Dividend stocks can be a “cheat code” for building wealth. Your dividend stocks work around the clock, earning the profits paid to you just for being a shareholder.
Suppose you invest money and time to collect dividend-paying stocks and reinvest your earnings to keep buying more. In this case, you can trigger a snowball of passive income that could eventually cover your living expenses. Every snowball starts out as a snowflake, and getting into dividend stocks doesn’t have to be expensive. Here are four great dividend-paying stocks you can buy for a total of under $400.
1. A high yield oil titan
ExxonMobil (NYSE:XOM) is one of the largest energy companies in the world. It is an integrated oil major, involved in both the exploration and production of oil and natural gas, their refining and their distribution. The company is a dividend aristocrat that has been able to pay and grow its dividend every year for the past 38 years and today offers a dividend yield of 4.5%.
Its massive size and balance sheet have helped it weather weak oil prices for much of the past decade. Now that oil prices have rebounded, Exxon is coming back stronger than ever. It generated $48 billion in cash flow from operations in the fourth quarter of 2021, its highest since 2012. Some green technologies like electric vehicles have become hot investment topics, but the role of ExxonMobil in meeting global energy needs should be assured for the foreseeable future.
2. A smoldering dividend
Altria Group (NYSE: MO) is a tobacco and nicotine products company that sells Marlboro brand cigarettes in the United States, as well as nicotine pouches, chewing tobacco and cigars. The company also holds minority stakes in a liquor company Anheuser-Busch InBevcannabis company Chronos Group, and e-cigarette company Juul Labs. Altria has increased its dividend for 51 years, making it a Dividend King that offers investors a 7.2% yield.
Fewer people smoke in the United States each year; Altria shipped 126.6 billion cigarettes and cigars in 2014, but only 95.6 billion in 2021, a 24% drop. However, the company’s operating profit fell from $7.6 billion in 2014 to $10.4 billion in 2021, or 37% to augment. Altria relies on the addictive properties of its products to gradually increase its prices in order to compensate for the drop in volumes. As long as this continues, investors can probably expect that big dividend to keep coming.
3. Calling all dividend investors
Verizon Communications (NYSE:VZ) is part of the wireless oligopoly in the United States, where a small group of telecommunications stocks controls the industry. Verizon holds around 29% of the market, making it the second-largest carrier in the United States. The satellites, towers and cables on which wireless networks run cost billions of dollars to build and maintain over the years, making it unlikely that a competitor would invest the money needed to get into space. and pose a threat.
And as people become more dependent on smartphones in daily life, the phone bill has become almost like a utility, getting the same priority in a household’s budget as the electricity and water bill. Verizon’s business has proven resilient through many tough times like the pandemic, helping it grow its payouts over the past 17 years. Investors can get a 4.8% return from Verizon today.
4. Peanut butter and jelly time
the JM Smucker Company (NYSE: SJM) is a consumer and pet food company that manufactures a variety of nut butters, fruit spreads, coffee and pet foods. These small products are purchased by consumers on a weekly or monthly basis, creating steady streams of income. Consumer products can be competitive and generic brands can put pressure on the prices of name brands like what JM Smucker sells. However, the company has shown brand power over the years, managing to grow its revenue by an average of 5% each year for the past decade.
The stock is also poised to become a dividend aristocrat; its dividend growth streak is currently 24 years and it offers a yield of 2.9%. The company faced challenges in this high inflation environment, where rising raw material and shipping costs put pressure on profit margins. Yet the company only devotes half of its cash flow to dividends. Therefore, payout seems perfectly safe through these headwinds which should prove to be temporary.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end consulting service Motley Fool. We are heterogeneous! Challenging 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 wealthier.