A fund or ETF that mirrors the performance of the S&P 500 Index (SNPINDEX: ^GSPC) is almost always a smart, all-weather growth investment.
There is one exception, however. That is, if you specifically need income. With a trailing dividend yield of only 1.1%, the S&P 500 just doesn’t generate much of it.
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There are still great alternatives, though. Here’s a rundown of three dividend payers with yields that are not only at least three times bigger than the S&P 500’s current yield, but yields based on dividends that have been paid and raised like clockwork for years now.
1. PepsiCo
For most investors, beverage giant Coca-Cola is the go-to choice as an income holding from the consumer goods space. And it’s still a good one to be sure. That’s certainly not been the case for rival PepsiCo (NASDAQ: PEP) of late, however, which is down 28% from its 2023 peak mostly due to the company’s struggle with inflation.
Both camps have arguably overplayed their hands, however. KO stock is up 50% for the past two years as investors clamored for the safety it offers, dragging its forward-looking dividend yield down to a multiyear low of 2.2%. Conversely, PepsiCo shares’ prolonged weakness has pumped its dividend yield up to 4.2%.
A strong yield alone isn’t necessarily enough reason to purchase a stock, even as high as this one may be. PepsiCo also brings all the rest of what it needs to bring to the table, though, including an impressive dividend pedigree as well as evidence that it’s finally on a turnaround track.
Not only has this beverage (and snack) outfit now raised its per-share dividend for 54 consecutive years, but it’s looking for full-year organic revenue growth of around 3% following Q3’s top-line improvement of 3.1%, accelerating last year’s tepid growth of only 1.7%. It’s evidence that initiatives like its prebiotic cola and protein-enriched snack chips are getting traction.
Just don’t tarry if you’re interested. PEP stock has bounced 12% since reporting its third-quarter numbers in early October. The crowd’s starting to believe in it again.
2. Altria Group
There will come a time when the tobacco business is no longer a tenable industry. Blame/credit successful smoking-cessation efforts, mostly.
That end isn’t on the near-term horizon, however. Although the Center for Disease Control reports more than two-thirds of U.S. smokers say they want to kick the cigarette habit, only a little more than half actually tried to quit in the past year, while less than 10% successfully did so. That leaves 11.6% of a still-growing (albeit slowly) U.S. population that continues smoking. Meanwhile, the use of vaping continues to rise as means of delivering nicotine to craving consumers, offsetting much of the progress made on the tobacco-smoking cessation front.
