24/7 Wall St. Insights

• The current market rally is now two years old.
• Investors are likely to see lower returns over the next 10 years.
• 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 two 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. 

In simpler terms, it is the sum of income and stock appreciation. Dividend stocks can boost investment success by delivering regular income and capital appreciation.

After a stunning two years in which investors have seen the stock market increase by nearly 50%, many across Wall Street are not only tapping the brakes on the current rally but are also saying the outsized gains over the past decade are likely over. In a recent report from Goldman Sachs, Chief U.S. Strategist David Kostin and his team feel that the S&P 500 index is only expected to post an annualized nominal total return of just 3% over the next 10 years. In addition, they also see a roughly 72% chance that the benchmark index will trail Treasury bonds and a 33% likelihood they will be chasing inflation through 2034.

If the venerable index does trail Treasury Bonds, then it will also likely trail high-yield dividend-paying stocks. We screened the Goldman Sachs list of Buy-rated dividend-paying stocks looking for quality companies that investors can buy now and hold for the next decade or longer. Five top companies caught our eye, and all make sense with an overbought market. In addition, all pay at least a 5% or higher dividend and all have double-digit upside to the Goldman Sachs price target.

Why we recommend Goldman Sachs stocks

Goldman Sachs is the acknowledged leader in the investment landscape on Wall Street and worldwide. The firm’s top-notch research department continues to provide clients with the best ideas across the investing spectrum and is likely to continue to for years.

Devon Energy

This energy company utilizes the variable dividend strategy to pay investors a massive 5% dividend. Devon Energy Corp. (NYSE: DVN) an independent energy company, primarily engages in the exploration, development, and production of oil, natural gas, and natural gas liquids (NGLs) in the United States and Canada. It operates approximately 19,000 wells.

The company also offers midstream energy services, including:

• Gathering
• Transmission
• Processing
• Fractionation
• Marketing to natural gas producers, NGLs, crude oil, and condensate producers through its natural gas pipelines, plants, and treatment facilities

Production is weighted towards crude oil, while growth opportunities are liquids-focused. The Delaware Basin, SCOOP/STACK, Eagle Ford Shale, Canadian Oil Sands, and the Barnett anchors the company. Devon also owns equity in the publicly traded midstream MLP EnLink (NYSE: ENLC).

Kodiak Gas Services

This stock looks ready to break out to new 52-week highs and pays a very attractive 5.31% dividend. Kodiak Gas Services Inc. (NYSE: KGS) operates contract compression infrastructure for customers in the oil and gas industry in the United States.

It operates in two segments:

• Compression Operations
• Other Services

The Compression Operations segment operates company-owned and customer-owned compression infrastructure to enable the production, gathering, and transportation of natural gas and oil.

The Other Services segment provides a range of contract services, including station construction, maintenance and overhaul, and other ancillary time and material-based offerings.

Pfizer

This top pharmaceutical stock was a massive winner in the COVID-19 vaccine sweepstakes but has been beaten down over the last year as many are not getting boosters. Pfizer Inc. (NYSE: PFE) discovers, develops, manufactures, markets, distributes, and sells biopharmaceutical products worldwide and pays a hefty 5.81% dividend, which has risen yearly for the past 14 years.

The company offers medicines and vaccines in various therapeutic areas, including:

• Cardiovascular metabolic and women’s health under the Premarin family and Eliquis brands
• Biologics, small molecules, immunotherapies, and biosimilars under the Ibrance, Xtandi, Sutent, Inlyta, Retacrit, Lorbrena, and Braftovi brands
• Sterile injectable and anti-infective medicines and oral COVID-19 treatment under the Sulperazon, Medrol, Zavicefta, Zithromax, Vfend, Panzyga, and Paxlovid brands.

Pfizer also provides medicines and vaccines in various therapeutic areas, such as:

• Pneumococcal disease, meningococcal disease, tick-borne encephalitis
• COVID-19 under the Comirnaty/BNT162b2, Nimenrix, FSME/IMMUN-TicoVac, Trumenba, and the Prevnar family brands
• Biosimilars for chronic immune and inflammatory diseases under the Xeljanz, Enbrel, Inflectra, Eucrisa/Staquis, and Cibinqo brands
  Amyloidosis, hemophilia, and endocrine diseases under the Vyndaqel/Vyndamax, BeneFIX, and Genotropin brands

Trading not far from its lowest split-adjusted level in 13 years, the stock is an incredible bargain at current levels and pays a massive dividend. Pfizer reported revenues of $13.3 billion in the second quarter, representing 3% year-over-year operational growth, despite an expected decline in COVID revenues and a 14% year-over-year operational increase in revenues from the company’s non-COVID product portfolio. Third-quarter results will be out on November 8.

The pharmaceutical giant raised full-year 2024 revenue guidance to $59.5 to $62.5 billion and lifted adjusted diluted EPS guidance to $2.45 to $2.65. Patient investors will get paid one of the highest blue-chip dividends, and shares trade at a reasonable 9.88 times estimated 2025 earnings.

Verizon

This top telecommunications company offers tremendous value, trading at 9.5 times estimated 2025 earnings and paying investors a strong 6.20% 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.

Verizon 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 northeastern United States and Mid-Atlantic, including 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

Whirlpool

With massive institutional ownership and backing, the potential for new home sales to increase is a big positive for this company, which pays a dependable 6.67% dividend. Whirlpool Corp. (NYSE: WHR) manufactures and markets home appliances and related products.

It operates through four segments:

• North America
• Europe
• Middle East and Africa
• Latin America and Asia

The company’s principal products include:

• Refrigerators, freezers, ice makers, and refrigerator water filters
• Laundry appliances and related laundry accessories
• Cooking and other small domestic appliances
• Dishwasher-associated appliances and accessories, as well as mixers

Whirlpool markets and distributes its products primarily under these brand names:

• Whirlpool
• Maytag
• KitchenAid
• JennAir
• Amana
• Roper
• Admiral
• Affresh
• Gladiator
• Speed Queen
• Hotpoint
• Bauknecht
• Indesit
• Ignis
• Laden
• Privileg
• KIC
• Consul
• Brastemp
• Across
• Ariston
• Diqua
• Royalstar

Our 4 Top Ultra-High-Yield Dividend Picks for October and All Pay 12% and More

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