3 High-Yield Dividend Stocks Increasing Payouts For Decades

If you want a vehicle to compound your investments for the coming decades or you just want a passive income source, high-yield dividend stocks should be your go-to. You should look into companies with solid underlying businesses and a track record of increasing dividend payouts every year.

If you invest a portion of your portfolio in businesses with these characteristics, you’ll make much more money in the long run vs. holding cash or treasuries. Better yet, these dividends come in handy during emergencies and downturns. The stocks themselves often perform better than the broader market when recessions hit, since dividend-paying companies are often mature and have recurring sources of cash flow.

Here are three high-yield dividend stocks to look into.

PepsiCo (PEP)

PepsiCo (NASDAQ:PEP) is one of the most solid stocks you can buy, even though PEP stock has been on a downtrend after plateauing two years ago. It is now down nearly 33% from its peak, but the problems here are less structural and more connected to the broader economy and consumer preferences.

Inflation has caused consumers to cut down on discretionary spending like snacks, whereas higher treasury yields have triggered a rotation out of high-yield low-growth stocks into bonds. The company has also seen margin pressures due to inflation and higher input costs.

That said, the current dip is a great long-term buying opportunity. PEP stock seems poised to return to its original trajectory as interest rates come down and bond yields are dragged down along with it. PepsiCo is a very strong brand, and revenue has still grown year-over-year, albeit at a much slower pace. Every dip in the past has proven to be a buying opportunity, and this one should as well.

The dividend yield here is 4.33%, with 54 consecutive years of increases. The payout ratio here is 68.03%. Some Treasuries still yield higher than this, but as rate cuts come down, the yield here will look increasingly attractive.

Pfizer (PFE)

Pfizer (NYSE:PFE) is not a one-trick pony like many think it is. The company is a household name for the COVID vaccine, and many believe Pfizer is also a thing of the past. However, that couldn’t be further from the truth.

It still sells COVID drugs, but the company has built a broad, late-stage pipeline and a leaner cost structure that positions it for growth well beyond the pandemic. Even as vaccine and antiviral sales fade, Pfizer’s cost cuts, other drug franchises have kept the company’s foundation intact.

The decline in COVID sales has also mostly been priced in by Wall Street. PFE stock is down almost 59% from its late 2021 peak. The stock is now stabilizing and seems to be nearing a bottom.

Profits are bouncing back fast, debt is coming down, and the cash balance is starting to increase. Speaking of debt, this is something else that could turn into a positive catalyst as interest rates come down. Pfizer’s net interest losses in 2024 were $2.5 billion, compared to net income of $8 billion. Investors expect two rate cuts this year, decreasing debt servicing costs by hundreds of millions.

On top of that, stocks often trade at a discount if the underlying company has a lot of debt. This is especially true in high interest rate environments. But as interest rates eventually come down, PFE stock seems well-positioned to make a comeback.

The forward dividend yield here is 7.05%. Pfizer has had 16 years of consecutive dividend increases, and its payout ratio right now is at 55.74%.

Verizon (VZ)

Verizon (NYSE:VZ) has been seen as a pretty bad bet to make, especially in the past three years. And that’s as expected, since telecom companies carry high debt, and the growth here hasn’t been that exciting.

However, these companies are quickly making a comeback in recent quarters. Interest rates are coming down, and telecom companies have shown that they can survive and pay dividends through high interest rate regimes. Not only that, they have shown significant pricing power. With the AI boom increasing demand even more, many are starting to argue that major telecom companies like Verizon fall into the “essential” businesses category. The internet is no longer discretionary.

Recent trends have been highly promising. Verizon is starting to post growth again, and the rate cuts have driven down the debt servicing costs. It still has $167.71 billion of debt in its balance sheet, and net interest loss was at $6.3 billion last year. But even with that burden, it posted $17.5 billion in net income. This comfortably covered dividend payments and some debt repayments.

AT&T (NYSE:T) is ahead in its recovery at the moment, but VZ stock is following right in its footsteps. There are no near-term threats to its businesses, and the fact that this company operates entirely in the U.S. makes it even more attractive. Tariffs and trade policies have turned erratic, so VZ stock is becoming a great recovery bet with high dividends and insulation from tariffs.

The forward dividend yield here is at 6.38%, with 20 years of consecutive dividend increases. The payout ratio is 56.16%.

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