in 1873, is ironically focused on those two sectors – tobacco and commercial real estate. 

On the tobacco side, Vector Group owns Liggett Group, the 4th largest cigarette company in the US, and a significant player in the discounted cigarette market. Its brands include: 

• Montego
• Eagle 20s
• Grand Prix
• Liggett Select
• Eve
• Pyramid
• USA

Additionally, Vector Group also manufactures private brands. Vector Tobacco operates out of its cigarette factory in North Carolina. 

For real estate, Vector Group’s New Valley LLC owns 23 large real estate properties, predominantly residential condominiums  in Manhattan. There is also a Times Square Marriott Hotel, The Park Lane Hotel on Central Park South, resorts in Bermuda and St. Barthelemy, and mixed use properties in Hollywood and Milan, Italy. Before spinning it off as a separate public company in 2021, Vector Group owned 100% of top NY real estate brokerage firm Douglas Elliman (NYSE: DOUG).

Although overall smoking rates are diminishing, the market is still huge. Liggett’s Montego is still the best selling discount cigarette brand in the US. Ian Zaffino of Oppenheimer rates Vector Group stock a “buy” and his price target indicates a +35-40% increase over current market price. Earnings forecasts anticipate higher earnings per share for 2024 year end, based on current trends. 

As Vector Group’s earnings continue to grow, investors attracted by the dividend should have a degree of comfort that barring any major earnings drops, the current 7.21% rate is sustainable. 

The Bank of Nova Scotia

Stock #6 :  The Bank of Nova Scotia (NYSE: BNS)

Yield: 6.61%

Shares for $10,000: 212.45

Annual Dividend Amount: ~$661.00

Founded in 1832, The Bank of Nova Scotia, also operating as Scotiabank, has a $57.85 billion market cap and is the third largest bank in Canada. With main offices in Toronto, Scotiabank’s international reach extends south to the US, continues down to Mexico, Colombia, Central America, Peru, Chile, and the Caribbean. 

From a dividend investor’s perspective, it might be heartening to know that Bank of Nova Scotia’ unbroken streak of dividend payouts started in 1833. As with Enbridge, Inc. Canadian company dividend payouts are subject to Canadian taxes, which are subject to reimbursement as a credit  by the IRS for US taxpayers, and are waived when paid into an IRA or other retirement account.  

Universal Corporation

Stock #7 :  Universal Corporation (NYSE: UVV) 

Yield: 6.61% 

Shares for $10,000: 203.9

Annual Dividend Amount: ~$661.00

Returning to the topic of tobacco from the supply chain angle, companies with strong cigarette brands, like Altria Group’s (NYSE: MO) Marlboro and British American Tobacco plc’s (NYSE: BTI) Gitanes don’t grow and harvest their own tobacco. So where do they get their supply?

The answer to that question is Richmond, VA based Universal Corporation, which sources, procures, processes, stores, and distributes various tobacco types, such as flue-cured, oriental leaf, burley, and dark air-cured. Other services include custom blending, physical and chemical testing, liquid nicotine extraction, manufacturing with reconstituted leaves, and other tobacco processing specialties.

From an investor’s viewpoint, Universal Corporation has a 54 consecutive year streak of dividend increases. Its current 10.26% price to earnings ratio is roughly 20% below the industry standard, indicating that Universal Corporation has significant upside potential.