3 begs to buy ultra-high earnings dividend stocks in May

While there are countless strategies to grow your wealth on Wall Street, few people can succeed in the long run as much as buying and holding high-quality dividend stocks.

Public companies that regularly bring dividends to their shareholders are often profitable, time-tested, and often able to provide transparent long-term growth prospects. In other words, they are just the types of business we expect to increase value over time, and the data can support this.

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exist The Power of Dividends: Past, Present, and Futureanalysts at Hartford Funds worked with Ned Davis Research to compare dividend stock performance with non-payers in the 51-year (1973-2024). What they found was Broad Performance of dividend payers: 9.2% per year, non-payers (annualized) is 4.31%.

The biggest challenge for those seeking income is balancing risks and rewards. Although the natural instinct of investors is to maximize output, research shows that risk and return tend to be related. That said, ultra-high yield inventory - i.e., those stocks with yield rates are four times or multiple times higher than current output S&P 500 - Sometimes it may be more trouble than they deserve.

The good news is that with the sale caused by Wall Street tariffs, there have been some amazing deals. Next are three unlimited ultra-high-yield dividend stocks (average yield of 8.63%) that were bought by opportunist investors in May.

Arguably, the best deal among the ultra-high-yield dividend stocks in May is medicine Pfizer (NYSE:PFE)which produces an annual rate of return of nearly 7.5%, which seems to be fully sustainable.

Despite concerns about tariffs that could impact drug profit margins, Pfizer’s main “challenge” is being punished for its previous success. After two sensational Covid-19 therapies, Comirnaty and Paxlovid brought in more than $56 billion in combined sales in 2022, with their cumulative revenue of $11 billion last year.

Even if some investors may view this sales decline as a disappointment, it is important to understand how far Pfizer has gone in just four years. At the end of 2020, Pfizer's full-year sales were US$41.9 billion. But in 2024, net income reached $63.6 billion, accounting for 52% growth. It is still in large revenues associated with COVID-19 therapy, and its collective non-COVID-19 product portfolio continues to grow. In short, Pfizer is financially stronger than it was four years ago.

There is also a lot of excitement around its fast-growing oncology segment. The $43 billion deal to acquire cancer developer Seagen in December 2023 greatly expands Pfizer's oncology pipeline and provides billions of dollars in cost synergies that should start this year, thereby increasing operational efficiency.

In addition, Pfizer's luxury recession concerns. The demand for branded drugs is not because the U.S. economy (or stock market) is facing a difficult situation. The consistent demand for new therapies, coupled with strong pricing power, is an enviable combination of the company's bottom line.

Pfizer has a forward P/E ratio of 7.6, which is 27% higher than its average forward P/E ratio in the five-year period.

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The second sensational ultra-high-yield dividend stock begging for purchases in May is Telecom Titan Verizon Communications (NYSE: VZ). Verizon's nearly 6.4% yield is 363% higher than the average S&P 500.

Two counter-trends in which it primarily holds Verizon after the AI ​​revolution were its downturn in growth rates—that is, investors have passed it to support higher-growth tech stocks—and the Fed’s rapid rate hike from March 2022 to July 2023. Higher interest rates can make these projects more expensive.

The silver lining for investors is that none of these headwinds are long-term in nature or are particularly worrying.

For example, even though Verizon's growth heyday was a distant memory, the 5G revolution provided companies with multiple ways to gradually increase their organic growth rates. The expansion of its 5G wireless network and historically low churn rates have resulted in highly predictable operating cash flows and modest sales growth.

Meanwhile, Verizon saw total broadband connections expand to 12.6 million by the end of March 2025, 13.7% higher than the comparable period a year ago. Although broadband is no longer a growth story in the early 2000s, it remains a consistent provider of cash flow and a facilitator of high-margin services bundling.

Don't ignore Verizon's efforts to improve its balance sheet, either. It ended 2022 with $130.6 billion in unsecured debt. Verizon's unsecured debt fell by $13 billion to $117.3 billion in the following nine quarters. That said, even if interest rates rise, Verizon's financial flexibility has improved.

The icing on the cake is that Verizon stock has historically been cheap. Considering that the broader market is entering 2025 with its highest valuation in history, Verizon has a edgy 8.8, making the telecom giant a screaming bargain.

Opportunistic Incomemakers in May are the third unlimited ultra-high earnings dividend stock purchased by beggars is RADAR Business Development Company (BDC) Pennantpark Floating Rate Capital (NYSE: PFLT). PennantPark pays dividends monthly and accounts for 12% north of this article at the time of writing.

A BDC is a business that invests in stocks (ordinary and/or preferred stocks) or medium-market companies (i.e., usually unproven businesses). As of the end of 2024, approximately $1.964 billion of PennantPark's $21.94 billion portfolio was spent on debt securities, while the rest were in various preferred and shared equity positions.

Become a debt-centric BDC Big Pennantpark's revitalization: super output. Since unproven companies often do not have access to basic financial services, PennantPark loans usually exceed the yield on market interest rates. As of the end of 2024, the weighted average yield on its debt investment was 10.6%!

More importantly, Pennantpark floating rate capital's full debt securities portfolio variable rate (if the company's name has not been disclosed yet). The Fed's aggressive hiking cycle starting in March 2022 meaningfully increased Pennantpark's average yield on debt investments. Even now, the country's central bank is now in a growing cycle, and its slow and steady cuts offer PennantPark ample opportunity to take advantage of higher loan rates.

Additionally, the company’s management team has done a great job protecting its investment principal. Including stock investments, an average investment size of $13.8 million ensures no single bet on profitability or can reduce well-known ships.

Similarly, all debt securities won first place except for the approximately $1.964 billion debt securities of $3.4 million. In the event of bankruptcy, the first secured debate holder is at the forefront of repayment.

Pennantpark's upper limit feather is its book value (as of December 31, 2024) of 10%. BDCs often trade near their respective book value, which is what makes Pennantpark such a deal now.

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Sean Williams owns positions at Pennantpark Floating Rate Capital and Pfizer. Motley Fool has a place and recommends Pfizer. Motley Fool recommends Verizon Communications. Motley Fool has a disclosure policy.

3 Unsolicited ultra-high earnings dividend stocks that were purchased in May