I think I’ve developed a bit of an obsession with dividend stocks. There’s just something satisfying about the passive income they generate, and I often find myself reinvesting that money into more high-yield stocks. It feels like a step toward greater financial freedom.
Recently, I added more shares of PepsiCo (NASDAQ:PEP), Main Street Capital (NYSE:Main), and Verizon (NYSE:VZ). Here’s why these quality companies are hard to resist.
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I mean, PepsiCo is pretty well known, right? This snack and beverage giant boasts a lineup of household names, including Pepsi, Gatorade, and Doritos. These brands consistently bring in strong cash flow, which easily supports a dividend yield of about 3.8%. That’s significantly more than the 1.1% yield of the S&P 500.
PepsiCo has a solid history of raising its dividends. Just last year, it bumped up its payments by 5%, extending its streak to 53 consecutive years—a remarkable achievement.
The company is targeting organic revenue growth of 4% to 6% annually, even aiming for higher numbers in the long run. To do this, strategic investments are key. For example, they recently acquired Poppi for $1.7 billion, strengthening their partnership with Celsius, where they now hold an 11% stake. I think these moves should help them keep raising those dividends.
Main Street Capital acts as a business development company (BDC), focusing on providing debt and equity to lower middle-market businesses—those with revenues between $10 million and $150 million. They also make secured debt investments in companies with revenues from $25 million to $500 million, generating interest and dividends to support their own dividend payments.
They have a consistent dividend policy, offering a monthly payout that’s relatively stable. In fact, Main Street Capital has never cut or suspended its monthly dividends. They’ve seen steady increases, raising them by 4% over the past year and a whopping 136% since their IPO in 2007. Right now, their yield sits at around 4.8% based on recent stock prices.
On top of that, Main Street often pays additional quarterly dividends, keeping the payout consistent over the years. All told, this brings their total yield up to about 6.7%, which aligns perfectly with my strategy of generating passive income.
Then there’s Verizon. With over 146 million customers, they offer mobile and broadband services. The revenue they generate from these services supports a solid 6.9% dividend yield.
Verizon pulls in roughly $20 billion in free cash flow every year after covering necessary maintenance and expansion costs for their 5G and fiber networks. This revenue is more than enough to cover their annual dividend commitment of around $11.5 billion, and they still have cash left over for financial flexibility.
They’ve recently used some of that flexibility to acquire Frontier Communications for $20 billion, which should strengthen their fiber network and help boost mobile and internet service sales. Given their growth trajectory, it seems likely they’ll continue to increase dividends—a streak they’ve maintained for 19 years.
So, yeah, I’ve picked up more shares of PepsiCo, Main Street Capital, and Verizon lately. Their high dividends are certainly attractive, but it’s their track records of consistently increasing these dividends that really draw me in. With time, this should lead to greater passive income, and I think that can help speed up my journey toward financial independence.
Before considering PepsiCo stock, you might want to keep these points in mind.
Our analyst team has identified some of the best stocks to consider right now, and PepsiCo doesn’t make the list. These stocks are seen as having strong potential for impressive returns in the coming years.
It’s worth mentioning that some well-known companies, like Netflix, have yielded significant returns for investors who got in early. For instance, a $1,000 investment in Netflix when they first recommended it in 2004 would now be worth over $450,000!
The average return from these stock recommendations is impressive, standing at 942%—outpacing the S&P 500 by a considerable margin. This could be an enticing prospect for anyone looking to join an investing community centered around retail investors.
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