Investing

5 Highest Yielding S&P 500 Passive Income Stocks All Pay More Than Treasury Bonds

Lee Jackson

Published: June 29, 2024 10:50 am

24/7 Insights

• Passive income is one of the best ways to supplement Social Security or pension income.
• By this time next year, interest rates should start to come down.
• Access 2 legendary, high-yield dividend stocks Wall Street loves.

Investors love dividend stocks because they provide dependable income and give investors a great opportunity for solid total return. Total return includes interest, capital gains, dividends, and distributions realized over time. In other words, the total return on an investment or a portfolio consists of income and stock appreciation.

At 24/7 Wall St., we always remind our readers about the impact total return has on portfolios because it is one of the best ways to improve the chances of overall investing success. Again, total return is the combined increase in a stock’s value plus dividends.

Over the past two years, the yield on U.S. government debt, from one-month T-bills to the 30-year-long bond, has risen from historical lows to levels not seen in almost twenty years. Many conservative investors have opted to get out of stocks and play it safe. However, safe blue-chip S&P 500 dividend stocks are the way to go for investors who want a secure passive income dividend stream combined with the upside that stocks can deliver.

We screened our 24/7 Wall St. S&P 500 dividend stock research database, searching for companies that provide yields higher than Treasury bonds, can deliver streams of safe passive income, and are rated Buy at top Wall Street banks. Five look like outstanding ideas now. 

Why we are covering these stocks

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Blue chip S&P 500 dividend stocks provide the potential for solid total return. At 24/7 Wall St., we consistently emphasize the possibility of total return to our readers, as it is one of the most effective ways to enhance the prospects of overall investing success. Once again, total return is the collective increase in a stock’s value plus dividends.

Altria

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This tobacco company offers value investors a great entry point. Now trading at a cheap 8.8 times estimated 2025 earnings, it pays a rich 8.39% dividend. Altria Group Inc. (NYSE: MO) manufactures and sells smokable and oral tobacco products in the United States through its subsidiaries.

The company provides cigarettes primarily under the Marlboro brand, as well as:

• Cigars and pipe tobacco, principally under the Black & Mild brand
• Moist smokeless tobacco and snus products under the Copenhagen, Skoal, Red Seal, and Husky brands
• on! Oral nicotine pouches.

It sells its tobacco products primarily to wholesalers, including distributors and large retail organizations, such as chain stores.

Altria used to own over 10% of Anheuser-Busch InBev (NYSE: BUD), the world’s largest brewer. The company sold 35 million of its 197 million shares through a global secondary offering. That represents 18% of their holdings, but still leaves a hefty 8% of the outstanding shares in their back pocket. They also announced a $2.4 billion stock repurchase plan partially funded by the sale. 

Crown Castle International

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This top cell tower company offers incredible growth and income possibilities with a fat 6.22% dividend. Crown Castle International Corp. (NYSE: CCI) is one of the largest U.S. wireless tower companies, with over 40,000 towers and approximately 90,000 route miles of fiber supporting small cells and fiber solutions across every primary U.S. market.

The company’s core business is leasing space on its wireless towers, primarily to wireless carriers, government agencies, and broadband data providers. This nationwide portfolio of communications infrastructure connects cities and communities to essential data, technology, and wireless service – bringing information, ideas, and innovations to the people and businesses that need them.

Crown Castle is one of the best stocks in the sector for more conservative investors. Its high yield distribution and low volatility make it a good holding for accounts seeking growth, income, and less risk.

Kinder Morgan 

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This is one of the top energy stocks and remains a favorite across Wall Street. It pays a dependable 5.86% dividend. Kinder Morgan Inc. (NYSE: KMI) is an energy infrastructure company in North America. The company operates through the following segments.

The Natural Gas Pipelines segment:

• Owns and operates the interstate and intrastate natural gas pipeline and underground storage systems
• Natural gas gathering systems and natural gas processing and treating facilities
• Natural gas liquids fractionation facilities and transportation systems
• Liquefied natural gas liquefaction and storage facilities

The Products Pipelines segment owns and operates refined petroleum products, crude oil and condensate pipelines, associated product terminals, and petroleum pipeline transmit facilities.

