3 Reliable Dividend Stocks With Yields Above 5% That You Can Buy With $100 In July

The reference S&P 500 The index continues to set new records, thanks in large part to a handful of stocks leading the way. Fortunately for income-seeking investors, there are some very reliable dividend stocks that haven’t been swept up in the hype.

Actions of Pfizer (NYSE: PFE), Capital of Ares (NASDAQ: ARCC)And Bristol Myers Squibb (NYSE: BMY) All three companies are reasonably valued, with an average dividend yield of around 7% at recent prices. Moreover, there is a good chance that all three can meet their commitments and continue to do so for many years to come.

Pfizer

At recent prices, Pfizer offers a healthy 6% yield, buoyed by profits from sales of innovative new drugs. The company has raised its dividend for 15 consecutive years, and it looks set to keep that up for at least another decade.

Pfizer has been reinvesting some of the huge profits it generated from its COVID-19 products into new revenue streams that can keep it moving in the right direction. For example, its $43 billion acquisition of Seagen in 2023 gave it access to four commercial-stage cancer drugs, including Padcev.

Last December, the Food and Drug Administration (FDA) approved Padcev for the treatment of patients newly diagnosed with advanced bladder cancer. New patients tend to stay on treatment much longer than people who have already relapsed, so this label expansion could add billions to Pfizer’s revenue in the years to come.

In addition to Padcev’s expanded product line, the FDA also approved a record nine new Pfizer drugs last year. With plenty of new revenue streams, another decade of steady dividend hikes seems likely.

Capital of Ares

Ares Capital is a business development company (BDC), which means it must distribute almost all of its profits to investors in the form of dividends. This BDC’s dividend has not grown linearly, but it has increased by 26% over the past decade.

At recent prices, the stock offers a stunning 9.2% yield and a good chance of seeing much more when you’re ready to retire.

For decades, major U.S. banks have been increasingly reluctant to lend money to anything but the largest companies. As a result, Ares Capital and its BDC counterparts have consistently found midsize companies willing to accept loans at relatively high interest rates.

Ares Capital collected loan repayments from 510 different companies in the first quarter. With an investment portfolio worth $23.1 billion, it is the largest publicly traded BDC. That means it has many relationships with mid-sized companies and their private equity sponsors.

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With a wide selection of potential borrowers, Ares Capital’s underwriting department can focus on those most likely to repay their debts. As of the end of March, only 0.7% of investments were in a non-accumulation situation.

Bristol Myers Squibb

Bristol Myers Squibb is another large drugmaker, with a 15-year streak of annual dividend increases. At recent prices, the pharmaceutical stock offers a healthy 5.9% dividend yield and a great chance of further dividend increases.

Bristol Myers Squibb shares are down in large part because the company spooked investors with a sharply reduced earnings outlook for 2024. In February, management told investors it would earn between $7.10 and $7.40 per share this year. In April, the company cut its 2024 earnings estimate to a range of $0.40 to $0.70 per share to account for $12.9 billion in ongoing research and development spending related to recent acquisitions.

In the first quarter, Bristol Myers Squibb completed the acquisitions of Karuna Therapeutics, Mirati Therapeutics, and RayzeBio. It’s unusual to account for these acquisitions too early, but that’s no reason to avoid the stock.

Bristol Myers Squibb’s portfolio of recently launched drugs grew sales 11% in the first quarter, excluding the negative effects of a stronger dollar. With potential contributions from recent acquisitions, there’s a good chance the drugmaker will continue to raise its dividend for another 15 years. Adding a few stocks to an income-generating portfolio now seems like a smart move.

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Cory Renauer holds positions in Ares Capital. The Motley Fool holds positions in Bristol Myers Squibb and Pfizer and recommends these companies. The Motley Fool has a disclosure policy.

3 Reliable Dividend Stocks With Yields Above 5% That You Can Buy With $100 in July was originally published by The Motley Fool