On this episode of Market Sense, we explore how investors can strategically use dividend-paying stocks and dividend ETFs to help generate income, especially in light of potential interest rate cuts. Whether you're new to income investing or looking to optimize your retirement portfolio, this episode offers insights and free Fidelity tools to help you find dividend-paying stocks for your financial goals. Topics covered: • Dividend paying stocks • Income investing • Plans for cash • Interest rates 00:00 Marke ...

Core Viewpoint - The stock market is currently at a critical juncture, making it challenging to predict the outlook for 2026 [1] Group 1 - The current state of the stock market indicates significant uncertainty, which could impact investment strategies moving forward [1] - Analysts are divided on the potential direction of the market, reflecting a range of opinions on economic indicators and corporate performance [1] - The inflection point suggests that investors should closely monitor market trends and economic data to make informed decisions [1]

Group 1 - The article emphasizes the importance of a diversified investment strategy that combines high-quality dividend stocks with other asset classes such as Business Development Companies, REITs, and Closed End Funds to enhance income and total return [1] - The author claims to have developed a hybrid investment system that balances growth and income, achieving total returns comparable to traditional index funds like the S&P 500 [1] Group 2 - There is no mention of specific companies or stocks in the provided content, focusing instead on general investment strategies and philosophies [2][3]

Group 1: Enterprise Products Partners - Enterprise Products Partners has $6 billion in organic expansion projects expected to enter commercial service by the end of this year, with additional projects set to start in 2026, providing stable cash flow for continued distribution increases [1] - The current yield for Enterprise Products Partners is 6.9%, supported by stable cash flow from fee-based income derived from long-term contracts and regulated rate structures [2] - The company has a strong balance sheet, allowing for continued growth beyond the current year [1] Group 2: Clearway Energy - Clearway Energy aims to pay out 70%-80% of its stable cash flow as dividends, with expected cash available for dividends rising from $2.08 per share this year to $2.50-$2.70 per share by 2027, supporting a 5%-8% annual dividend growth target [3] - The company offers a 6.3% dividend yield, backed by predictable cash flow from long-term power purchase agreements with utilities and corporate buyers [4] Group 3: Vici Properties - Vici Properties has a current dividend yield of 5.4%, with a portfolio that includes long-term net leases that escalate rents in line with inflation, providing stable and rising rental income [6][8] - The REIT has extended its dividend growth streak to eight years, achieving a 6.6% compound annual growth rate during this period [8] Group 4: Verizon - Verizon has a dividend yield of 6.4% and is projected to generate between $19.5 billion and $20.5 billion in free cash flow this year, sufficient to cover its annual dividend commitment of less than $12 billion [9][10] - The company has a strong financial profile that supports strategic investments, including a $20 billion acquisition of Frontier Communications to enhance its fiber network [10][11] Group 5: W.P. Carey - W.P. Carey offers a 5.4% dividend yield, with a diversified portfolio secured by long-term net leases that provide stable cash flow [12] - The company has invested $1.3 billion in new properties this year and aims for an investment volume target of $1.4 billion to $1.8 billion [13][14] Group 6: Overall Market Context - The S&P 500 currently has a historically low dividend yield of 1.2%, making high-yield dividend stocks like Clearway Energy, Enterprise Products Partners, Verizon, Vici Properties, and W.P. Carey attractive for income-seeking investors [5][15]

Group 1 - The appeal of credit investments is declining compared to previous years, indicating a shift in market dynamics [1] - Credit funds do not depend on the earnings growth of their holdings, differentiating them from traditional equities [1] - A hybrid investment strategy combining classic dividend growth stocks with Business Development Companies, REITs, and Closed End Funds can enhance investment income while achieving total returns comparable to traditional index funds like the S&P [1]

