In the realm of high dividend stocks, it’s really not about just cranking out numbers; it’s about picking the right ones. Sure, there are stocks boasting yields of 5% or more, but many of these could fall into the “yield trap” category. This means the companies run the risk of slashing their dividends or suffering price drops that outweigh the quarterly cash returns. It’s definitely wiser to focus on quality before diving into dividend stocks. With that lens, certain stocks seem quite appealing for long-term investments right now, like Energy Transfer, Pfizer, and United Parcel Service.
Remember Nvidia back in 2009? An unusual indicator is signaling again. In 2009, a “double down” signal was spotted from a lesser-known chipmaker called Nvidia. Now, a company significantly smaller than Nvidia is showing this same “full conviction” signal.
Energy Transfer boasts high yield and AI growth potential
Energy Transfer operates as a master limited partnership (MLP) focusing on midstream energy assets like pipelines. As a pass-through entity, it distributes a large share of its pre-tax profits as quarterly cash payouts to its investors. Currently, this MLP has an attractive forward yield of 6.6%.
Historically, Energy Transfer has consistently raised its dividend by about 2% to 4% each year. But what’s interesting is its indirect involvement in the AI trend—it could mean even larger dividend growth ahead.
AI data centers are increasing the demand for midstream energy infrastructure. In response to this trend, Energy Transfer is aiming for a 3% to 5% rise in sales volumes each year moving forward. If the stock price rises as dividends increase and the MLP maintains a solid yield, it could yield solid returns for investors willing to hold on for the long haul.
Concerns around Pfizer’s “yield trap” may be overstated
Pfizer is projected to have a nearly 7% future dividend yield, and its stock is trading at a very low forward price-to-earnings (P/E) ratio of 8.5. While some investors might view this as a “super bargain,” others might be wary, considering Pfizer’s recent lackluster financial performance.
However, the negative sentiment surrounding one of the most undervalued stocks in the pharmaceutical sector could actually play to its advantage. Yes, demand for Pfizer’s COVID-19 vaccines and treatments is waning. They’ve also got a critical patent cliff approaching for their main drug, Eliquis, in 2028.
Even so, Pfizer anticipates a 4% sales growth for the remaining product lines by 2026. Estimates suggest earnings of $2.94 per share, leading to a payout ratio close to 59% with an annual dividend of $1.72. Might not be perfect, but if Pfizer can launch successful new products to counterbalance declines in its COVID-19 and Eliquis sales, it might manage to keep increasing its dividends, potentially leading to revaluations in the low teens.
United Parcel Service may continue to surprise
United Parcel Service, or UPS, currently has a forward dividend yield of 5.7%. They’ve managed to increase dividends each year for 16 years, but recently that growth has slowed. Some analysts worry about their high payout ratio, which raises concerns about a potential future dividend cut.
Still, despite some yielding concerns, UPS’s stock has climbed in recent months for reasons that shouldn’t be ignored. Yes, Amazon is moving into logistics, but recent upticks in freight rates could positively impact the sector.
Analysts expect flat earnings growth this year, yet improved pricing conditions could lead to strong performance by 2027, with consensus estimates anticipating per-share earnings to rise from $7.13 to $8.02. If profits recover and the dividend increases from its current range of $6.56, UPS could provide steady cash returns as it continues its recovery. It’s worth considering as a buy now, but if a bearish trend hits in the short term, it could become an even stronger investment in the long run.
Is now the right time to invest in Energy Transfer stock?
Before jumping into Energy Transfer, it’s important to think about a few things.
Our analysts have pinpointed what they believe are the Best 10 stocks available now, yet Energy Transfer didn’t make the cut. These selections are expected to deliver impressive returns over the coming years.
By the way, revisiting notable investments like Netflix or Nvidia could provide some perspective. For instance, a $1,000 investment in Netflix when recommended back in 2004 would be worth around $377,990 today!* Similarly, Nvidia has skyrocketed to about $1,269,518!*
The takeaway? The average return from our stock advisor program stands at 896%, outpacing the S&P 500’s 206% return. Don’t pass up on our latest Top 10 list.
*The Stock Advisor program will resume on July 26, 2026.
Disclosure: The individual mentioned has no stocks in any of those companies. The advisory service holds positions in and recommends Amazon, Pfizer, and UPS.
