3 Magnificent Dividend Stocks With Yields Over 5% to Buy Now and Hold Forever

benchmark S&P 500 the index is up about 26% over the past three years, but that doesn’t mean every stock has had a great run. In the same time frame, actions of WP Carey (WPC -1.17%), Verizon (See -2.04%)and Pfizer (PFE -0.80%) decreased by 15%, 18% and 33% respectively.

All three of these stocks offer yields of more than 5% at their low prices. You wouldn’t know it by looking at the stock charts, but all three of these companies have what it takes to meet their current dividend obligations and raise them much higher in the years to come.

Here’s how adding these stocks to a diversified portfolio could lead to a pile of passive income to fuel your retirement.

WP Carey

WP Carey is a diversified real estate investment trust (REIT) with a portfolio of 1,291 properties that it does not manage. Instead, it uses net leases that transfer all the variable costs of building ownership to its tenants.

You may have noticed that WP Carey’s dividend payout dropped in 2023 after the REIT spun off a portfolio of 59 office buildings into a new company called Office properties net of rent. Now that it has exited the office leasing business, 63.9% of its estimated rent payments come from industrial properties and warehouses.

At recent prices, stocks are yielding 5.5% and maybe much more by the time you’re ready to retire. This year, management expects adjusted funds from operations, a measure of earnings used to value REITs, to reach a range of $4.63 to $4.73 per share. That’s more than enough to cover a dividend currently set at $3.48 per share.

In addition to predictable rental income from existing tenants, WP Carey investors can look forward to earnings from new properties. This year, management expects to expand its portfolio by investing between $1.25 billion and $1.75 billion.

Verizon

In September, Verizon raised its dividend for the 18th year in a row. This is the longest consecutive annual dividend growth streak among America’s big three 5G network operators. At recent prices, the stock offers a whopping 6.1% dividend yield.

Verizon’s device sales have fallen due to longer smartphone refresh cycles, but a recently released iPhone 16 could lead to an uptick in sales in the fourth quarter.

Fortunately, Verizon doesn’t require customers to have new phones to continue collecting their monthly service payments. Q2 wireless revenue rose 3.5% year-over-year to $19.8 billion.

Investors can look forward to another significant dividend increase next year. In the first half of 2024, Verizon reported free cash flow of $8.5 billion, but only needed $5.6 billion to meet its dividend obligations.

Verizon probably won’t be the fastest growing dividend stock in your portfolio. However, as one of only three 5G service providers nationwide, it might be the most reliable.

Pfizer

Pfizer’s share price is down about 51% from its peak in 2021. At a glance, the business looks like a disaster as sales of its COVID-19 vaccine and antiviral treatment have both collapsed.

That stock is way down from its previous peak, but Pfizer’s overall business is booming. Excluding sales related to COVID-19, Q2 revenue was up 14% year-over-year.

Last December, Pfizer raised its payout for the 15th consecutive year. At recent prices, the stock offers a hefty 5.6% yield.

Even cautious investors can feel good about adding some Pfizer stock to their portfolios. Pfizer has a longer list of patent-protected drugs to sell than any of its Big Pharma peers.

In the first half of 2024, 11 of its products grew double-digit percent sales, and new growth engines are pouring out of an industry-leading development pipeline. Last year, the Food and Drug Administration (FDA) approved nine new drugs from Pfizer. With plenty of new products for its global sales force to market, Pfizer could continue to raise its payouts for another 15 years.