3 Massively Undervalued Perpetual Dividend Payers for Retirement Riches
The bottom layers of my “Super Income System,” the bedrock of the strategy, are all about reliable income. Bonds, dividend-paying stocks – assets an investor can rely on in an uncertain economy…
Usually, the best dividend-paying stocks are the ones you think of the least. They don’t have gimmicky technology or an eccentric CEO. They offer products and services that people can’t live without.
They are the very epitome of boring but important. And because of that, you can often pick them up at bargain prices. They don’t have their value inflated by speculators. With dividend stocks, like the three in this report, what you see is what you get…
And what you’re getting with these stocks is an incredible value…
Not to mention, you’re getting some of the biggest, safest dividend yields in the entire stock market. And these three companies have long histories of growing those yields.
Read on to learn about the stocks that form the foundation of my Super Income System…
Connecting America, Rewarding Shareholders
Established in 1984 when the cellphone was in its infancy, Verizon Communications (VZ) has grown to become the largest cell carrier in the United States.
When Verizon was founded, cellphones were playthings for rich yuppies. These days, everyone has more computing power in their back pocket than NASA had when it put a man on the moon. It has become a necessity of modern life…
And with more than 140 million customers, about 43% of the American population relies on Verizon to make calls, send texts and watch videos on their phones.
On top of that, the company’s 5G Ultra Wideband network is one of the largest in the American market. It now reaches 200 million Americans, bringing the speed of 5G to nearly two-thirds of the American population.
In addition to its cell carrier business, Verizon also offers Fios TV, one of the largest cable TV providers in the United States with more than 4.4 million subscribers.
And Verizon may soon become even more critical as the industry digitizes to become the industrial Internet of Things, or IIoT. The company is eyeing that segment with great interest. Companies that have integrated 5G networks and the automation they enable into their production and logistics have seen boosts in productivity and efficiency.
Airbus eliminated errors while improving productivity by 500% after it implemented its digital manufacturing initiative called “Factory of the Future.” Amazon’s well-known automation of its enormous warehouses has allowed it to cut its operating costs by 20%.
As companies catch on to the potential of the IIoT, it’s companies with large 5G networks (which enable the communication speed required to make the IIoT work) that will profit. And with its own massive 5G network, Verizon is in a good position to do that.
Verizon isn’t a tech startup with insane revenue growth or some cutting-edge gadget. It’s an industry leader, a blue chip company and a titan of American business with $136.8 billion in revenue in 2022.
And that revenue is growing across the board. It was up 2.4% year over year while wireless service revenue was up 8.6% year over year.
Verizon’s quality allowed the company to record the highest quarterly broadband net adds (the overall growth in customer base over a set period of time) in more than a decade. It’s ahead of schedule on the deployment of its 5G network, and its download speeds have hit a blistering 2.4 gigabits per second. And 50% of customers are served by Verizon’s own fiber-optic network.
The company’s financials are fantastic in a market facing tough economic headwinds. Most companies lost money last year, but Verizon grew in spite of that. And the company has also managed to cut its capital spending by $5 billion to run a leaner, meaner, profit-making machine.
Even moving into 2023, Verizon has held steady. In the second quarter of 2023, it saw slight declines in revenue and income but saw strong business moves that are set to pay off moving forward.
For the second quarter of 2023, the company delivered more than 400,000 new broadband net adds for the third consecutive quarter.
Verizon also offers an incredible dividend yield. Currently, Verizon pays out an annual dividend of $2.61 per share, and it has raised that dividend by an annualized rate of 2% for the last three years. With more than $14 billion in free cash flow for 2022, Verizon is well positioned to keep raising that dividend regularly.
At 7.92%, Verizon’s yield is nearly double the average dividend yield of its peers on the S&P 500. And Verizon is well on its way to becoming a Dividend Aristocrat (a company that has raised its dividend every year for 25 years or more).
Verizon has raised its dividend every year for the past 18 years. And given Verizon’s growth potential and the popularity of its products, I don’t see the growth stopping anytime soon. Neither does Wall Street, for that matter…
The consensus analyst price target is $43.33, up just over 31% from its share price as of this writing. If Verizon hits that price, you’ll increase your investment by nearly one-third and have a nice, growing dividend check coming your way every quarter.
Verizon is a perfect dividend-paying blue chip to form the bedrock of your portfolio. It’s a sturdy company – one that isn’t going anywhere anytime soon.
Action to Take: Buy Verizon Communications (NYSE: VZ) as long as the yield is above 6.2%.
A Food Industry Heavyweight
Springdale, Arkansas-based Tyson Foods Inc. (TSN) is one of the four biggest meat producers in the United States. It’s also a fantastic dividend payer, with more than $53 billion in sales for 2022.
Perhaps best known for its slew of chicken products, Tyson also owns a number of other brands, like Jimmy Dean, Hillshire Farm, Ball Park, Wright and State Fair. Tyson’s business is pretty straightforward. It processes and sells meat – from beef to pork to chicken.
It’s a colossal blue chip company, but if you look at its latest results, you’ll see its revenue, income and other metrics are either stagnant or declining slightly. It’s still a very strong company… but one that has fallen on somewhat hard times and is trading near its 52-week low.
