Inflation is cooling, and there are positive signs of the economy improving. We can expect rate cuts by May, and the ongoing earnings season could take stocks higher. The economy might be showing signs of positivity today, but you need to be prepared for anything that comes your way. As an investor, it helps to build a portfolio of resilient stocks that can thrive in any market situation. If you are an investor like me, you would prefer to build a stock portfolio that not only performs in tough times but also generates steady passive income. Dividend stocks are the best way to build wealth. Choose companies that have been paying dividends for several years and have also increased the payout with time. Here are my top three high-yield dividend stocks to buy.
High-Yield Dividend Stocks to Buy: PepsiCo (PEP)
If you are looking to buy only one dividend stock, it has to be PepsiCo (NASDAQ:PEP). The global giant has a massive market to cater to and holds a range of brands under its umbrella. Pepsi is so much more than just a beverage stock and it has some of the most popular snack brands under its name. The company enjoys loyalty, pricing power and the ability to keep growing even in times of high inflation. Its snacking division has been a huge winner recently and has witnessed growth when consumer spending was low.
Trading at $165 today, the stock has dropped 13% in the past six months, making it a great buying opportunity. Pepsi has a dividend yield of 3.06% and pays a quarterly dividend of $1.26, which is $5.06 per share annually. The company raised its dividend payments for the past 52 consecutive years. That says a lot about its commitment to reward shareholders.
Fundamentally, PepsiCo is a stable business with organic revenue growth of 8.8% in the third quarter. Its revenue stood at $23 billion, while EPS was $2.25. The company is expecting a 7.4% rise in earnings in the next 12 months.
While the company is planning modest hikes this year, it has already proved it enjoys a pricing power, and a price hike doesn’t impact the business. Pepsi’s diversified portfolio ensures consistent growth, and we could see solid fourth-quarter results very soon. Buy the stock while it is trading at a discount.
3M (MMM)
3M (NYSE:MMM) is an industrial company that manufactures energy solutions, cleaning supplies, automotive equipment and personal protective equipment. The company has had a tough time with recent lawsuits, but I think it is handling the ups and downs well. It has a strong presence across multiple industries, which shields it during tough times.
MMM stock is trading for $107, and it has an impressive dividend yield of 5.57%. The company pays out an annual dividend of $6 per share, better than several other dividend-paying companies in the industry.
3M has paid dividends for over 100 years, and I think it has enough liquidity to keep rewarding shareholders. Once the company completes the payment of the ear plug lawsuit settlement, it will be in a better financial position. As part of this settlement, the company will have to pay $5 billion in cash and $1 billion in common stock between 2023 and 2029.
Fundamentally, the company has shown impressive growth in the third quarter and saw sales of $8.3 billion. Free cash flow came in at $1.9 billion, up 39% year-over-year (YoY). Following the results, management raised the full-year adjusted EPS and free cash flow expectations. The business has also taken restructuring moves, which can help the stock move upwards.
With a dividend payout of around 66%, 3M is one of the best high-yield dividend stocks to buy now. The stock might take time to soar, but it will continue generating passive income for you in the years to come.
Starbucks (SBUX)
Starbucks (NASDAQ:SBUX) is a no-brainer dividend stock to own this year. It is a highly underrated stock trading at $93 today. Buying the stock below $100 is a very smart move. The stock is down 11% in the past year and is much lower than its 52-week high of $115. SBUX stock looks cheap to me, considering the high-quality business and global positioning of the company.
The company plans to increase the locations and ticket volumes and take more orders. It aims to expand to more than 55,000 locations by 2030 and is already on an aggressive expansion spree in India. Starbucks aims to open two stores each week in the country and gain exposure in the most populous nation in the world.
Starbucks has raised dividends for 14 consecutive years and has become a highly reliable dividend stock today. It has a dividend yield of 2.45% and pays an annual dividend of $2.28 per share.
It reported blowout results in the third quarter with a record-high quarterly revenue of $9.2 billion, up 12% YoY. At the end of the quarter, its store count was 37,000, out of which 588 were newly opened that quarter. Starbucks could have an excellent 2024, and the stock is one of the best buys right now. Piper Sandler (NYSE:PIPR) analysts have a price target of $100 for the stock.
On the date of publication, Vandita Jadeja did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
