Although there are a lot of ways to make money in the stock market, few investing strategies have delivered the same level of long-term success as buying dividend stocks.
Nine years ago, J.P. Morgan Asset Management, a division of banking behemoth JPMorgan Chase, released a report that compared the performance of income stocks to non-dividend payers over a four-decade stretch (1972-2012). The report showed that dividend stocks averaged an annual return of 9.5%, which equates to investors doubling their money every 7.6 years. Meanwhile, the non-dividend stocks scraped their way to an average annual return of just 1.6% over 40 years.
These results are precisely what we’d expect to see, even if the magnitude of the outperformance is a bit shocking. Companies that pay regular dividends are almost always profitable on a recurring basis, time-tested, and have clear long-term growth outlooks. In other words, they’re the type of businesses we’d expect to increase in value over time.
Dividend stocks can be your ticket to a healthy amount of passive income. If you want to bring home $5,000 in annual dividend income, investing $60,300 (split equally) into the following three high-yield stocks, which combine to offer an 8.3% average yield, can make it happen.
Enterprise Products Partners: 6.88% yield
Arguably, the safest high-yield stock of the group is oil and gas company Enterprise Products Partners ( EPD -0.22% ). The company offers a nearly 6.9% yield and is riding a 23-year streak of increasing its base annual payout.
For some investors, the idea of putting their money to work in oil stocks might not be appealing. After all, oil demand fell off a cliff two years ago during the pandemic, with crude oil futures briefly pushing into the negative. However, this tumble in oil prices had no impact on Enterprise Products Partners’ operating performance.
What makes this company so special is that it’s a midstream operator. Whereas drilling and…
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