Many investors are more concerned with dividend payments and yield than with share price appreciation. Dividends can form an important source of income for investors and are often more dependable than volatile markets where share prices can abruptly rise and fall. Taking sizable positions in high-paying dividend stocks provides peace of mind to investors who can sit back and enjoy regular and consistent payments.
Dividends can also be reinvested, helping to grow a portfolio over time without the need to sell any positions. High yield dividends can sometimes be a sign of underlying problems with a company’s stock. And many mature and successful companies provide their shareholders with strong dividend payments. Look at these top recommendations for three dividend stocks to buy and hold until you reach your more mature years.
Bank of America (BAC)
Bank of America’s (NYSE:BAC) stock is safe, reliable, and offers a quarterly dividend that yields a healthy 3.35%. The spring crisis that emerged among regional lenders, such as Silicon Valley Bank, has contributed to BAC appearing cheaper right now.
Bank of America’s shares are down 14% since this year’s start and trading at a 52-week low. Also stock is changing hands at eight times future earnings, indicating that the stock is undervalued at current levels.
This presents a great opportunity to scoop up BAC stock before it inevitably rises once sentiment towards the banking sector improves. The most recent earnings report from the country’s second largest lender, was typically good. The bank announced earnings per share (EPS) of 88 cents and revenue of $25.33 billion, both of which topped Wall Street forecasts. In terms of the dividend, it pays 24 cents a share each quarter, and Bank of America just raised it by 9%.
Dow Inc. (DOW)
Although riskier, investors who chase yields will likely be interested in chemical company Dow Inc. (NYSE:DOW).
Dow remains one of the three largest industrial chemical producers worldwide and a specialist in chemicals that are needed to make plastics and rubber. Dow Inc. provides its stockholders with a quarterly dividend payout of 70 cents, which is equal to a yield of 5.12%. This represents the second highest of any stock listed in the Dow Jones Industrial Average after 3M (NYSE:MMM), which has a slightly higher yield of 5.61%.
An older, more established industrial company (founded 1897), Dow Inc. is more of a slow-moving stock. So far in 2023, DOW stock has risen 7% versus an 18% gain in the benchmark S&P 500 index. Over five years, the stock has grown a modest 13%. Still, the share price remains in the green. The dividend is an attractive option for income investors. Also, Dow Inc.’s Q2 print was beyond expectations. Additionally, the company expects to generate free cash flow this year of $2.5 billion, meaning the dividend is likely secure moving ahead.
Texas Instruments (TXN)
While many people still associate Texas Instruments (NASDAQ:TXN) with its scientific calculators, the company is a major player in the design and manufacture of semiconductors and integrated circuits. In business since 1930, Texas Instruments is another mature and reliable company.
It pays a quarterly dividend of $1.24 per share, which gives it a yield of aproximately 3%. Considering that most tech stocks pay no dividend at all, Texas Instruments’ offering looks quite attractive. Importantly, the dividend does come at the expense of stock performance.
TXN stock is up a slight 3% this year. Compare that to the 245% year-to-date (YTD) gain in fellow semiconductor company Nvidia (NASDAQ:NVDA). Thus, the dividend starts to look like a good way to keep shareholders from hitting the “sell” button. Over the past year, Texas Instruments’ performance looks better. TXN stock has increased 50% through five years and is up 342% over the past decade.
On the date of publication, Joel Baglole held long positions in NVDA and BAC. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.