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3 High-Yield Dividend Stocks That Can Deliver a Lifetime of Passive Income
Dividend investing can create substantial passive income over time. A conservative example illustrates this potential: Investing $10,000 annually for 40 years in a stock yielding 3.1% with 2.5% annual dividend growth could generate $44,316 in yearly dividend income. This strategy could also build a portfolio worth over $1.4 million, assuming normal market conditions.
Selecting the right dividend stocks is crucial, however. Investors should focus on companies with sustainable payouts, a management team committed to shareholder returns, and businesses that are poised for long-term profitability.
Which stocks tick these boxes? This October, three dividend stocks stand out for their attractive dividends, valuations, and growth prospects: Nomad Foods (NYSE: NOMD), WK Kellogg Co. (NYSE: KLG), and Honda Motor Corp. (NYSE: HMC). Let’s explore why these three dividend payers might deserve a spot in your long-term passive-income portfolio.
Nomad Foods: A tasty opportunity in frozen foods
Nomad Foods, a leading international frozen food company, currently offers a 3.4% dividend yield. This attractive payout is well-supported by the company’s conservative 21.9% payout ratio, suggesting ample room for future dividend growth.
The stock’s forward price-to-earnings (P/E) ratio of 11.1 indicates an attractive valuation, relative to its earnings potential. Moreover, Wall Street analysts see a significant upside in the stock, projecting a 39.5% potential gain from current levels. Still, Nomad Foods has significantly underperformed the broader market year to date, posting only a 5.4% gain, compared to the S&P 500‘s 22% rise in 2024.
Nomad’s strong market position in the European frozen food space and its focus on innovation in health-conscious offerings could drive long-term growth. The company’s ability to pass on inflationary costs to consumers demonstrates pricing power, a key attribute for maintaining profitability and supporting future dividend increases.
WK Kellogg Co: A fresh start in familiar territory
WK Kellogg Co, representing the North American cereal business of the iconic Kellogg brand, emerged as an independent entity on Oct. 2, 2023. This spinoff was part of Kellogg’s strategic decision to separate its cereal operations, allowing for a more focused approach to this specific market segment.
The stock offers an attractive 3.6% dividend yield, underpinned by a prudent 34% payout ratio. This conservative approach to dividend distribution provides a buffer for sustaining payouts, even in the face of potential economic headwinds.
WK Kellogg’s shares currently trade at a forward P/E of 9.21, hinting at a possible undervaluation of its earnings potential. However, the stock’s robust year-to-date performance of 33%, significantly outperforming the S&P 500, has led analysts to generally consider it fairly valued at current levels.
As a stand-alone company, WK Kellogg can now channel its resources and attention exclusively into its core cereal business. This laser focus could pave the way for enhanced operational efficiencies and accelerated innovation, potentially unlocking long-term value for shareholders. The company’s well-established brand recognition and strong foothold in the North American cereal market serve as a solid foundation for future expansion and growth.
For passive-income seekers, WK Kellogg’s commitment to its dividend, combined with its potential for operational improvements and market expansion, makes it an intriguing option for generating steady income streams over the long term.
Honda Motor Co.: Revving up for the future
Japanese automotive giant Honda Motor Co. presents investors with an enticing 4.36% dividend yield. The company’s conservative payout ratio of 28.5% suggests this attractive yield is well-supported by earnings, providing ample room for potential dividend growth in the coming years.
Honda’s shares currently appear significantly undervalued, trading at a forward P/E of just 6.43. This modest valuation, coupled with Wall Street’s bullish 27.8% upside projection, points to an attractive entry point for long-term investors.
The automaker’s stock has lagged behind the broader market’s performance year to date. However, Honda’s unwavering commitment to electrification, combined with its robust presence in the global automotive and motorcycle markets, offers multiple avenues for future growth.
Honda’s strategic focus on developing cutting-edge technologies, including fuel cell vehicles and robotics, has the potential to drive substantial long-term value creation for shareholders. For passive-income investors, Honda presents a compelling opportunity due to its strong brand, diversified product portfolio, and commitment to innovation.
Don’t miss this second chance at a potentially lucrative opportunity
Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.
On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:
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Amazon: if you invested $1,000 when we doubled down in 2010, you’d have $21,139!*
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Apple: if you invested $1,000 when we doubled down in 2008, you’d have $44,239!*
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Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $380,729!*
Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.
*Stock Advisor returns as of October 14, 2024
George Budwell has no position in any of the stocks mentioned. The Motley Fool recommends WK Kellogg. The Motley Fool has a disclosure policy.
3 High-Yield Dividend Stocks That Can Deliver a Lifetime of Passive Income was originally published by The Motley Fool
The habits of millionaires are a topic of interest when it comes to financial advice. After all, unless they received a large chunk of money as an inheritance or gift, most millionaires had to be smart with their money to get where they are.
Learning how millionaires accumulate wealth — and where they keep it — can provide valuable insights for anyone focused on growing their money. One common question is whether or not millionaires keep money in checking accounts.
Studies show that in recent years, millionaires are keeping a significant portion of their wealth in cash. According to CNBC’s , that portion was about 24% in 2023. While this doesn’t necessarily mean a quarter of a millionaire’s wealth is sitting in a checking account, it does indicate the importance of maintaining liquid assets. And a checking account can be a helpful tool for doing so — whether or not you’re a millionaire.
Anyone, regardless of net worth, can find value in a checking account. Checking accounts allow unlimited deposits and withdrawals, check writing, bill pay, and other features to help you manage your money day-to-day.
