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3 Ultra-High-Yield Dividend Stocks That Are Screaming Buys in 2025
FFord Motor(F) The Motley Fool·2025-01-03 10:21

Core Viewpoint - The article highlights three high-yield dividend stocks with an average yield of 7.93%, presenting them as attractive investment opportunities for 2025, especially in light of their historical valuations and growth potential. Group 1: Dividend Stock Performance - Dividend stocks have outperformed non-payers over a 50-year period, with average annual returns of 9.17% compared to 4.27%, while also exhibiting less volatility than the S&P 500 [3] - Companies that consistently pay dividends are typically profitable and adept at navigating economic challenges, providing a transparent long-term growth outlook [4] Group 2: Ford Motor Company - Ford Motor Company offers a yield of 6.06% and is currently facing challenges such as declining demand for electric vehicles and increased warranty-related expenses [7][8] - Ford's quality control improvements have led to better performance in initial quality studies, which may reduce warranty costs moving forward [9] - The company has deferred 12billioninEVspendingtoalignwithdemand,potentiallyleadingtosmallerlossesinitsModeledivision[10]−Ford′sF−Seriestrucksremainastrongrevenuedriver,beingthebest−sellingtruckinAmericafor48consecutiveyears[11]−ThestockistradingataforwardP/Eof5.5,markingitslowestvaluationinadecadeandan1112 billion in EV spending to align with demand, potentially leading to smaller losses in its Model e division [10] - Ford's F-Series trucks remain a strong revenue driver, being the best-selling truck in America for 48 consecutive years [11] - The stock is trading at a forward P/E of 5.5, marking its lowest valuation in a decade and an 11% discount to its book value [12] Group 3: PennantPark Floating Rate Capital - PennantPark Floating Rate Capital offers an impressive yield of 11.25% and operates primarily as a debt-driven business development company [13][14] - The company benefits from a variable rate debt portfolio, with a weighted average yield on debt investments increasing to 11.5% despite a recent rate-easing cycle [16] - PennantPark has a low delinquency rate of 0.4% in its portfolio, with most loans being first-lien secured notes, providing a safety net in case of borrower defaults [17] - The portfolio is diversified across 158 companies, with an average investment size of 12.6 million, reducing risk exposure [18] Group 4: Pfizer - Pfizer offers a sustainable yield of 6.48% and has seen a significant drop in sales from its COVID-19 therapies, projecting 8.5billionincombinedsalesfor2024[19][20]−DespitethedeclineinCOVID−19relatedsales,Pfizer′soverallsalesguidancefor2024is8.5 billion in combined sales for 2024 [19][20] - Despite the decline in COVID-19 related sales, Pfizer's overall sales guidance for 2024 is 62.5 billion, reflecting a 49% increase from 2020 [21] - The company is experiencing steady organic growth in its specialty care and oncology segments, bolstered by its acquisition of Seagen for $43 billion, which is expected to enhance its oncology pipeline and profitability [23] - Pfizer's forward P/E of 9 is the lowest this decade, making it an attractive investment option for value and income seekers [25]