The Terminals segment owns and operates liquids and bulk terminals that store and handle various commodities, including:

• Gasoline
• Diesel fuel
• Chemicals
• Ethanol
• Metals
• Petroleum coke 
• Owns tankers

Lastly, the CO2 segment produces, transports, and markets CO2 to recover and produce crude oil from mature oil fields and owns interests in/or operates oil fields and gasoline processing plants, as well as a natural oil pipeline system in West Texas. It holds and runs approximately 83,000 miles of pipelines and 144 terminals.

Pfizer

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This top pharmaceutical stock was a massive winner in the COVID-19 vaccine sweepstakes but has been crushed as many are not getting boosters. Pfizer Inc. (NYSE: PFE) discovers, develops, manufactures, markets, distributes, and sells biopharmaceutical products worldwide and pays a hefty 5.88% dividend, which has risen yearly for the last 14 years.

The company offers medicines and vaccines in various therapeutic areas, including:

• Cardiovascular metabolic and women’s health under the Premarin family and Eliquis brands
• Biologics, small molecules, immunotherapies, and biosimilars under the Ibrance, Xtandi, Sutent, Inlyta, Retacrit, Lorbrena, and Braftovi brands
• Sterile injectable and anti-infective medicines and oral COVID-19 treatment under the Sulperazon, Medrol, Zavicefta, Zithromax, Vfend, Panzyga, and Paxlovid brands.

Pfizer also provides medicines and vaccines in various therapeutic areas, such as:

• Pneumococcal disease, meningococcal disease, tick-borne encephalitis
• COVID-19 under the Comirnaty/BNT162b2, Nimenrix, FSME/IMMUN-TicoVac, Trumenba, and the Prevnar family brands
• Biosimilars for chronic immune and inflammatory diseases under the Xeljanz, Enbrel, Inflectra, Eucrisa/Staquis, and Cibinqo brands
• Amyloidosis, hemophilia, and endocrine diseases under the Vyndaqel/Vyndamax, BeneFIX, and Genotropin brands

Trading at its lowest split-adjusted level in thirteen years, the stock is an incredible bargain at current levels and pays a massive dividend. Despite a stunning 44% decline in profits, the company still posted first-quarter earnings that came in above Wall Street estimates. The company reported $0.55 diluted earnings per share and $14.9 billion in first-quarter sales, trouncing analysts’ $0.51 and $13.87 billion estimates, respectively.

While the pharmaceutical giant reported its fifth straight year of year-over-year revenue and net income declines, the numbers are still skewed somewhat from the enormous revenues posted during the pandemic. Patient investors will get paid one of the highest blue-chip dividends going, and shares trade at a reasonable 10.75 times estimated 2025 earnings.

Five Dividend Aristocrats to Buy and Hold Forever for Dependable Passive Income

Verizon Communications

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This top telecommunications company offers tremendous value trading at just 8.7 times estimated 2025 earnings and pays investors a hefty 6.50% dividend. Verizon Communications Inc (NYSE: VZ)  through its subsidiaries, engages in the provision of communications, technology, information, and entertainment products and services to consumers, businesses, and governmental entities worldwide.

It operates in two segments:

• Verizon Consumer Group 
• Verizon Business Group 

The Consumer segment provides wireless services across the wireless networks in the United States under the Verizon and TracFone brands and through wholesale and other arrangements; and fixed wireless access (FWA) broadband through its wireless networks, as well as related equipment and devices, such as smartphones, tablets, smartwatches, and other wireless-enabled connected devices.

The segment also offers wireline services in the Mid-Atlantic and northeastern United States and Washington, D.C., through its fiber-optic network, Verizon Fios product portfolio, and a copper-based network.

The Business segment provides wireless and wireline communications services and products, including:

• FWA broadband
• Data
• Video and conferencing
• Corporate networking
• Security and managed network
• Local and long-distance voice
• Network access services to deliver various IoT services and products to businesses, government customers, and wireless and wireline carriers in the United States and internationally

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