Discerning investors seek stable yet promising income options to bolster their portfolios in the investment landscape. Delving into the strategies of the listed companies in the article reveals intriguing insights into their strategic prowess and financial fortitude. These are our top dividend stocks to buy.
As technology advances, two leading telecom giants strategically position themselves with 5G innovations, evident in their revenue surges and market dominance. Meanwhile, a real estate stalwart showcases an impressive portfolio expansion strategy and financial resilience, enhancing its attractiveness to investors.
The spotlight on the first one on the list reveals a deliberate focus on 5G and fiber technology, translating into revenue upticks and solidifying its position in the market. Through astute financial management and market segmentation, the second demonstrates robust growth in wireless services and a disciplined approach to capital allocation. The third one, with its strategic acquisitions and merger synergies, presents a compelling case for sustained growth and investor confidence in the real estate domain.
Read more to dive into strategic cues from these dividend titans, guiding investors toward potentially prosperous ventures in the ever-dynamic market landscape.
Top Dividend Stocks to Buy: AT&T (T)
AT&T (NYSE:T) is offering a dividend yield of 6.45%, and it strategically focuses on investments in 5G and fiber technology, which have yielded tangible results. For instance, a 1% increase in consolidated revenues will be driven primarily by wireless service and fiber revenue growth in Q3 2023. The company’s focus on advancing these next-generation technologies positions it for sustained growth.
To begin with, the wireless segment has been a significant driver of growth. It showcases impressive figures such as 468K postpaid phone net adds and a 2% revenue increase. AT&T has a consistent approach to catering to high-value subscribers through competitive deals and network quality. Hence, this has led to notable outcomes, including increased customer retention, higher average revenue per user (ARPU), and minimal churn rates.
On the other hand, AT&T’s focus on expanding its fiber network has resulted in steady growth. As a result, 296K fiber customers were added in Q3, and an approximate 9% increase in fiber ARPU year-over-year. The fiber investments signify AT&T’s lead in addressing consumer preferences for high-speed internet solutions. The company focuses on offering superior broadband services that have fueled customer acquisition. Thus, it boosted revenue streams and significantly increased ARPU, showcasing a robust market demand for such services.
Lastly, AT&T’s emphasis on operational efficiency, cost-saving initiatives, and margin improvements has positively impacted financial performance. AT&T focuses on generating incremental cost savings and aligning operations with the evolving 5G and fiber networks. Finally, the company reduced its net debt by more $3 billion in Q3. It remains on track to achieve its adjusted EBITDA target.
Verizon (NYSE:VZ) provides a dividend yield of 6.92%, showcasing robust growth in key financial metrics. For instance, in Q3 2023, there was a 2.9% year-over-year increase in wireless service revenue and an adjusted EBITDA of $12.2 billion, surpassing previous quarters. The growth underscores the effectiveness of Verizon’s strategic initiatives, emphasizing expanded customer relationships and disciplined financial management.
Moreover, the year-to-date free cash flow of $14.6 billion exceeds the 2022 full-year cash flow. This highlights Verizon’s efficient cash generation capabilities, driving confidence in its dividend stability and value growth potential.
Additionally, Verizon’s net debt reduction focuses on maintaining healthy dividend coverage. The prudent financial management strategies indicate its dedication to enhancing shareholder value while ensuring sustainable dividend growth. Thus, the company has a healthy free cash flow dividend payout ratio of approximately 56%. Hence, this suggests improved financial health and disciplined capital allocation, supporting growth initiatives.
Furthermore, Verizon’s solid leads in the consumer mobility segment stem from its segmented market approach, prioritizing customer choice and flexibility. As a result, there is a growth in postpaid phone net ads and reduced promotional costs. Similarly, in the business domain, Verizon Business Group has consistent growth in postpaid phone net adds, 151K in Q3, with a ninth consecutive quarter above 125K. This illustrates its adeptness in addressing distinct market segments while maintaining profitability, a critical factor in sustaining long-term growth.
Verizon’s focus on operational efficiency is reflected in its emphasis on profitability while optimizing network infrastructure. The company’s cost-efficiency program is on track to meet savings goals ($2 billion to $3 billion annually by 2025). This highlights its ability to generate operational efficiencies across various business domains. Finally, the raised 2023 free cash flow guidance of more $18 billion demonstrates Verizon’s confidence in sustaining robust financial performance and operational growth. This one easily earned its spot on our list of the top dividend stocks to buy.
Realty Income (O)
Realty Income (NYSE:O) is offering a 5.59% yield, and its strategic prowess in investment deployment is evident through the quarter’s $2 billion investment in high-quality acquisitions. The substantial investments, particularly the $1.4 billion derived from international business, will yield a 6.9% yield in Q3 2023.
Diverse transaction types, such as sale-leaseback deals and larger transactions, are also included, underscoring the company’s flexibility and capability to navigate less conventional investment avenues. Therefore, Realty Income has a distinct competitive advantage in identifying and executing transactions that might not be as prevalent among other net lease companies.
Additionally, the impressive rent recapture rates of 106.9% on new and renewed leases underline Realty Income’s negotiation strength. Also, it highlights the company’s capability to secure favorable terms with tenants. Notably, a same-store rent growth of 2.2% surpassed expectations. It also led to an upward revision of full-year guidance to around 1.5%. Fundamentally, the company’s emphasis on leases with robust rent escalators has proven to be a strategic advantage in driving higher average rent escalators.
Despite challenging capital market conditions, Realty Income delivered a solid performance. The company had a 4.1% growth in Adjusted Funds From Operations (AFFO) per share and an annualized total operational return of approximately 9%. The growth, coupled with the announced merger agreement with Spirit Realty (NYSE:SRC), valued at $9.3 billion, is anticipated to boost AFFO per share immediately. Overall, the anticipated synergies from the merger emphasize the company’s vision to augment AFFO per share growth. It will also allow the company to access capital markets more efficiently. If you are looking for dividend stocks to buy, start here.
As of this writing, Yiannis Zourmpanos held long positions in T and VZ. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.