Dividend stocks are looking more and more attractive these days. Especially when you consider a given share of some companies can be prohibitively expensive. For example, investors who want to claim ownership over a whole share of Nvidia (NASDAQ:NVDA) stock will have to shell out roughly $900.
It isn’t just Nvidia, there are multiple examples of shares that cost well in excess of $1,000. That makes stocks under $50 particularly attractive. Shares priced at that level which also include dividends yielding 5% become even more so. Let’s look at three dividend stocks that check those boxes.
Altria (MO)
Altria (NYSE:MO) is a stock that continues to go through a transitional phase in which it needs to find new revenue sources. The tobacco giant has traditionally relied on cigarette sales for the majority of its revenues. However, cigarette smoking rates continue to decline and that has forced the company to evolve.
The result is that the company has primarily been attractive for its high-yield dividend of late. Investors are counting on the company to navigate its way through the aforementioned pivot while it also acts as a strong income stock.
The good news is that Altria is becoming more reliable as an income source. It is doing so through the sale of 35 million Anheuser-Busch Inbev (NYSE:BUD) shares. That will allow the company to increase its current share repurchase program, valued at $1 billion, to $2.4 billion. Meanwhile, the company also announced that it is raising its 2024 earnings guidance. That announcement was likely intended to quell any concerns that the company had undertaken the move due to increasing concerns about its ability to continue to pay dividends.
Pfizer (PFE)
There are many reasons to believe Pfizer (NYSE:PFE) stock will rebound moving forward. The company has a long history of success and has developed multiple blockbuster drugs that have made it one of the preeminent names in the pharmaceutical sector. Yet, Pfizer continues to struggle after it’s post pandemic success in developing Paxlovid.
The company is betting big on cancer drugs as one of the catalysts for a rebound. It is close to commercialization of its drug known as ADCETRIS. The drug is showing promising results in the treatment of lymphoma.
It’s part of a larger push by the company to introduce dozens of treatments in 2024 that could revitalize its top line. Yet, share prices have remained stubbornly low. The benefit is that Pfizer’s current dividend is approximately 6%.
Pfizer is also working on an orally administered weight loss drug that has the potential to disrupt the massive sales growth that has accrued to firms including Eli Lilly (NYSE:LLY) and Novo Nordisk (NYSE:NVO). In my opinion that’s the strongest potential catalyst for Pfizer at the moment. The company is set to release data on that drug at some point in the first half of this year.
British American Tobacco (BTI)
British American Tobacco (NYSE:BTI) is another company that is pivoting away from tobacco sales while offering a massive dividend through its stocks. It is yielding nearly 10% on a forward basis. the recent move by Altria may prompt the company to make a move of its own.
Does that mean that British American Tobacco will soon increase its dividend or its share buyback policy? The answer is that the company actually already has. British American Tobacco recently sold a stake in Indian conglomerate ITC worth more than $2 billion.
What that should tell investors is that British American Tobacco is intent on keeping its share prices higher and shareholders happy through 2025. The company intends to use the proceeds from the divestiture to fund share buybacks through 2025.
My impression is that tobacco companies since investor trepidation on some level at the moment. They are sending strong signals about their stability and ability to continue to pay strong dividends throughout this pivotal period. Investors should take advantage of this income opportunity while it lasts.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
