I Own 4 High-Yield Dividend Stocks. Here's Why I Own Each One.

Core Insights - High-yield dividend stocks have outperformed the S&P 500 over 20+ years, indicating that sustainable high dividend yields can signal intrinsic value [1] - Companies with above-average dividend yields typically exhibit strong free cash flows, resilient business models, and shareholder-focused management [2] Company Summaries AbbVie Inc. (ABBV) - AbbVie is a leader in the healthcare sector, with growth driven by its immunology franchise despite the patent expiration of Humira in the U.S. [4] - The stock trades at a forward P/E ratio of 14.2, significantly lower than the S&P 500's 23.6, supported by a robust clinical pipeline with over 90 compounds in development [5] - AbbVie offers a 3.85% dividend yield with a 213% payout ratio, backed by strong free cash flow and a clear path to earnings growth from new drug launches [6] HSBC Holdings plc (HSBC) - HSBC provides exposure to Asian financial markets, benefiting from rising affluence and demand for banking services, with a global network across 60 countries and $3 trillion in assets [7] - The stock has a forward P/E ratio of 8.2, below the banking industry average of 12.9, indicating a potential undervaluation given its strong position in high-growth markets [8] - HSBC offers a 3.9$60 billion in annual revenue from key therapeutic areas [10] - The stock trades at a forward P/E ratio of 8.87, significantly below the S&P 500's 23.6, presenting a buying opportunity at a steep discount [11] - Pfizer has a 6.59% dividend yield with a concerning 222% payout ratio, though its diverse portfolio and strong free cash flow provide some assurance for sustainability [12][13] Philip Morris International Inc. (PM) - Philip Morris is leading the transition to reduced-risk tobacco products, with growth driven by the IQOS heated tobacco system [14] - The stock trades at a forward P/E ratio of 18.3, below the S&P 500's 23.6 but at a premium to tobacco industry peers, justified by its lead in reduced-risk products [15] - The company has an 83% payout ratio, raising concerns about dividend sustainability, but offers a healthy 4.24% yield supported by stable free cash flows [16] Investment Strategy - High-yield dividend investing requires balancing current income with sustainability risks, and these four companies represent high-conviction income investments for 2025 and beyond due to their attractive yield and sustainability profiles [17]