2 High-Yield Dividend Stocks You Can Buy Now or Hold Forever

Yield-seeking investors must make an important choice when purchasing stocks. Shares of companies that are likely to raise their dividend payments quickly tend to have lower upfront yields. On the other hand, unless the investor believes that the likelihood of the underlying company increasing its earnings and thus its dividend is low, the yield on the stock will generally not be very high.

Currently.Terry Rae Inc. (NYSE: PFE)respond in singingAltria Group (NYSE: MO)stand out among dividend stocks. Both companies have increased their dividend payout ratios every year for over a decade. In addition, they both currently have yields above 6% and are likely to continue to increase their dividend payouts over the long term.

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Terrific's stock is down about 36% over the past 12 months, primarily due to a much faster-than-expected decline in sales of its COVID-19 product. Sales of its COVID-19 vaccine Comirnaty fell $26.6 billion last year. 2023 sales of its antiviral treatment drug Paxlovid fell $17.7 billion.

Terrific Inc. has raised its dividend payout for the 15th consecutive year, but the market can't seem to get over last year's sharp drop in sales. The drug giant's stock offers investors a dividend yield of 6.3% at its beaten-down price.

Increasing the dividend yield over the next few years may not be a problem for Terry. Ignoring the contribution of the COVID-19 product, total gross sales of Terry increased by 7% last year.

This year, Terry expects to earn between $2.05 and $2.25 per share. This is enough to support the current dividend payout of $1.68 per share on an annualized basis, which could be significantly higher.

In order to grow dividends over the long term, drug companies must continually replenish their pipeline of patent-protected drugs. Terrific has been able to sustain growth by investing a portion of the COVID-19 windfall into new drug development, and by 2023, the company will have received nine new drug approvals from the U.S. Food and Drug Administration (FDA).

At recent prices, you can buy shares of Terry Inc. for just 12.5 times the midpoint of Gunn's 2024 earnings estimate. That's a pretty good price for an established company that's likely to see mid-single-digit annual earnings growth over the next few years. Adding some shares to the Income Generation Portfolio now looks like a smart move.

Altria Group

Shares of Altria Group, which sells Marlboro cigarettes in the U.S. market, have an eye-popping dividend yield of 9.3%. Over the past 54 years, the company has raised its dividend payout 58 times. Over the past 11 months, the company's stock price has fallen about 131 TP3T as investors worry that sales of combustible cigarettes are falling faster than usual.

Nicotine consumption in the U.S. is not decreasing, but consumers are moving away from combustible cigarettes at an alarming rate.In 2023, Altria shipped 76.3 billion cigarettes, a decrease of 9.9% from the same period a year earlier.

Despite the fact that Koon's combustible cigarettes declined more than in previous years, Altria reported an increase in adjusted earnings last year of 2.31 TP3T to $4.95 per share. That's more than its current dividend payout of $3.92 per year.

The US Food and Drug Administration (FDA) is banning the use of flavored vaporizers in 2020, and the illegal market is a major challenge for the Altria Group. With the help of the government, the tobacco industry may not be able to solve this problem. At the end of last year, the U.S. Food and Drug Administration (FDA), in conjunction with Customs and Border Protection, seized 41 shipments of unauthorized e-cigarettes. So far this year, the FDA has issued warning letters to 19 online retailers and 61 brick-and-mortar retailers warning them about the sale of unauthorized e-cigarettes.

The increased enforcement of the FDA's ban on flavored e-cigarettes is likely to attract a large number of customers to Altria's new e-cigarette products. Last year, Altria acquired NJOY, the company that markets the only pod-based e-cigarette system authorized for sale by the FDA. Adding some shares to the portfolio now could generate significant passive income over the long term.

Should you invest $1,000 in Terry's now?

Consider the following before buying shares of Terry & Co:

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*Stock Advisory Rates as of April 8, 2024

Cory Renauer does not hold any of the aforementioned stocks.The Motley Fool holds shares of Recommended Terry Inc.The Motley Fool has a disclosure policy.

2 Dividend Stocks You Can Buy Now and Hold Forever was originally published by The Motley Fool.