Investing in dividend stocks can be a great strategy, especially if you pick solid companies that pay reliable and high-yield dividends. While dividend stocks don't always offer the same excitement as high-flying growth stocks or deep value plays, simple is often more.
Reinvested dividends can compound the growth of a stock holding over time, which can translate into a nice stream of passive income when you choose to start tapping those payouts instead. Additionally, these companies don't always need to outperform their sectors to keep paying and growing their dividends.
Here are three dividend stocks to buy in March.
You may know pharmaceutical company Pfizer(NYSE: PFE) best for its COVID-19 vaccine, but investors knew the company long before the pandemic as a reliable dividend payer. At the end of 2024, Pfizer increased its payout and declared its 345th consecutive quarterly dividend, marking 86 straight years as a dividend payer. Pfizer has also increased its dividend for 16 straight years.
The COVID-19 vaccine obviously led to boom times for Pfizer, but as the pandemic wound down, investors wondered what the company would do next. In 2023, Pfizer paid $43 billion to acquire Seagen, a large biopharma company focused on cancer treatments. That acquisition has given management confidence that it can produce as many as eight breakthrough drugs by 2030. Management also thinks Seagen could add $10 billion to its sales by 2030.
Happily for investors, the company is still generating enough cash flow to cover its dividend. In 2024, Pfizer paid $9.5 billion in dividends, while generating over $9.8 billion of free cash flow, not including $3 billion of cash proceeds from the company's sale of its stake in British pharmaceutical company Haleon. Management also seems confident on its cash-flow generating capabilities, considering the company just hiked its dividend.
U.S. telecommunications giant Verizon Communications(NYSE: VZ) is developing quite the reputation as a strong dividend stock. It has increased its quarterly dividend for 18 consecutive years and offers an extremely healthy yield at the current share price. The stock is down about 23% over the last five years, which contributed to that high yield, but the company looks to be turning things around.
Fourth-quarter results came in ahead of analysts' expectations, and the company grew its wireless postpaid phone subscribers (its highest-spending segment) by 568,000, well ahead of Wall Street's prediction of 479,000.
Verizon also accelerated its growth strategy in the fiber-optic space by announcing the acquisition of Frontier Communications in September for $20 billion. That deal will bring 2.2 million fiber customers to Verizon, lifting its total fiber customer count to about 10 million.
The dividend also looks to be secure, with the company generating more than enough free cash flow to cover its current payout. In 2024, Verizon paid $11 billion in dividends and generated $18.7 billion in free cash flow. In 2025, management is guiding for free cash flow to dip slightly to $18 billion at the midpoint of guidance, but that still leaves it with plenty of cash to pay and grow the dividend.
Realty Income(NYSE: O) is a real estate investment trust (REIT). REITs enjoy certain tax advantages, but to retain that status, they must meet several requirements. These include distributing at least 90% of their taxable income annually through dividends, investing at least 75% of their assets in real estate, cash, or U.S. Treasury bills and bonds, and receiving at least three-fourths of their total revenue from rent, mortgage interest, or real estate sales.
Realty Income has a solid strategy. It largely caters to companies in non-discretionary, service-oriented, non-retail, and low-price-point businesses. Core tenants include Home Depot, Walmart, FedEx, casinos like the Bellagio, and gym chains like Lifetime Fitness.
The strategy seems to be paying off as Realty Income has re-leased 5,800 properties at a 103% recapture rate (rent increase) since 1996. Management also sees promising opportunities in the data center and gambling industries. It sees the combined total addressable market in those two segments in the U.S. as being worth $700 billion.
Realty Income has increased its dividends annually for three decades, and its current streak includes 110 consecutive quarterly dividend increases. The company has also grown its dividend at a 4.3% compound annual rate. Given this track record, investors can buy into Realty Income with confidence, knowing that its high dividend yield is safe and that the REIT will likely keep growing its payouts in the future.
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Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.
Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends FedEx, Home Depot, Pfizer, Realty Income, and Walmart. The Motley Fool recommends Haleon Plc and Verizon Communications. The Motley Fool has a disclosure policy.
