Stock dividends continue to be important for investors. One of the best ways to generate regular income, dividends can be especially helpful to retirees living on a fixed income and relying on quarterly stock payments to provide them with funds to survive. However, dividends continue to be relatively small, and many companies either don’t pay them or reduce them when times get tough.
Walt Disney Co. (NYSE:DIS), Intel (NASDAQ:INTC), and Harley-Davidson (NYSE:HOG) are just a few of the companies that have suspended or cut their dividend payments since the Covid-19 pandemic in 2020. The average dividend yield among stocks traded on the S&P 500 index is now just 1.54%, having trended steadily lower over the past decade. Finding stocks that pay large and reliable dividend payouts is getting harder. However, with a little sleuthing, investors can identify relatively affordable stocks to buy and offer high-yielding dividends to their shareholders. Here are three high-yield cheap stocks with dividends to boost your portfolio.
Icahn Enterprises (IEP)
Still offering the most lucrative dividend among S&P 500-listed companies is Icahn Enterprises (NYSE:IEP). The holding company of Wall Street veteran Carl Icahn continues to offer shareholders a quarterly dividend payment of $2 per share, which is good for a yield of 25% based on the current share price. No other stock in the benchmark S&P 500 provides a dividend with as big a yield. Of course, IEP stock has been knocked substantially lower by a scathing report from short-seller Hindenburg Research. This stock is not without risks.
That said, IEP stock has risen substantially from the 52-week low in late May of this year following the Hindenburg report. Investors have been encouraged that Carl Icahn has reached an agreement with lenders to restructure $3.7 billion in loans, lessening his company’s debt burden. While IEP stock remains down nearly 40% on the year, Carl Icahn has so far left the dividend unchanged, which has also heartened many stockholders. For investors with some appetite for risk, Icahn Enterprises is available at a discount right now.
Pioneer Natural Resources (PXD)
For investors who are simply interested in income-generating stocks, there is Pioneer Natural Resources (NYSE:PXD). The oil company, the largest landowner in Texas’ Midland Basin, offered shareholders a chunky quarterly dividend payout of $5.58 per share during the first quarter and $3.34 in the second — totaling nearly $9 for the first six months. That equates to a dividend yield of just under 11%, which is about as high as one can expect. Like all energy companies right now, PXD stock looks cheap following a sector downturn this year.
With crude oil prices trading more than 35% below their June 2022 peak, Pioneer Natural Resources has seen its share price slide lower. PXD stock has been flat over the last 12 months and has seen a 4% decline so far in 2023. Currently, the shares are trading at about 7.5 times future earnings estimates, suggesting they are undervalued. Over five years, Pioneer Natural Resources stock is only up 17%. However, investors shouldn’t buy this security expecting huge share price appreciation. The real attraction to PXD stock is the big dividend payment.
3M (MMM)
Consumer goods company 3M (NYSE:MMM) is not for every investor. The company is an analog firm operating in a digital age. It sells Post-it-Notes and Scotch tape in the era of chatbots and self-driving cars. That helps to explain why MMM stock is down nearly 50% over the past five years, including a 16% decline this year. That said, 3M does provide investors with a strong dividend that pays $1.50 a share each quarter, giving it a yield of 5.85%.
With a price-earnings ratio of 10, MMM stock looks comparatively cheap. For investors chasing yield, 3M might be worth the investment if the company maintains its dividend. And there doesn’t appear to be any danger of 3M cutting its payout to shareholders, given that the company is a dividend aristocrat. In fact, 3M has one of the best dividend track records ever. The company has paid dividends for more than 100 years, and has increased its dividend payout for more than 60 years in a row.
On the date of publication, Joel Baglole held a long position in DIS. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
