2 Dividend Stocks That Yield More Than 6% That Retirees Can Buy and Hold Safely for Years

Collecting an above-average dividend can sometimes carry risks. High-yielding stocks may need to cut their distributions if a company’s underlying financials are not strong enough to support its dividend payments. But that doesn’t mean all high-yielding stocks are dangerous investments.

Two good examples of stocks that pay more than 6% and can still be ideal long-term options for retirees are Pfizer (NYSE:PFE) And VerizonCommunications (NYSE:VZ). Although their returns are high, these stocks are not as risky as they seem. Here’s why.

1.Pfizer

A bearish outlook for the future has caused Pfizer’s stock price to fall more than 10% this year, despite a generally strong year for the markets. The leading healthcare stock is trading around its 52-week low and its yield is incredibly high at around 6.8%.

Protecting that dividend is a priority for CEO Albert Bourla, who earlier this year called the payout a “sacred cow” for the company, recognizing its importance to investors who rely on the recurring payment . Pfizer has been paying dividends for 344 consecutive quarters and is one of the most stable income stocks to own in the healthcare sector.

The company recently raised its guidance for 2024 in light of strong results. However, investors remain concerned about the future, including how they will respond to a new U.S. administration and the possible implications regulatory changes could have on their operations, as well as how they will grow in the face of to multiple patent cliffs.

The reason I’m not worried about Pfizer is that regardless of who takes the job, there will be a need for constant and continued innovation in healthcare. Pfizer has been a leading name in this field for decades. Its acquisition of oncology company Seagen last year highlighted its aggressive growth strategy, with the move costing Pfizer $43 billion. Over the years, it has also sought out smaller companies in an effort to strengthen its pipeline and bolster its growth prospects.

As for patent breaches, that’s an issue that any healthcare company with a top-tier drug will have to worry about at some point. But by focusing on expanding and diversifying its operations, Pfizer is in an excellent position to meet these challenges. Bourla previously said that by 2030, the company could generate up to $25 billion in revenue from new drugs and acquisitions, which would help offset losses from generics.

The company’s earnings numbers have been volatile due to COVID-19-related writedowns and sales fluctuations. But last quarter, Pfizer generated $6.1 billion in free cash flow, more than double what it paid out in dividends ($2.4 billion). While the company undoubtedly faces some challenges, the company is in much better shape than bearish investors might give it credit for.

2. Verizon Communications

Retirees can get another tempting return from Verizon, which currently pays 6.5%. The telecommunications company has also increased its dividend for 18 consecutive years. The most recent increase came in September when the company increased its dividend by 1.9%. While that’s not a huge increase, it still speaks to Verizon’s commitment to increasing payments.

This also comes at a time when the company is not growing so fast. This year, the company expects a growth rate of between 2% and 3.5% in its core wireless services business. But in the long run, Verizon might have more room to grow. Earlier this year, the company announced plans to acquire Border communicationswhich will expand its fiber footprint to more markets. The $20 billion deal would be accretive to Verizon’s bottom line and bottom line upon completion. Frontier shareholders approved the deal and it is expected to close in early 2026.

Verizon is a big name in the telecommunications sector, but the stock has been a disappointing buy in recent years as rising interest rates have made investors bearish on capital-intensive companies. As rates continue to fall and investors seek safety, it may only be a matter of time before Verizon stock begins to recover. Even though the stock isn’t trading at its lowest level of the year, it’s still an incredibly cheap buy. Investors can buy it today for less than 9 times next year’s estimated earnings (based on analyst expectations).

Don’t miss this second chance and a potentially lucrative opportunity

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See 3 “Double Down” Stocks »

*Stock Advisor returns November 18, 2024

David Jagielski has no position in any of the stocks mentioned. The Motley Fool holds positions at and recommends Pfizer. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.