Investors seeking attractive dividend yields need not settle for average options, especially given the wealth of established companies offering solid returns. According to Charles Schwab, approximately 80% of the firms listed in the S&P 500 are categorized as dividend stocks, presenting a wide array of choices.
Dividend stocks are particularly appealing as they provide returns to shareholders for holding onto their shares, typically on a quarterly or monthly basis. These payments can be utilized for everyday expenses or, for those not nearing retirement, can be reinvested to accelerate portfolio growth.
A historical investment in the S&P 500 illustrates the potential benefits of dividends. For instance, an investment of $10,000 a decade ago in an index fund like the Vanguard S&P 500 ETF would have grown to $33,620. However, reinvesting dividends from the fund would have increased that total to $39,670, highlighting the considerable power of reinvestment.
The Vanguard S&P 500 ETF currently offers a dividend yield of 1.1%, prompting investors to seek stocks that significantly surpass this figure while also demonstrating stability and potential for growth. Here are three compelling dividend stocks for consideration.
AbbVie
AbbVie (ABBV) stands out as a Dividend King, having raised its dividend for over 54 consecutive years, with no signs of slowing down. The company generates a substantial portion of its revenue from its immunology drugs, Skyrizi and Rinvoq, which saw nearly $12.1 billion in revenue for the third quarter, with Skyrizi contributing approximately $4.1 billion in sales. AbbVie aims to boost sales further, projecting Skyrizi will reach $17 billion by 2027 and Rinvoq $10 billion. The stock has appreciated by 30% in 2025, complemented by an attractive dividend yield of 2.84%.
Realty Income
Realty Income (O), a well-regarded real estate investment trust (REIT), boasts a portfolio of over 15,500 properties across the U.S. and various European nations. With a diverse array of tenants including grocery and convenience stores, pharmacies, and restaurants, Realty Income’s long-term leases provide a security blanket for investors relying on monthly dividend income. The company has successfully increased its monthly dividend 133 times since going public in 1969, achieving over 30 years of annual raises. Investors can expect a significant dividend yield of 5.66% due to the REIT’s requirement to distribute at least 90% of its profits.
JPMorgan Nasdaq Equity Premium Income ETF
For those looking to invest in a collection of dividend stocks simultaneously, the JPMorgan Nasdaq Equity Premium Income ETF (JEPQ) stands out. This actively managed ETF focuses on Nasdaq-100 stocks, providing income through dividends alongside a covered-call strategy. By selling out-of-the-money call options, the fund aims to enhance returns while managing risks associated with direct options trading. Although shares have seen a modest increase of 3.6% this year, the fund shines with a staggering dividend yield of 10.1%, resulting in a total return of 14.2% year-to-date. It’s worth noting that there is an expense ratio of 0.35%, which translates to an annual fee of $35 for every $10,000 invested.
Investors considering these options should conduct further research to ensure that these stocks align with their financial goals and risk tolerance, as the potential for significant returns awaits those who understand the value of dividend investing.
