Investors love dividend stocks, especially the high-yield mega-cap variety, because they offer a significant income stream and have massive total return potential. Total return includes interest, capital gains, dividends, and distributions realized over time. In other words, the total return on an investment or a portfolio consists of income and stock appreciation.
24/7 Wall St. Key Points:
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Some of the largest and safest dividend stocks have been laggards in 2024.
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The Federal Reserve will likely lower interest rates just twice in 2025.
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Safe mega-cap leaders could be the best idea for growth and income investors.
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Does your portfolio contain enough of the mega-cap dividend market leaders? Why not connect with an experienced financial advisor near you and find out today? Click here and get started. (sponsored)
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Wall Street defines mega-cap stocks as companies with over $200 billion in market value. In business and investing, the market capitalization for mega-cap companies generally ranks them among the largest publicly traded companies in the world. For growth and income investors, they are often the best ideas as they offer safety, dependable and growing dividends, and usually dominate the sectors they reside in.
We screened our 24/7 Wall St. mega-cap stocks research database for companies that offer the best total return potential for 2025. After the S&P 500’s enormous back-to-back years, we could be in for a sizable correction at some point this year. So sticking with some of the world’s largest and most successful companies is a solid hand to play. Here are four that look attractive now, and all are rated Buy at some of the top firms on Wall Street.
Why do we cover high-yielding mega-cap dividend stocks?
Investing in mega-cap dividend stocks provides regular income through dividends from established and financially stable companies. These stocks offer lower volatility and the potential for capital appreciation. Since 1926, dividends have contributed approximately 32% of the total return for the S&P 500, while capital appreciations have contributed 68%. Therefore, sustainable dividend income and capital appreciation potential are essential for total return expectations.
Chevron
This integrated giant is a safer option for investors looking to position themselves in the energy sector and pays a 4.30% dividend. Chevron Corp. (NYSE: CVX) engages in integrated energy and chemicals operations worldwide through its subsidiaries. The company operates in two segments.
The Upstream segment is involved in the following:
- Exploration, development, production, and transportation of crude oil and natural gas
- Processing, liquefaction, transportation, and regasification associated with liquefied natural gas
- Transportation of crude oil through pipelines; and transportation, storage
- Marketing of natural gas, as well as operating a gas-to-liquids plant
The Downstream segment engages in:
- Refining crude oil into petroleum products
- Marketing crude oil, refined products, and lubricants
- Manufacturing and marketing renewable fuels
- Transporting crude oil and refined products by pipeline, marine vessel, motor equipment, and rail car
- Manufacturing and marketing of commodity petrochemicals, plastics for industrial uses, and fuel and lubricant additives
It also involves cash management, debt financing, insurance operations, real estate, and technology businesses.
IBM
The legacy blue-chip tech giant pays a solid 3% dividend and offers conservative investors a safer way to play the sector. International Business Machines Corp. (NYSE: IBM) and its subsidiaries provide integrated solutions and services worldwide.
The company operates through four segments:
- Software
- Consulting
- Infrastructure
- Financing
The Software segment offers a hybrid cloud and AI platform that allows clients to realize their digital and AI transformations across the applications, data, and environments they operate.
The Consulting segment focuses on skills integration for strategy, experience, technology, and operations by domain and industry.
The Infrastructure segment provides on-premises and cloud-based server and storage solutions and life-cycle services for hybrid cloud infrastructure deployment.
The Financing segment offers client and commercial financing that facilitates IBM clients’ acquisition of hardware, software, and services.
The company has a strategic partnership with various companies, including:
- Hyperscalers
- Service providers
- Global system integrators
- Software and hardware vendors that include Adobe, Amazon Web services, Microsoft, Oracle, Salesforce, Samsung Electronics SAP, and others
Merck
Not just a healthcare company, Merck & Co. Inc. (NYSE: MRK) is a global force in the industry. The share price is down almost 8% but it comes with a solid 3.20% dividend, making it a solid 2025 buy. The company operates through two segments.
The Pharmaceutical segment offers human health pharmaceutical products in:
- Oncology
- Hospital acute care
- Immunology
- Neuroscience
- Virology
- Cardiovascular
- Diabetes
- Vaccine products, such as preventive pediatric, adolescent, and adult vaccines
The Animal Health segment discovers, develops, manufactures, and markets veterinary pharmaceuticals, vaccines, health management solutions and services, and digitally connected identification, traceability, and monitoring products.
Merck serves:
- Drug wholesalers
- Retailers
- Hospitals
- Government agencies
- Managed healthcare providers, such as health maintenance organizations
- Pharmacy benefit managers and other institutions
- Physicians
- Physician distributors
- Veterinarians
- Animal producers
PepsiCo
This top beverage and consumer stock posted earnings for the third quarter that aligned with expectations. It will continue to supply all the goods for the 2024 NFL football season playoffs and Super Bowl parties and pay a solid 3.32% dividend. PepsiCo Inc. (NYSE: PEP) is a worldwide food and beverage company.
Its Frito-Lay North America segment offers:
- Lays and Ruffles potato chips
- Doritos, Tostitos, and Santitas tortilla chips
- Cheetos cheese-flavored snacks and branded dips
- Fritos corn chips
The company’s Quaker Foods North America segment provides:
- Quaker Oatmeal
- Grits
- Rice cakes
- Natural granola and oat squares
- Pearl Milling mixes and syrups
- Quaker Chewy granola bars
- Cap’n Crunch cereal
- Life cereal
- Rice-A-Roni side dishes
PepsiCo’s North America Beverages segment offers beverage concentrates, fountain syrups, and finished goods under these brands:
- Pepsi
- Gatorade
- Mountain Dew
- Diet Pepsi
- Aquafina
- Diet Mountain Dew
- Tropicana Pure Premium
- Sierra Mist
- Mug brands
Four High-Yield Stocks With 7% and Higher Dividends Are 2025 Home Runs
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