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5% CDs Are History: 6 High-Yield Blue Chips Pay 5% and Higher Dividends

Lee Jackson

Published: October 3, 2024 7:14 am

24/7 Wall St. Insights

• Banks are slashing the rates they pay on money market funds and certificates of deposit (CDs).
• Dividend-paying stocks will grow in favor as rates continue to decline.
• Sit back and let dividends do the heavy lifting for a simple, steady path to serious wealth creation over time. Grab a free copy of “7 Things I Demand in a Dividend Stock,” plus get our two best dividend stocks to own today. Access 2 legendary, high-yield dividend stocks Wall Street loves.

Dividend stocks are a favorite among investors for good reason. They provide a steady income stream of passive income and offer a promising avenue for total return. Total return, a comprehensive measure of investment performance, encompasses interest, capital gains, dividends, and distributions realized over time.

Let’s take a closer look at the concept of total return. Imagine you purchase a stock at $20 that offers a 3% dividend. If the stock price rises to $22 within a year, your total return is 13%. This is calculated by adding the 10% increase in stock price to the 3% dividend.

Income investors were spoiled over the past two years as interest rates soared to their highest levels in over 20 years. The Federal Reserve raised the benchmark federal funds rate for almost two years to combat rampant inflation, which peaked in June 2022 when the consumer price index inflation rate hit a stunning 9.1%.

With the first interest rate cut since 2020, a hefty 50 basis points or half of one percentage point recently, yields that banks are paying immediately got chopped. Money markets were cut from 40 to 50 basis points, while a 5% one-year CD started to disappear fast and may soon become history.

One bright idea for investors using CDs and money market funds as fixed-income investments may be to shift some of those dollars to quality dividend stocks. We screened our 24/7 Wall Street high-yield blue chip database and found five top companies that pay 5% and more dependable dividends. All are rated Buy by top Wall Street banks.

Why do we cover dividend stocks?

Dividend stocks provide investors with reliable streams of passive income. Passive income is characterized by its ability to generate revenue without requiring the earner’s continuous active effort, making it a desirable financial strategy for those seeking to diversify their income streams or achieve financial independence.

Altria

This tobacco company offers value investors a great entry point now and a rich 7.70% dividend. Altria Group Inc. (NYSE: MO) manufactures and sells smokable and oral tobacco products in the United States through its subsidiaries.

The company provides cigarettes primarily under the Marlboro brand, as well as:

• Cigars and pipe tobacco, principally under the Black & Mild brand
• Moist smokeless tobacco and snus products under the Copenhagen, Skoal, Red Seal, and Husky brands
  on! Oral nicotine pouches

It sells its tobacco products primarily to wholesalers, including distributors and large retail organizations, such as chain stores.

Altria used to own over 10% of Anheuser-Busch InBev S.A. (NYSE: BUD), the world’s largest brewer. The company sold 35 million of its 197 million shares through a global secondary offering. That represents 18% of their holdings but still leaves a hefty 8% of the outstanding shares in their back pocket. They also announced a $2.4 billion stock repurchase plan partially funded by the sale.

Crown Castle

This top cell tower company offers incredible growth and income possibilities with a fat 5.43% dividend. Crown Castle International Corp. (NYSE: CCI) is one of the largest U.S. wireless tower companies, with over 40,000 towers and approximately 90,000 route miles of fiber supporting small cells and fiber solutions across every primary U.S. market.

The company’s core business is leasing space on its wireless towers, primarily to wireless carriers, government agencies, and broadband data providers. This nationwide portfolio of communications infrastructure connects cities and communities to essential data, technology, and wireless service – bringing information, ideas, and innovations to the people and businesses that need them.

Crown Castle is one of the best stocks in the sector for more conservative investors. Its high yield distribution and low volatility make it a good holding for accounts seeking growth, income, and less risk.

Dow

This company was spun out from DuPont in 2019 and offers investors growth and income potential with a hefty 5.29% dividend. Dow Inc. (NYSE: DOW) is a leading materials science company formed by the merger of Dow and DuPont in 2017 and subsequent spin in 2019.

The company is organized into three principal divisions:

• Performance Materials & Coatings
• Industrial Intermediates & Infrastructure
• Packaging & Specialty Plastics

The company’s segments include Agricultural Sciences, which provides crop protection, seed/plant biotechnology products and technologies, urban pest management solutions, and healthy oils.

