While there is a broad range of investing styles, dividend investing is one of the most popular and effective ways to generate long-term income and portfolio gains through the stock market. And if you’re looking to add some juicy dividend yields to your basket of investments in 2021, you’ve come to the right place.
In addition to boasting above-average dividend yields and a wealth of catalysts for continued business growth, both of the following companies also have an impressive track record of raising and maintaining their dividends despite market highs and lows.
1. Realty Income
Realty Income (NYSE:O) snags the top spot on today’s list, because not only does it have 25 solid years of consecutive dividend increases to its name, but it also pays out its dividend on a monthly basis. The Dividend Aristocrat currently yields just about 4%. Realty Income’s most recent dividend increase was announced on March 16, marking the 110th hike to its payout since its initial public offering (IPO) nearly three decades ago.
In addition to Realty Income’s stellar track record of raising and fulfilling its dividend obligation to shareholders, the real estate investment trust (REIT) has continued to report balance sheet growth despite ongoing economic headwinds.
Realty Income’s continued success can be attributed to its diversification strategy in the lucrative commercial real estate sector. Its portfolio comprises more than 6,500 commercial properties with a roster of clients spanning 51 different industries. The most prominent clients in Realty Income’s portfolio include convenience stores, dollar stores, drugstores, and grocery stores, all of which are the types of businesses that have reaped considerable profits from “essential business” status during the pandemic.
Realty Income closed 2020 with roughly 98% portfolio occupancy, and reported total revenue growth of 11% for the full year. At the same time, Realty Income’s funds from operations (FFO) surged by approximately 10% last year.
Analysts are forecasting that Realty Income will deliver double-digit earnings growth in the upcoming year, and will increase its average annual earnings by the mid-single digits over the next five years alone. If you’re in search of reliable dividend income to help you grow your portfolio faster and/or boost your nest egg, Realty Income’s monthly payout and the durability of its business are tough to beat.
Pfizer‘s (NYSE:PFE) dividend yields 3.95% based on current share prices, which is considerably higher than the 1.5% yield that the average stock on the S&P 500 offers. And while Pfizer doesn’t have enough consecutive years of payout increases to qualify as a Dividend Aristocrat, it has faithfully hiked its dividend over the past decade and could become a member of this elite group of stocks in the future.
Besides Pfizer’s stellar dividend, the company’s existing portfolio of products as well as its pipeline can help it generate sustainable growth in the coming decades. Its biopharmaceutical segment was a key factor behind its overall revenue growth in the full year (3%) and fourth quarter (11%) of 2020. This division is also primed to deliver superior growth in the years ahead now that it no longer has Upjohn dragging it down.
Then you have the ever-rising star power of Pfizer’s coronavirus vaccine, BNT162b2, which it created with its German partner BioNTech. Not only did BNT162b2 demonstrate 95% efficacy in adults during phase 3 clinical trials, but updated top-line results released by Pfizer on April 1 also showed that the vaccine still demonstrated 91.3% efficacy up to six months after patients received the second dose. The same data also showed that the vaccine was 100% effective against the South African variant. In addition, top-line results from a phase 3 study of BNT162b2 on adolescents showed that the vaccine had 100% efficacy in individuals between 12 and 15 years of age.
Pfizer and BioNTech have already inked deals to supply hundreds of millions of doses to the U.S. and the European Union, while distribution is underway in other locations across the world. And word on the street is that the vaccine partners are about to sign a historic deal with the European Commission to supply nearly 2 billion doses of the vaccine through 2023. This would not only mean an additional tens of billions in revenue, but would also be the largest vaccine deal ever.
Pfizer has already said that it expects to generate $15 billion in revenue from BNT162b2 in 2021 alone, which would also make the vaccine one of the top-selling pharmaceutical products in history. Pfizer has also launched a phase 1 study of an oral antiviral therapy for the virus that causes COVID-19 and a separate phase 1b study for an intravenously administered treatment for hospitalized coronavirus patients. In short, Pfizer is addressing the broad spectrum of prevention and therapeutic needs brought about by the pandemic.
While its share price hasn’t always reflected the company’s strides in the global fight against COVID-19, these developments will be key to its ongoing growth story. The stock is a compelling choice for dividend income, and its position as one of the largest pharmaceutical companies in the world makes it an investment for the ages.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.