A $5,000 investment can be a good amount of money to invest in a stock. It's large enough that if you pick a winner, your returns could be significant, and that can help justify spending a lot of time researching the ideal stock to invest in. You can also generate a fair bit of dividend income from that type of investment. If you find a stock that yields 5%, that would mean you're collecting $250 per year in dividends.
But you can aim for even more than that, without taking on too much risk. Three stocks that yield more than 5% and can be good options for dividend investors today are Enbridge (NYSE: ENB), Ford Motor Company (NYSE: F), and Verizon Communications (NYSE: VZ). Here's why these stocks should be on your buying list.
1. Enbridge
Enbridge is a top oil and gas company in North America. Its pipelines help connect the continent and transport oil. It plays a critical role in the industry and it makes for a fairly safe and stable investment to hold on to. In five years, it has generated modest 15% returns.
While that isn't likely to get growth investors too excited, what's really appealing about this Canadian-based oil and gas stock is the dividend that it offers. Enbridge yields 6.6%, which would generate approximately $330 in dividends over the course of a full year if you invested $5,000. The company has also raised its dividend payments for 29 straight years, with its most recent hike last year being a 3.1% increase to the dividend.
The company has consistently achieved its guidance over the years and its growth prospects look even stronger since it has recently acquired U.S. gas utilities that will help the business expand and diversify even further. Enbridge has posted a profit of 5.5 billion Canadian dollars over the trailing 12 months on revenue of CA$43.5 billion. And with an attractive price-to-earnings (P/E) multiple of 22, it can make for a solid dividend stock to buy today.
2. Ford Motor Company
Vehicle maker Ford also provides investors with a fairly high yield of 5.6%. And at a P/E multiple of just over 11, investors don't have to pay a big premium to own shares of the business.
Investors may be concerned about the company's near-term prospects given the potential for a recession on the horizon, but the leading automaker has performed reasonably well this year with revenue totaling $90.6 billion through the first half, rising by 4.2% year over year. Income is down slightly by 0.5% but overall the business has been doing fairly well.
The company's approach toward electric vehicles (EVs) is more conservative than rival Tesla's, ensuring that the business can balance growth while also still continuing to offer its shareholders a dividend. Ford's payout ratio is around 63%. By focusing on offering low-cost vehicles, Ford can potentially steal market share from Tesla in the future and be an underrated EV investment today.
3. Verizon Communications
Rounding out this list of high-yielding stocks is telecom giant Verizon. Its 6.3% yield is normally not this high but given the bearishness in the markets in recent years due to rising interest rates, the stock's struggles have pushed the yield up. Verizon's stock is down 28% in five years but it has been rallying of late as the Federal Reserve has cut rates and hopes are high that more reductions could be around the corner.
Verizon is another attractive dividend growth stock, recently announcing that it would be raising its payout by a modest 1.9%. It marks the 18th straight year in which the telecom company has increased its dividend.
In September, the company also announced plans to acquire Frontier Communications, which will help Verizon expand its fiber network. Frontier has 2.2 million subscribers in 25 states while Verizon currently has 7.4 million connections through its fiber business, which spans nine states plus Washington, D.C. The deal should help accelerate Verizon's sluggish single-digit growth this year and potentially pave the way for greater dividend increases in the future.
At a relatively modest 16 times earnings, Verizon is yet another cheap dividend stock to buy right now.
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*Stock Advisor returns as of October 14, 2024
David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Enbridge and Tesla. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy.