Consumer Solutions, which consists of:

• Consumer Care
• Dow Automotive Systems
• Dow Electronic Materials
• Consumer Solutions-Silicones businesses

Infrastructure Solutions, which consists of:

• Dow Building & Construction
• Dow Coating Materials
• Energy & Water Solutions
• Performance Monomers and Infrastructure Solutions-Silicones businesses

Performance Materials & Chemicals, which consists of Chlor-Alkali and Vinyl, Industrial Solutions and Polyurethanes businesses.

Performance Plastics, which consists of Dow Elastomers, Dow Electrical and Telecommunications, Dow Packaging and Specialty Plastics, Energy and Hydrocarbons business.

Ford

This legacy carmaker pays shareholders a rich 5.49 dividend. Ford Motor Co. (NYSE: F) develops, delivers, and services a range of Ford trucks, commercial cars and vans, sport utility vehicles, and Lincoln luxury vehicles worldwide.

It operates through five segments:

• Ford Blue
• Ford Model e
• Ford Pro
• Ford Next
• Ford Credit

The company sells Ford and Lincoln vehicles, service parts, and accessories through distributors, dealers, and dealerships to commercial fleet customers, daily rental car companies, and governments.

It also engages in vehicle-related financing and leasing activities to and through automotive dealers.

In addition, the company provides retail installment sale contracts for:

• New and used vehicles
• Direct financing leases for new cars to retail and commercial customers, such as leasing companies, government entities, daily rental companies, and fleet customers.

Further, it offers wholesale loans to dealers to finance the purchase of vehicle inventory, loans to dealers to finance working capital and enhance dealership facilities, purchase dealership real estate, and other dealer vehicle programs.

Kinder Morgan

This is one of the top energy stocks and remains a favorite across Wall Street. It pays a dependable 5.38% dividend. Kinder Morgan Inc. (NYSE: KMI) is an energy infrastructure company in North America.

The company operates through four segments:

• Natural Gas
• Products
• Terminals
• CO2

The Natural Gas Pipelines segment:

• Owns and operates the interstate and intrastate natural gas pipeline and underground storage systems
• Natural gas gathering systems and natural gas processing and treating facilities
• Natural gas liquids fractionation facilities and transportation systems
• Liquefied natural gas liquefaction and storage facilities

The Products Pipelines segment owns and operates refined petroleum products, crude oil and condensate pipelines, associated product terminals, and petroleum OKEpipeline transmit facilities.

The Terminals segment owns and operates liquids and bulk terminals that store and handle various commodities, including:

• Gasoline
• Diesel fuel
• Chemicals
• Ethanol
• Metals
• Petroleum coke
• Owns tankers

Lastly, the CO2 segment produces, transports, and markets CO2 to recover and produce crude oil from mature oil fields. It owns interests in/or operates oil fields, gasoline processing plants, and a natural oil pipeline system in West Texas.

Kinder Morgan holds and runs approximately 83,000 miles of pipelines and 144 terminals.

Verizon

This top telecommunications company offers tremendous value, trading at 9.5 times estimated 2025 earnings and paying investors a strong 6.11% dividend. Verizon Communications Inc. (NYSE: VZ), through its subsidiaries, provides communications, technology, information, and entertainment products and services to consumers, businesses, and governmental entities worldwide.

It operates in two segments:

• Verizon Consumer Group
• Verizon Business Group

The Consumer segment provides wireless services across the wireless networks in the United States under the Verizon and TracFone brands and through wholesale and other arrangements.

It also provides fixed wireless access (FWA) broadband through its wireless networks and related equipment and devices, such as:

• Smartphones
• Tablets
• Smartwatches and other wireless-enabled connected devices

The segment also offers wireline services in Mid-Atlantic, Northeastern United States, and the District of Columbia through its fiber-optic network, Verizon Fios product portfolio, and a copper-based network.

The Business segment provides wireless and wireline communications services and products, including:

• FWA broadband
• Data
• Video and conferencing
• Corporate networking
• Security and managed network
• Local and long-distance voice
• Network access services to deliver various IoT services and products to businesses, government customers, and wireless and wireline carriers in the United States and internationally

Five New Stocks Under $10 That Pay Huge Ultra-Yield Dividends of 10% and More