While millionaires may keep large portions of their wealth in other deposit accounts and investments, some may use a checking account to manage daily spending. Millionaires also recognize the importance of having liquid assets, like funds in checking and savings accounts. Accessible cash lets you cover unexpected expenses without needing to sell off investments, borrow money, or pay a penalty for tapping your retirement savings early.
The amount of money a millionaire keeps in their checking account is highly personal and depends on preference. However, because checking accounts rarely earn competitive — if any — interest, some millionaires intentionally limit their checking account balance. Some may choose to keep the bare minimum, such as a couple of months’ worth of essential expenses, in their checking accounts, keeping the rest of their wealth in more lucrative assets.
Regardless of preference, it would be surprising for a millionaire to keep more than $250,000 in a single checking account. That’s because the Federal Deposit Insurance Corp. (FDIC) only insures up to $250,000 in deposits per institution, per account holder.
While millionaires may use checking accounts for day-to-day financial transactions, they may also use some of the following accounts in addition to, or in place of, a checking account:
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Savings accounts: Like checking accounts, savings accounts provide a high degree of liquidity, allowing you to access your money as needed for regular or unexpected expenses. High-yield savings accounts, in particular, give millionaires an extra bang for their buck. Some of the best accounts currently offer rates upwards of 4% versus the national average savings account rate of 0.46%.
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Cash management accounts: Cash management accounts (CMAs) pay competitive interest rates while maintaining more accessibility than a savings account. Some CMAs come with a debit card and ATM access, and many provide extended FDIC coverage limits by “sweeping” additional deposits into partner banks. CMAs are available at brokerages, not banks, facilitating easy transfers between investment and cash accounts.
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Money market accounts: Similar to CMAs, money market accounts combine features of checking and savings accounts, often paying competitive interest rates and providing check writing and ATM access. Banks and credit unions offer these accounts, which are federally insured. Minimum opening deposit and minimum balance requirements are often higher than those for standard savings accounts.
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Retirement and tax-advantaged accounts: Millionaires understand the importance of investing for their later years, and retirement accounts such as 401(k)s and IRAs allow them to do so in a tax-advantaged way. Some retirement accounts, like 401(k)s, are offered by certain employers. Others, such as traditional and Roth IRAs, are available to anyone.
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Brokerage accounts: The IRS limits contributions to tax-advantaged accounts, and millionaires typically invest beyond these limits. They do so with taxable brokerage accounts, which can hold investments such as stocks, bonds, and mutual funds without contribution limits.
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Other investments, like real estate, commodities, and art: Some millionaires may decide to diversify their portfolio with other investment types. These could include real estate investments, such as investment properties or real estate investment trusts (REITs); commodities, such as metals or energy products; art; and more.
The amount of money millionaires keep in their checking accounts depends on personal preference. While some millionaires may keep six figures in their checking account to maintain a comfortable cash cushion, others may choose to keep the bare minimum in checking. You wouldn’t expect millionaires to keep more than $250,000 in a checking account, however, because balances over this threshold aren’t typically insured.
There’s no single bank that’s a favorite among millionaires; it’s another matter of preference. However, millionaires are likely to bank with institutions that offer private banking to those who meet specific financial requirements. Private banking may include wealth planning services, waived fees, dedicated bankers, and additional perks. J.P. Morgan Private Bank, Citi Private Bank, and Bank of America Private Bank are among some of the most popular banks for millionaires.
Billionaires may have checking accounts, but they likely use accounts that cater to ultra-high-net-worth individuals. These accounts may come with perks such as a dedicated banker, waived fees, and competitive interest rates. Alternatively, billionaires may opt for a cash management account with higher FDIC insurance coverage limits and checking account features.
No rule says you can’t have a million dollars in a checking account, but FDIC insurance typically only covers up to $250,000. Plus, you can get a bigger return on your investment by keeping $1 million elsewhere. One alternative is a cash management account, which acts like a checking account but generally earns higher interest. Plus, many cash management accounts insure more than the standard $250,000 by sweeping funds into multiple partner banks.
Lumen Technologies, Inc. (NYSE:LUMN) shares are trading higher on Monday after the company announced it is partnering with Meta Platforms, Inc. (NASDAQ:META) to significantly increase Meta’s network capacity and help drive its AI ambitions.
Lumen’s partnership offers Meta enhanced flexibility with secure, on-demand bandwidth, supporting its complex computing requirements and enabling it to serve billions daily.
Ashley Haynes-Gaspar, Lumen’s EVP and chief revenue officer, said, “We’ve transformed our company to meet this demand. As Meta’s customers use more AI services across its platforms, we’re helping provide Meta with a seamless, effortless, and flexible network that will meet its growing needs.”
Lumen Technologies said its Private Connectivity Fabric enables long-term network capacity for Meta’s AI.
Alex-Handrah Aimé, director of Meta’s Network Investments stated, “Our AI tools are performing increasingly more complex tasks including enabling conversations in a variety of languages and translating text to images in real time, while helping people interact with the world around them in new, immersive ways.”
Lumen will report third quarter 2024 results on November 5, 2024.
Investors can gain exposure to the stock via Invesco S&P SmallCap Utilities & Communication Services ETF (NASDAQ:PSCU) and First Trust Cloud Computing ETF (NASDAQ:SKYY).
Price Action: LUMN shares are up 9.50% at $7.38 at the last check Monday.
Image via Shutterstock
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This article Lumen And Meta Join Forces To Boost AI With Flexible, On-Demand Network Solutions originally appeared on Benzinga.com
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