Discover Secure Dividend Earnings till 2025 and Beyond with These 2 High-Yield Dividend Stocks.
As we prepare to bid farewell to 2024 and welcome the new year, it's essential for investors to assess their investments and outlook for the approaching 2025. For dividend hunters, the focus should shift towards stocks that offer a promising yield, with an emphasis on a company's capacity to maintain or even boost dividends.
Two such stocks outperform the meager 1.2% dividend yield of the S&P 500.
1. Target (TGT) (-0.74%)
The retail giant Target faced a tough quarter with a modest 0.3% increase in same-store sales (comps) for the November period. However, there is a silver lining: traffic still saw consumers shopping both in-store and online. Traffic contributed about 2.4 percentage points, while the transaction amount subtracted 2 percentage points.
The tepid sales are likely to be temporary as consumers are economizing on nonessential purchases. But the picture brightens with positive signs on the inflation front. Food prices increase by just 1.1% per year from the previous October. Despite the decrease in spending, Target still drew in customers, demonstrating the popularity of its exclusive, premium offerings.
Moreover, Target's commitment to dividends is unwavering. The company has a robust 47% payout ratio and has increased dividends for 53 consecutive years, including a 1.8% increase to $1.12 starting in September. With a dividend yield of 3.4%, Target is a bona fide Dividend King.
2. ExxonMobil (XOM) (-1.67%)
ExxonMobil has over 140 years of experience as an oil and gas company, exploring, producing, and transporting crude oil and natural gas. The third quarter under US generally accepted accounting principles (GAAP) saw earnings decline by 5.1%, partly due to industrywide refining margin issues.
ExxonMobil's results continue to be heavily influenced by oil and gas prices. However, the company's diversified business portfolio, including its chemical division, helps mitigate this volatility. Exxon has made significant strides in cost reduction, with a cumulative $11.3 billion reduction since 2019.
Despite the challenges, Exxon remains steadfast in growing dividends. While not quite a Dividend King yet, the company has increased payouts for 42 consecutive years - including a more than 4% increase in the recent quarterly dividend of $0.99. With an annual yield of 3.5%, ExxonMobil remains a compelling choice for income-focused investors.
While ExxonMobil requires substantial capital expenditures to operate and grow its business, it possesses more than enough free cash flow to support dividend payments, even at the increased level. During the first nine months of the year, the company generated $22.8 billion in free cash flow, covering its $12.3 billion in dividend payments.
In summary, both Target and ExxonMobil showcase unique approaches to sustaining and potentially increasing dividend payments. Target's 24-year track record of increasing dividends and a healthy dividend payout ratio reflect its strong commitment. ExxonMobil's robust financial position, operational optimizations, and investment in lower-carbon technologies give it the foundation to maintain and potentially grow its dividend payments. By contrast, the S&P 500 ETF Trust (SPY) boasts a lower dividend yield and growth rate relative to Target and ExxonMobil.
Investors looking for strong dividend stocks in 2025 might consider Target (TGT) and ExxonMobil (XOM), both of which have demonstrated a commitment to paying dividends. Target, a Dividend King with a 3.4% yield, has increased its dividends for 53 consecutive years.
Investing in finance and focusing on these two stocks could provide a promising return, especially considering their ability to maintain or boost dividends despite market challenges.