Investing in Dividend Stocks: Strategies and Top 7 High-Income Picks
In the ever-evolving world of investments, high-dividend stocks continue to be a popular choice for those seeking a regular stream of passive income. As we enter early August 2025, some of the top dividend stocks from well-established companies that offer payout ratios below 100% and a history of increasing dividends over time include:
- Walmart (WMT)
- Dividend Yield: 0.9%
- Consecutive Years of Dividend Increases: 52 years
- Five-Year Dividend Growth Rate: 3.3%
- Recent Dividend Hike: 13% increase in early 2025
Walmart, the retail giant, boasts solid growth prospects in e-commerce and its subscription business, Walmart+. With a dividend growth streak spanning more than half a century, this company is a reliable choice for dividend income investors.
- Chevron (CVX)
- Dividend Yield: 4.5%
- Consecutive Years of Dividend Increases: 38 years
Chevron's dividend has grown steadily, backed by strong cash flows despite earnings volatility. The company recently completed a major acquisition (Hess Corp.) to fuel future growth and expects rising cash flow, supporting continued dividend increases.
- DCC plc (LSE: DCC)
- Dividend Yield: just under 5%
- Dividend Growth Streak: 13 years
- Payout Ratio: safely below 100%
This FTSE 100 company has a 10% average annual dividend growth over the past decade and is viewed as undervalued with strong cash flow prospects and a share buyback in progress.
These companies are recognised as established dividend stalwarts, offering reliable or growing payouts and sustainable payout ratios under 100%. This combination positions them as strong candidates for dividend income investors looking for both reliability and some growth potential.
Other high-yield monthly dividend stocks, such as PennantPark Floating Rate Capital (PFLT) and Prospect Capital (PSEC), offer higher yields but are business development companies (BDCs) and typically have more volatile earnings and distributions. These may not meet the criteria of long-term dividend growth from well-established firms.
Investing in individual dividend stocks can offer a higher yield than a dividend fund. However, it's crucial to research each stock thoroughly to ensure it fits into your overall portfolio. A brokerage account is required to invest in dividend stocks.
Dividends in taxable brokerage accounts cause taxes to be realised in the year the dividends occur, which might not be as tax efficient as other options for investors with taxable accounts and in high income brackets. Dividend funds offer investors access to a selection of dividend stocks within a single investment, providing the benefit of instant diversification. If one stock held by the fund cuts or suspends its dividend, you can still rely on income from the others.
Remember, a too-high dividend yield can indicate the payout is unsustainable. Dividend yields over 10% tread firmly into risky territory. A company's payout ratio should be evaluated, and dividend yields among peers should be compared.
In conclusion, Walmart, Chevron, and DCC stand out as top-quality dividend stocks meeting your criteria as of August 2025.
- When considering personal-finance options for investing in passive income, it's essential to compare apps and calculators that help individuals calculate the potential returns from high-dividend stocks like Walmart, Chevron, and DCC.
- For the purpose of personal-finance management, it's noteworthy that the taxes incurred from dividends in taxable brokerage accounts are realized in the year they occur, making it crucial for investors to consider dividend funds for tax efficiency.
- To make informed decisions about personal-finance and investing, investors should research companies' payout ratios, such as the ones found in Walmart, Chevron, and DCC, to assess their sustainability and compare them with their peers.
- If you're willing to take on slightly more risk for a higher yield, you might consider stocks like PennantPark Floating Rate Capital and Prospect Capital, which offer monthly dividends but are business development companies with more volatile earnings.
- In the realm of personal-finance and investing, a well-diversified portfolio of stocks like Walmart, Chevron, and DCC may provide a reliable stream of dividend income, offering both growth potential and sustained payout ratios under 100%.
