When it comes to low-risk, dividend investing, many investors prefer dominant megacaps like Johnson & Johnson (JNJ), Apple (AAPL) or Microsoft (MSFT). That’s mostly because they subscribe to the notion that these stable corporations will be here many years from now.
That may be true. However, stability alone doesn’t count for much. A good dividend stock has to have… well, good dividends.
And the sad reality is this trio of big-name stocks offers a meager dividend that averages less than 1.5%.
That’s just table scraps. Just consider that recent survey results show that Americans on average think they need $1.25 million to retire comfortably… But even with that substantial nest egg, you would generate just $18,750 if you invested in these three stocks.
I don’t know about you, but that’s not my idea of a low-risk retirement. It sounds more like living on the poverty line.
Instead, investors need to balance the real need for yield with the desire for stability. And sometimes, that means thinking like a contrarian by looking beyond the usual Blue Chip stocks.
There’s no better proof of that right now than one my favorite “forever” holdings, Altria Group (MO).
Altria Group Smokes the Competition
Back in July, I touted Altria as a top dividend stock that had staying power. And, as I write, the tobacco giant has racked up a 9.5% total return vs. the broader market’s 2.7% loss.
There are a ton of reasons to like Altria, including:
Dividends – Altria has increased its dividend for 52 years in a row, for one of the best long-term track records on Wall Street. Those aren’t just nominal payouts, either, as it yields more than 4X the typical stock in the S&P 500. And the icing on the cake is that the payouts are very sustainable at just 75% of estimated profits.
Low volatility – As mentioned, MO stock has outperformed lately. Shares are more or less flat year-to-date in 2022 even as the S&P 500 has slumped about 16%. And over the last 24 months, Altria has slightly outperformed the S&P when measured by share prices alone. That proves this isn’t just a dividend delivery vehicle, and that this stock’s shares have staying power.
Battle-Tested Business – No one would argue that tobacco products is an industry with breakneck growth ahead of it. However, Altria is doing a great job managing its battle-tested business to keep margins generous and to innovate into new categories. This includes its Cronos cannabis business, FDA-authorized smoke-free products like vaping products or oral nicotine pouches, which are helping to replace any potential revenue losses down the road.
Sure, Altria isn’t quite as dynamic as Apple, and Marlboro cigarettes are not quite as virtuous as J&J products like Tylenol. But if you’re an income investor, this is just the kind of stock you should be looking for.
Tap “Hidden Yields” to generate $100,000 annually
When you rely on the usual dividend stocks, you normally get stuck with anemic yields that simply aren’t realistic income streams. After all, the average S&P 500 yield is just 1.7% right now – meaning half of the large-cap dividend stocks out there offer even worse than this meager amount!
Stocks like Apple and Microsoft, for example.
But with stocks like Altria, you can actually retire in comfort. Instead of living in poverty just to make ends meet, you can take that $1.25 million nest egg we talked about earlier and retire on $100,000 a year in annual income!
And if you’re not quite at retirement? Well then plow that cash back into your portfolio and keep it growing at a healthy clip.
That’s the power of “Hidden Yield stocks” like Altria. They offer savvy investors significant, growing dividends to retire in style. And beyond that, they offer the potential to double their money roughly every five years – without taking on aggressive bets or exposure to risky market trends.
The challenge for most investors is they don’t know where to find these hidden gems.
But the good news is that Chief Strategist Brett Owens has you covered with 7 Recession-Resistant Dividend stocks for 2023. Click here for his exclusive briefing and find out how you can get the names, buy prices and full research 100% risk-free right now.