Investing in Dividend Stocks: Strategies and Top High-Yield Picks for August
Top Dividend Stocks Offer Passive Income for Investors
Investing in dividend stocks can provide a regular stream of passive income for individuals seeking to grow their wealth. Here are some top dividend stocks with high yields as of early August 2025:
Altria (MO), with a dividend yield of approximately 6.42%, has a strong history of dividend increases and high profitability. The company has increased its dividend for 55 consecutive years and reported a net margin of over 30% in Q2 2025.
Bristol-Myers Squibb (BMY) yields around 5.3%, well above its five-year average of 3.7%. The dividend payout ratio is below 50%, indicating a secure dividend outlook.
Portland General Electric (POR) offers a dividend yield around 5.1%, above its five-year average of 4%. This utility stock has a stable dividend expected to grow near 5% annually.
Other notable mentions with decent yields but lower than the above include Amgen (AMGN), yielding around 3.1%, with a five-year dividend growth rate of 9.2% and expected further increases.
For ETF investors, REIT ETFs like the Invesco KBW Premium Yield Equity REIT ETF (KBWY) offer very high dividend yields, above 10%, but generally with different risk profiles. Other dividend ETFs with yields between 2.3% and 4.4% include the First Trust Morningstar Dividend Leaders Index Fund.
Investing in individual dividend stocks can offer a higher yield than a dividend fund. For example, Lument Finance Trust Inc has a dividend yield of 14.88%, while Resources Connection Inc offers a yield of 10.67%. However, it's essential to research each stock to ensure it fits into your overall portfolio.
When evaluating a dividend stock, compare the dividend yields among its peers and look at the stock's payout ratio. A high dividend yield can indicate the payout is unsustainable. Dividends in taxable brokerage accounts cause taxes to be realized in the year the dividends occur, so investors with taxable accounts and in high income brackets may want to consider other options.
If you don't need the income from the dividend stocks in your portfolio, you can typically choose to reinvest the dividends back into the stock. Reinvesting those dividends can increase your return on investment. Dividends typically increase the return of a stock or dividend fund by a few percentage points.
It's worth noting that a $5,000 investment that grows at 6% annually for 20 years could become over $16,000. Bumping the return up to 8% annually to include dividends, that $5,000 could grow to over $24,000.
For investors looking for dividend stocks that likely won't cut their dividends, check out the dividend aristocrats, a group of stocks listed on the S&P 500 that have increased their dividends every year for at least 25 years.
To invest in dividend stocks, one needs to have a brokerage account, which is free to open but requires a deposit to buy stocks. Setting up a brokerage account usually takes about 15 minutes. Dividend funds offer the benefit of instant diversification, and if one stock held by the fund cuts or suspends its dividend, you can still rely on income from the others.
In summary, investing in top dividend stocks can provide a passive income stream and potentially higher returns than other investment options. However, it's crucial to research each stock and evaluate its dividend yield and payout ratio before investing.
- Personal finance apps can help individuals calculate the potential returns from investing in dividend stocks, taking into account factors such as dividend yields and payout ratios.
- Technology has made it possible for people to easily compare various dividend stocks using personal finance apps, providing a valuable tool for those seeking to grow their wealth through investing.
- In personal-finance terms, investing in dividend stocks can contribute to a more balanced lifestyle, offering the potential for passive income and long-term growth.
- The comparison of different dividend stocks can reveal investment opportunities with high yields, such as Altria (MO), Bristol-Myers Squibb (BMY), and Portland General Electric (POR).
- To optimize dividend income, investors should consider using a dividend app that provides a comprehensive view of available dividend stocks, including their yields, payout ratios, and risk profiles.
- In the realm of personal finance and investing, knowledge of the tax implications is crucial, especially when it comes to invested income from stocks, such as taxes incurred in the year the dividends occur, as is the case with taxable brokerage accounts.
