Retirement doesn’t necessarily have to wait until you are in your 60s; working becomes optional as soon as your passive income covers your living expenses.
Buying dividend stocks, which make so much money that they give a chunk of their profits on a regular basis to shareholders, can eventually build a waterfall of cash that can set you financially free.
So if you’re looking to retire as soon as possible, consider these ultra-high-yield dividend stocks with solid financials to support their hefty payouts.
1. AT&T: The telecom giant
Dividend yield: 5.7%
AT&T (T 2.21%† is one of only a few wireless carriers in the United States. Its network supports roughly 67.5 million customers, who pay their monthly bills like clockwork because smartphones have become a vital part of everyday life for most of them. The company generates more than $160 billion in annual revenue and uses some of that to pay out a quarterly dividend of $0.278 per share that currently yields a whopping 5.7%.
You’ll see in the above chart how AT&T recently reduced the dividend, a result of AT&T’s fresh spinoff of its entertainment assets to form Warner Bros. Discovery† The lower payout also lowers the dividend payout ratio to roughly 40% of free cash flow per management’s estimates. That frees up some cash for AT&T to get its debt levels under control as well as giving it the wherewithal to continue raising the dividend going forward. This gives investors plenty of reason to expect those dividend checks to keep coming.
2. Altria: The tobacco king
Dividend yield: 7.9%
Altria Group (MO -0.15%† is the largest tobacco company in the United States. Its history goes back more than 100 years as owner of the best-selling Marlboro brand of cigarettes (at least in the US). It’s well known that fewer people are smoking than in previous generations. Still, Altria has used its robust pricing power for decades to offset declining cigarette volumes with price increases. That continued profit allows it to consistently grow its dividend to the point where it qualifies as a Dividend King with 52 consecutive annual dividend increases.
Altria spun off its international business as Philip Morris International (the owner of the Marlboro brand outside the US) in 2008, which you can see in the above chart. Still, the company has done fine since then, steadily growing its operating profits at a mid-single-digit pace over the past 10 years. Investors can enjoy a whopping 7.9% dividend yield covered by Altria’s 78% dividend payout ratio.
3. Enbridge: An oil and gas pipeline stalwart
Dividend yield: 6.2%
Enbridge (AND B -1.17%† is one of the largest energy companies in North America. Its primary business is pipelines, which carry oil and natural gas from Canada to the Gulf Coast. Pipelines are like toll operators on a highway; they get paid for the traffic or materials that pass through their pipes, in Enbridge’s case. This has made Enbridge more stable than most oil companies because it’s not as dependent on oil and gas prices to profit.
Enbridge’s business does nearly $40 billion in annual revenue, and the company has paid and raised its dividend in each of the past 26 years. Investors can enjoy a 6.2% yield at the current share price; the payout consumes under 60% of Enbridge’s distributable cash flow, making the dividend (and its continued growth) sustainable.
4. AbbVie: Pharmaceutical Leader
Dividend yield: 4%
AbbVie (ABBV -0.62%† is a pharmaceutical company that was born when it split from Abbott Laboratories in 2013. However, you can see how quickly the business has grown in nearly a decade, thanks to massive sales from its blockbuster drug Humira, which generated more than $20 billion in 2021. Shareholders have enjoyed a 4% dividend yield, while management has raised the payout by an average of 17% annually over the past five years.
AbbVie’s exclusive rights to Humira in the US expire next year, which will likely cause revenue growth to slow as competitors flood the market. AbbVie has moved to develop and acquire assets that could help replace lost business. The dividend payout ratio is just 43% of cash flow, so the dividend should be able to endure some short-term turbulence if there is any.
5. Realty Income: The monthly dividend company
Dividend yield: 4.5%
Realty Income (O 1.00%† is a real estate investment trust (REIT), a specific business structure that invests in real estate and shares its cash profits with shareholders as dividends. Realty Income specializes in retail properties; it’s a net-lease REIT, owning the building and charging its tenants for rent, and letting the tenants handle the taxes, insurance, and maintenance.
Realty Income’s tenants are businesses that tend to operate discount services, making them recession-proof and reliable tenants. Realty Income’s properties generate steady cash flow, so much so that it pays shareholders a monthly dividend instead of the quarterly payout that’s more common among US companies. It even refers to itself as The Monthly Dividend Company† A Dividend Aristocrat with 28 years of consecutive annual dividend raises, investors can take Realty Income’s 4.5% yield to the bank.