Buying high-yielding dividend stocks can be scary, even when it’s not Halloween. You can be tricked into thinking that a high payout is safe, only to watch management cut it later on. And when those reductions come, not only will your dividend income diminish, but the market will likely bid down the stock price too.
But there are some great dividend stocks to buy right now that not only have high yields but are also considered safe and can make for excellent investments for years to come. Pfizer (NYSE: PFE), Realty Income (NYSE: O), and ExxonMobil (NYSE: XOM) are all solid investments to load up on this Halloween.
Here’s why these three passive income providers are better options than your average dividend stock and why the Halloween season is as good a time as any to consider buying.
If you’re buying shares of Pfizer, you’re getting much more than just a high-yielding dividend stock. Its yield of 5.8% at the current share price is certainly one key reason why many investors should consider adding it to their portfolios right now. But another is its extremely low valuation.
The healthcare stock has been struggling in recent years and it’s trading around the levels it was at back in 2020. Based on analysts’ projections, it’s trading at just 10 times next year’s earnings. That’s incredibly cheap when you consider the average stock in the Health Care Select Sector SPDR Fund trades at a forward price-to-earnings ratio of 22.
Investors aren’t willing to pay a premium for Pfizer stock due to the rapidly declining sales of its COVID-19 vaccine and antiviral, and concerns about looming patent cliffs. But the business has been using the windfall profits from its pandemic-era vaccines and treatments to bolster its pipeline and growth prospects through acquisitions, including its mammoth $43 billion purchase of oncology company Seagen, which it closed last year.
There’s some short-term uncertainty ahead for Pfizer, but overall, its low valuation provides investors with an excellent margin of safety in case its growth plans don’t entirely pan out.
Realty Income, too, can make for an excellent income investment. In addition to the 4.9% yield you’ll collect at the current share price, what’s sweet about this real estate investment trust (REIT) is that, unlike most other dividend stocks, it makes monthly payments.
It also benefits from a lack of customer concentration risk: It leases its vast portfolio of properties to more than 1,500 different tenants. Its occupancy rate is also fairly high at 98.8%. The REIT has a lot of stability, which has allowed it to increase its dividend 127 times since it began trading on the NYSE in 1994.
