Although the U.S. stock market is trading close to an all-time high, its dividend yield is approaching a 20-year low, and that’s creating a challenge for income-oriented investors.
If you’re an income-oriented investor with a moderate risk tolerance and are looking for a steady stream of dividend checks with above-average yields and the chance to also achieve long-term capital appreciation, this basket of four household brand names may be worth a closer look.
First off, to narrow down the list of potential stocks, I created a sort engine with specific criteria:
- Member of the S&P 500.
- Dividend yield of at least 5%.
- An annual dividend increase streak of at least five years.
- No more than one stock per sector.
In selecting these factors, I sought large, widely followed companies with dividend yields that were significantly above the S&P 500’s current average payout of 1.2%, which has declined to a 20-year low as stocks have reached all-time highs. I also wanted some degree of safety in terms of companies that have the cash to fund their payouts and also have a track record of increasing them. Lastly, I purposefully excluded tobacco stocks.
Before I reveal the specific names, these four stocks carry dividend yields ranging from 6.7% to 8.2% (for an average of 7.1%). That’s over 5 times the S&P 500, more than double most money market funds, and 75% above a 10-year treasury.
Said another way, if you put $25,000 into each stock, you could expect to receive $7,140 in dividend payments in the first 12 months. Add in the historical dividend growth rates that these four stocks have delivered over the past five years, and you get an average annual increase of 6.3%. If that pace of growth were to continue for the next five years, your $7,140 in dividends today would grow to almost $9,200 by 2030.
With that, I give you the final four.
Image source: Getty Images.
Conagra Brands
Conagra Brands (CAG 1.32%) has been battered this year. Its stock is down 37% year to date (it’s among the 20 worst performers in the S&P 500) — a slump that, inversely, has lifted its dividend yield to 8%. As much as high-yielding stocks are often a Who’s Who list of distress stories, they can also serve as a beacon to value-hunting investors who are bottom fishing for deals.
Today’s Change
(-1.32%) $-0.23
Current Price
$17.54
Key Data Points
Market Cap
$8B
Day’s Range
$17.52 – $17.79
52wk Range
$16.60 – $28.69
Volume
649K
Avg Vol
12M
Gross Margin
25.36%
Dividend Yield
7.99%
In the case of Conagra, the 105-year-old owner of over 20 national food brands (Birds Eye, Healthy Choice, Hunt’s, Vlasic, and more) is forecast to do more than $11.6 billion in sales this year, and is actively introducing and modernizing its portfolio to drive future growth.
In its defense, the Chicago-based, consumer staples sector company has increased its dividend for the past six years. Koyfin data shows it currently has a trailing payout ratio of 78%. In addition to its record-high yield, Conagra’s key price-to-earnings (P/E) and price-to-sales (P/S) ratios are near 10-year lows.
United Parcel Service
Like Conagra, United Parcel Service (UPS 0.97%) has endured a bruising year, with a 28% year-to-date decline that, according to Koyfin data, puts it among the five worst performers in the industrial sector. As such, the yield on its $6.55 annual dividend has risen to almost 7%.
Today’s Change
(-0.97%) $-0.92
Current Price
$93.74
Key Data Points
Market Cap
$79B
Day’s Range
$93.36 – $94.67
52wk Range
$82.00 – $137.59
Volume
138K
Avg Vol
7.9M
Gross Margin
18.48%
Dividend Yield
7.01%
“Commitment to the dividend is one of UPS’s core principles and a hallmark of the company’s financial strength. UPS has either maintained or increased its dividend each year since going public in 1999,” the company said in a Nov. 6 press release announcing its fourth-quarter dividend payment.
In its favor, as UPS continues to rightsize and retool its business, especially low-margin work for Amazon, its 91% dividend payout ratio is expected to fall, as analysts currently project the company’s earnings per share (EPS) will grow by 4% and 11% in 2026 and 2027, respectively.
Pfizer
Pfizer (PFE +0.86%) dipped below $21 per share in early April. Its seven-month, 14% rally has trimmed its year-to-date loss to the mid-single digits. When compared to the yield-boosting declines of Conagra and UPS, Pfizer’s 5% year-to-date slump is modest, and yet its current healthcare sector-leading 6.9% dividend yield is hovering at a 10-year high.
Today’s Change
(0.86%) $0.21
Current Price
$25.25
Key Data Points
Market Cap
$143B
Day’s Range
$25.05 – $25.47
52wk Range
$20.91 – $27.69
Volume
1.3M
Avg Vol
67M
Gross Margin
69.53%
Dividend Yield
6.82%
As Pfizer works to refill its pipeline and pursue strategic acquisitions, its $140 billion market cap ranks it fourth largest of seven pharmaceutical companies in the S&P 500. Investors worried about its 98% dividend payout ratio can take some comfort in knowing the figure is projected to decline to 75% of 2026 full-year estimates. There’s also the fact that Pfizer has a 16-year track record of dividend increases and the balance-sheet strength and flexibility to support it.
Verizon
Verizon (VZ 2.29%) has a top-10 dividend yield in the S&P 500. Its 6.7% indicated payout is hard to overlook. While its $172 billion market cap has been exponentially eclipsed by communications-services sector heavyweights such as Alphabet, Meta Platforms, and Netflix, Verizon is still one of the largest cellular service providers in the country, serving 147 million retail customers as of Q3 2025, and generates almost $20 billion in profits on $137 billion in revenue.
Today’s Change
(-2.29%) $-0.94
Current Price
$40.28
Key Data Points
Market Cap
$170B
Day’s Range
$40.15 – $41.45
52wk Range
$37.59 – $47.35
Volume
1.3M
Avg Vol
26M
Gross Margin
46.08%
Dividend Yield
6.77%
In September, the New York-based telecom giant reiterated its commitment to returning money to shareholders — extending its track record to 21 years of annual increases — when it nudged its quarterly payouts by 1.9%. Its dividend payout ratio, based on the last 12 months, is the lowest of the four stocks in this basket at just 57%.
In terms of the stock, Verizon currently trades at less than 9 times earnings for the next 12 months, a forward P/E ratio in the 16th percentile over the past 10 years, meaning the stock traded at a higher multiple about 80% of the time. Ten of 24 analysts currently rate the stock a buy and have an average 12-month price target of $47.50, which is about 16% above the current price — and that doesn’t include another 7% in dividends.
Final thoughts
While no portfolio is perfect for everyone, income investors seeking stability, above-average yields, and long-term income growth and gains can use this four-stock basket, which pays north of 7%, as a solid starting point.
Depending on the prevailing price, a $25,000 investment into each stock would approximately break down as follows:
- Conagra: 1,400 shares × $1.40 = $1,960 per year
- Pfizer: 1,000 shares × $1.72 = $1,720 per year
- United Parcel Service: 275 shares × $6.56 = $1,804 per year
- Verizon: 600 shares × $2.76 = $1,656 per year
With this portfolio of great dividend stocks, you can expect dividend income of $7,140 per year — all of which could be reinvested in your portfolio or used for quarterly income. Either way, these stocks provide a great incentive for any income investor.