Investing

5 Spooky High-Yield Sin Stocks Are All Offering Big Treats With No Tricks

Lee Jackson

Published: October 29, 2024 8:12 am

24/7 Wall St. Insights:

• Wall Street pros expect volatility to ramp up regardless of presidential outcome.
• Despite added volatility, the S&P 500 should have another year of big double-digit gains.
• 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.

Almost regardless of what happens these days, the market pushes higher. The gains continued unabated thanks to 15 years of excess central bank-provided liquidity, tempered by two years of rate hikes. Still, a massive increase in retail trading volume and the constant flow of money into passive index and exchange-traded funds kept the train rolling. The Magnificent 7 mega-cap technology stocks that have influenced the indices and pushed everything higher are reporting this week and will likely influence trading across the board.

A long-overdue sell-off is probably coming and may start right after the election. While it doesn’t necessarily mean a market crash, it could mean a fast and furious 10%, 15%, or even 20% bear market territory drop. We have been looking for ideas that could stand up best in a swift sell-off, and the group commonly known as the “sin stocks” may be just the ticket for worried investors.

One of the categories on Wall Street that some portfolio managers don’t want to discuss in their portfolios is the so-called sin stocks. These are companies that sell tobacco and alcohol products, run gambling casinos, sex-related industries, weapons manufacturers, and now even marijuana producers. While they don’t all seem sinful at the margin, some money management companies, like some investors, refuse to own them.

We screened our 24/7 Wall St. sin-stock research database and found five companies that pay dependable high-yield dividends and look like great ideas for growth, and income investors worried that we could be on the ledge of a big sell-off. All are rated Buy at top Wall Street firms.

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 two “sin” products and a rich 8.21% dividend and is touted across Wall Street as one of the top passive income stocks for investors to own now. 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 N.V. (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 8% of the outstanding shares in their back pocket. They also announced a $2.4 billion stock repurchase plan partially funded by the sale.

BAE Systems

This top defense company pays a solid 2.40% dividend and is close to breaking out to new highs. BAE Systems PLC (BAESY) provides worldwide defense, aerospace, and security solutions.

The company operates through five segments:

• Electronic Systems
• Platforms and services
• Air
• Maritime
• Cyber and intelligence

The Electronic Systems segment offers:

• Electronic warfare systems
• Navigation systems
• Electro-optical sensors
• Military and commercial digital engine and flight controls
• Precision guidance and seeker solutions
• Military communication systems and data links
• Persistent surveillance capabilities, space electronics, and electric drive propulsion systems

The Cyber & Intelligence segment provides solutions to:

• Modernize, maintain, and test cyber-harden aircraft, radars, missile systems, and mission applications that detect and deter threats to national security
• Systems engineering, integration, and sustainment services for critical weapons systems
• C5ISR, and cyber security; and solutions and services to intelligence and federal/civilian agencies

It also offers data intelligence solutions to protect nations, businesses, and citizens.

The Platforms & Services segment manufactures and upgrades combat vehicles, weapons, and munitions, provides naval ship repair services, and manages government-owned ammunition plants.

The Air segment develops future combat air systems and falconworks.

The Maritime segment provides maritime and land activities, including submarine, ship build, and support programs.

Diageo

Warren Buffett owns Diageo PLC (NYSE: DEO), one of the largest producers of alcoholic beverages in the world. The company pays a solid 3.11% dividend.

It offers:

• Scotch whiskey, gin, vodka, rum, beer and spirits
• Irish cream liqueurs
• Wine, Raki, tequila, Canadian and American whiskey
• Cachaça, and brandy, as well as adult beverages and ready-to-drink products

The company’s premium brands comprise Johnnie Walker, Smirnoff, Captain Morgan, Baileys, Tanqueray, and Guinness.

The reserve brands include:

• Johnnie Walker Blue Label
• Johnnie Walker Green Label
• Johnnie Walker Gold Label 18-year-old
• Johnnie Walker Gold Label Reserve
• Johnnie Walker Platinum Label 18-year-old
• John Walker & Sons Collection
• Johnnie Walker The Gold Route
• Johnnie Walker The Royal Route
• Johnnie Walker super premium brands: The Singleton, Cardhu, Talisker, Lagavulin, and other malt brands.

Molson Coors Brewing

While the iconic American beer company did merge with a Canadian beer giant, it is still based in Chicago with the main offices in Golden Colorado and Montreal and pays a solid 3.16% dividend. Molson Coors Brewing Co. (NYSE: TAP) manufactures, markets, and sells beer and other malt beverage products under various brands in the Americas, Europe, the Middle East, Africa, and the Asia Pacific.

The company offers flavored malt beverages, including hard seltzers, craft, spirits, and energy drinks, and ready-to-drink beverages.

It provides its products under:

• Aspall Cider
• Blue Moon
• Coors Original
• Five Trail
• Hop Valley brands
• Leinenkugel’s
• Madri
  Miller Genuine Draft
• Molson Ultra
• Sharp’s, Staropramen, and Vizzy Hard Seltzer

Bergenbier, Borsodi, Carling, Coors Banquet, Coors Light, Jelen, Kamenitza, Miller Lite, Molson Canadian, and Niksicko, Ozujsko under the premium brands

The company also markets these economy brands:

• Branik
• Icehouse
• Keystone
  Miller High Life
• Milwaukee’s Best
• Steel Reserve

The company’s strategic response to Bud Light’s marketing missteps a few years ago, which led to a surge in new customers, is a testament to its agility. Furthermore, the company is exploring new opportunities, such as the potential to market a cannabis-infused product.

VICI Properties

This is one of the top picks across Wall Street in the net lease group and is ideal for more conservative investors looking for gaming exposure and a solid 5.40% dividend. VICI Properties Inc. (NYSE: VICI) is an S&P 500 experiential real estate investment trust with one of the largest portfolios of market-leading gaming, hospitality, and entertainment destinations, including three iconic entertainment facilities on the Las Vegas Strip.

• Caesars Palace Las Vegas
• MGM Grand
• The Venetian Resort Las Vegas

VICI Properties owns 93 experiential assets across a geographically diverse portfolio of 54 gaming properties and 39 other experiential properties across the United States and Canada. The portfolio comprises approximately 127 million square feet and features approximately 60,300 hotel rooms and over 500 restaurants, bars, nightclubs, and sportsbooks.

Its properties are occupied by industry-leading gaming, leisure, and hospitality operators under long-term, triple-net lease agreements.

VICI Properties has a growing array of real estate and financing partnerships with leading operators in other experiential sectors including:

• Bowlero
• Cabot
• Canyon Ranch
• Chelsea Piers
• Great Wolf Resorts
• Homefield
• Kalahari Resorts

VICI Properties also owns four championship golf courses and 33 acres of undeveloped and underdeveloped land adjacent to the Las Vegas Strip.

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