However, if recent activity is any indication, the people who know the company best – its insiders – are very bullish on its near future…
There was no insider activity on this stock at all this year… until early May. Between May 9 and 12, four insiders bought a total of $1.85 million worth of shares. Those four are Johanna Söderström, an executive vice president; Donnie King, the CEO; Brady Stewart, the group president of fresh meats; and Kevin McNamara, a director.
They all bought while the stock was trading between $48 and $52 – about $30 below its previous high. That tells me Tyson’s leadership believes the company has hit bottom and is poised for a massive rebound.
Last year, the company made $5 per share. Its annual income for 2022 totaled $53.28 billion, up 13% over 2021’s annual income. It has a dividend yield of 3.5%. And it holds just shy of $700 billion in cash and cash equivalents.
That likely means 2023 has been an anomaly for Tyson and the company is poised to rebound in the next six months to a year. It has been three months since Tyson saw that cluster of insider buying… and not one insider has sold.
If you buy now, you can lock in the 3.5% dividend yield Tyson offers at prices as of this writing and take advantage of future growth. It has raised its dividend by 5.74% annualized over the last three years and has raised its dividend annually for 11 years in a row.
This is a fantastic buying opportunity… one you can’t afford to pass up.
Action to Take: Buy Tyson Foods Inc. (NYSE: TSN) for $51 or under.
A Pipeline Partner
My last dividend-paying pick is an under-the-radar energy play with an absurdly high yield called Energy Transfer (ET).
Founded in 1996 and based in Dallas, Energy Transfer is the premier oil and gas company that doesn’t actually produce any oil or gas.
See, Energy Transfer doesn’t extract or refine fossil fuels. It simply moves them to where they need to go.
In total, Energy Transfer has over 125,000 miles of energy infrastructure that transports a full 30% of America’s natural gas and crude oil…
Much of Energy Transfer’s resources lie in the Permian Basin – one of the largest oil fields in North America and one of America’s natural gas production sites that is still ramping up production in the face of the anti-energy policies from the Biden White House.
And with the war in Ukraine driving natural gas prices higher, Energy Transfer is in an excellent position to capitalize on the situation…
Over the last two years, Energy Transfer’s share of worldwide natural gas exports has expanded to the point where the company controls one-fifth of the global market.
And all that natural gas is transported on a network of pipelines and storage facilities that connects Arizona, New York and the Dakotas to America’s refinery heartland in Louisiana and the Gulf Coast of Texas.
And that’s just natural gas. Energy Transfer also owns miles of crude oil pipelines and storage facilities that connect to not only the Permian Basin but also the Bakken oil fields in North Dakota and Montana, the Marcellus oil fields in the Appalachian, and the Niobrara oil fields in Wyoming and Colorado.
Through all of Energy Transfer’s pipelines and facilities, the majority of America’s oil and natural gas production zones are covered and tied together.
No matter what the price of oil or natural gas does, Energy Transfer will make money because all the oil in the world is useless if it’s stuck in North Dakota.
Oil production sites will always need to access the broader market from where they are. The oil and natural gas industry is unlike many other industries, in which you can just build a factory near the infrastructure you need. With oil and natural gas, you need to run the infrastructure to where the resources are.
Distributable cash flow, the funds that Energy Transfer’s distributions are paid out of, totaled $9.2 billion in 2022.
Shareholders get that money handed back to them in the form of dividends, or as they’re called for partnerships like Energy Transfer, distributions.
Owning Energy Transfer is like owning a tollbooth on the highway of America’s fossil fuel infrastructure. The company’s colossal distribution payment ensures that you’ll be profiting for years to come just by holding shares.
See, Energy Transfer is a publicly traded partnership. It combines the tax benefits of a limited partnership with the liquidity of a publicly traded security. So it pays distributions rather than dividends.
By buying shares of Energy Transfer, you too will become a partner and will be entitled to distribution payments. And they are some hefty payments.
Right now, Energy Transfer pays out an annual distribution of $1.24 per share for a colossal yield of 9.55% at its share price of about $12 as of this writing.
A nearly 10% yield is double the yield of the average dividend payer on the S&P 500. It’s one of the best in the whole stock market right now. But it likely won’t be for long…
Company insiders are loading up on shares. Chairman Kelcy Warren recently bought 1.1 million shares, and fellow chairman Bradford Whitehurst has loaded up on an additional 10,000. And insiders buy their company’s shares for only one reason – they believe the shares are about to take off. Not a single insider has sold in the last 12 months.
Analysts agree. They’re projecting this company to hit a price target of $16 per share, up 28% from current prices. And while the distribution yield will likely still be solid at a share price of $16, Energy Transfer is an absolute steal right now at $12.
Action to Take: Buy Energy Transfer (NYSE: ET) as long as the yield is above 9%.
The Building Blocks of a Healthy Portfolio
Dividend-paying stocks form part of the base of my Super Income System because they tend to be stable companies focused on returning money to shareholders.
They are as close to a sure thing as you can get in the stock market, especially when those companies are the boring but important kind, making products and providing services the modern world can’t go without…
And the three companies in this report are criminally undervalued, which has made their yields incredibly high. Now is the time to pick up all three of them and collect easy income every quarter.
With the top four “Monster Yields” in your portfolio alongside these three dividend-paying stocks, the base of your pyramid is formed and it’s time to start moving on up to build your own Super Income Retirement Package.