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Dividend stocks serve as a robust strategy against market volatility. Observing regular cash deposits from prominent companies enhances investor confidence. Currently, the S&P 500 (SNPINDEX: ^GSPC) has an average dividend yield of 1.40%, yet many investors are eyeing individual companies that offer significantly more attractive yields.
Below are two high-yield stocks worth considering for your investment portfolio.
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AT&T (NYSE: T) has seen a remarkable rise of 68% in its share price over the past year. The telecommunications giant is taking substantial steps to improve its financial health, including paying down debt and divesting its remaining stake in DirecTV. The company is channeling its efforts into expanding its 5G wireless and fiber internet services, which should help sustain its impressive free cash flow that supports its high dividend yield.
AT&T’s consistent revenue from customer bills provides a stable foundation for dividend payments. The company anticipates realizing $16 billion in free cash flow by 2025, paying out less than half of this in dividends, with a current quarterly distribution set at $0.2775.
Having cut its dividend in 2022, AT&T has since improved its debt situation, enabling a stronger focus on growth projects, such as enhancing fiber internet accessibility. By the end of 2024, AT&T reported 29 million fiber locations and aims to expand to 50 million by 2029.
The company’s wireless postpaid segment demonstrates resilience as it experiences low churn rates, largely due to enhanced customer services. Last year, AT&T attracted 1.7 million new postpaid subscribers, which indicates potential for increased free cash flow and future dividend uplifts.
This forward momentum positions AT&T as a compelling income investment for 2025 and beyond, offering a forward dividend yield above 4% even after recent gains.
Hershey (NYSE: HSY) has faced challenges, including surging cocoa prices, weaker consumer spending, and intensified competition in the chocolate sector. Nevertheless, this iconic brand, with a legacy spanning 130 years, has made 380 consecutive dividend payments, with current yields at a 15-year peak.
Hershey’s stock has been primarily impacted by the increased costs of cocoa; however, historically, commodity price spikes tend to normalize, stimulating greater production levels and balancing supply.
To navigate current challenges, Hershey is optimizing its supply chain and investing in opportunities for growth. The company’s management is targeting $350 million in cost reductions over the next few years.
Moreover, Hershey is pursuing high-return investment opportunities in the salty snacks segment. Products like SkinnyPop and Dot’s Pretzels are showing solid demand. The recent intention to acquire the organic snack brand LesserEvil is expected to enhance Hershey’s growth trajectory and help offset recent deficits in chocolate sales.
Despite recent challenges in the candy market, Hershey has proven resilient, with fourth-quarter sales rising by 9% year-over-year. Management projects at least 2% sales growth in 2025 even as high cocoa prices strain near-term earnings.
Analysts anticipate a drop in adjusted earnings for Hershey, expecting it to decrease to $6.10 in 2025 from $9.37 in 2024. Even with this decline, the earnings will sufficiently support the quarterly dividend of $1.37.
Hershey’s current forward dividend yield stands at 3.22%. With cocoa prices moderating since the start of the year, the company’s shares have rebounded recently, and further increases may occur as investors refocus on Hershey’s long-term viability.
However, potential investors in AT&T should exercise caution:
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John Ballard is not invested in any stocks mentioned. The Motley Fool does hold positions in and endorses Hershey. The organization adheres to a disclosure policy.
2 Dividend Stocks to Double Up on Right Now was originally published by The Motley Fool.
Source
finance.yahoo.com