Dividend investing is a tried and true strategy for building wealth over time, and it's no wonder. As the data shows, dividend-paying stocks have consistently outperformed their non-dividend counterparts. So, if you're looking to boost your returns, here are three dividend stocks to consider adding to your portfolio in June.
Pfizer (PFE)
Pfizer is a pharmaceutical giant with a compelling dividend yield of 6.7%. This high yield is largely due to the stock's recent losses, which have averaged around 7% annually over the past three years. While this may seem concerning, it's important to remember that when a stock's price falls, its dividend yield rises. Pfizer's shares are also undervalued, with a forward P/E ratio of 9.0, well below the five-year average of 9.7.
One of the key challenges for Pfizer is the expiration of patent protection for some of its biggest sellers. However, the company is addressing this issue by developing a pipeline of promising drugs and acquiring promising drugs from other companies. This strategy not only helps Pfizer maintain its competitive edge but also positions it for long-term growth.
United Parcel Service (UPS)
UPS is another stock with a massive dividend yield of 7.7%. While the company has posted average annual losses over the past three years, it's important to note that this is a temporary setback. UPS is now focusing on serving higher-margin customers, such as small and medium-sized businesses and the healthcare sector. This strategic shift is expected to boost the company's profitability and dividend payments.
Critics may argue that UPS's decision to cut back on deliveries for Amazon.com is a death knell. However, this move is actually a smart one. By focusing on higher-margin customers, UPS is positioning itself for long-term success. The company's first-quarter report showed strong revenue growth, with domestic revenue down only 2.3% and revenue per package growing 6.5%.
Schwab U.S. Dividend Equity ETF (SCHD)
If you're looking for a more diversified approach to dividend investing, the Schwab U.S. Dividend Equity ETF is a great option. This ETF trades like a stock and offers a solid yield of 3.25%. It's a good choice for investors who want to park their money across a broad range of dividend-paying stocks, such as Qualcomm, Texas Instruments, and UnitedHealth Group.
The ETF has been performing well, with a year-to-date return of nearly 20% as of June 4. This makes it a compelling alternative to investing in individual dividend payers on your own or in addition to doing so. By diversifying your portfolio with ETFs, you can reduce risk and potentially boost your returns over the long term.
In conclusion, dividend investing is a powerful strategy for building wealth over time. By adding these three dividend stocks to your portfolio in June, you can position yourself for long-term success. Remember to diversify your investments and stay invested for the long haul. As the saying goes, 'Time is the friend of the wise investor.'