Group 1: PepsiCo - PepsiCo is considered undervalued with a forward price-to-earnings (P/E) ratio of 18.5, significantly lower than its historical median P/E of 26.2 [5] - Activist investor Elliott Investment Management has acquired a $4 billion stake in PepsiCo, representing approximately 2% ownership, indicating confidence in the company's potential [4] - Despite the potential, PepsiCo's stock has underperformed, gaining little over the past five years compared to the consumer staples sector and Coca-Cola [6][9] - The company has a strong dividend yield of 3.8% and has increased its payout for 53 consecutive years, making it attractive for dividend investors [11] Group 2: ConocoPhillips - ConocoPhillips has seen a stock decline of about 13% over the past year, attributed to a 10.7% drop in oil prices, presenting a buying opportunity for investors seeking passive income [12][13] - Management projects strong free cash flow of approximately $8 billion for 2025, supported by tax benefits and lower capital requirements [14] - The company has maintained a conservative payout ratio of 42.3% over the past five years, ensuring financial stability while rewarding shareholders [15] - ConocoPhillips offers a forward dividend yield of 3.2%, making it an appealing option for income-focused investors [12] Group 3: Watsco - Watsco's stock has declined by 16.6% year-to-date, primarily due to weak conditions in the HVACR market and challenges in the new residential construction sector [17][19] - The company has a successful business model focused on acquiring smaller distributors, which enhances its geographic reach and operational scale [18] - Current challenges are expected to be temporary, and Watsco is well-positioned to strengthen its market position as conditions improve [20]

Group 1 - The primary goal of the "High Income DIY Portfolios" Marketplace service is to provide high income with low risk and capital preservation for DIY investors [1] - The service offers seven portfolios designed for income investors, including retirees or near-retirees, featuring three buy-and-hold portfolios, three rotational portfolios, and a conservative NPP strategy portfolio [1] - The portfolios include two high-income portfolios, two dividend growth investing (DGI) portfolios, and a conservative NPP strategy portfolio that aims for low drawdowns and high growth [1] Group 2 - The article is part of a monthly series on dividend stocks, analyzing approximately 7,500 stocks listed on U.S. exchanges [2] - The author has disclosed beneficial long positions in a variety of companies, indicating a vested interest in the stocks mentioned [2] - The article emphasizes the importance of conducting further research and due diligence before making investment decisions [3]

Core Insights - Income funds are viewed as an effective strategy to hedge portfolios against market uncertainty and volatility as markets approach all-time highs [1] - A hybrid investment approach combining classic dividend growth stocks, Business Development Companies, REITs, and Closed End Funds can enhance investment income while achieving total returns comparable to traditional index funds like the S&P [1] Investment Strategy - The strategy emphasizes the importance of high-quality dividend stocks and assets that provide long-term growth potential, which can significantly contribute to income generation [1] - The combination of growth and income investments is highlighted as a method to maintain total returns on par with major market indices [1]

Core Viewpoint - Dividend stocks with strong fundamentals can provide above-average yields and stability for long-term investors [1][2] Group 1: UnitedHealth Group - UnitedHealth Group has seen a significant decline of 39% as of September 2, primarily due to higher medical costs and an ongoing Department of Justice investigation [5][6] - Despite the challenges, UnitedHealth generated $25.3 billion in free cash flow over the past 12 months, covering its $7.8 billion in dividend payments [7] - The current dividend yield stands at approximately 2.9%, making it an attractive buy for long-term investors looking for potential gains [6][8] Group 2: Medtronic - Medtronic offers a higher dividend yield of 3.1% and has shown solid growth, with revenue increasing by over 8% to $8.6 billion in the most recent quarter [9][10] - The company forecasts an organic growth rate of around 5% for the current fiscal year and has generated $5.3 billion in free cash flow, exceeding its $3.6 billion in dividend payments [11] - Medtronic's shares have risen 17% this year, and its lower volatility (beta of around 0.8) makes it a favorable long-term investment [11] Group 3: Realty Income - Realty Income boasts the highest yield at 5.5% and is unique for providing monthly dividend payments, having announced its 662nd consecutive monthly dividend [12][14] - The company's funds from operations (FFO) per share was $1.06, consistent with the previous year, and well above its quarterly dividend of $0.807 [13] - With a diversified portfolio and an occupancy rate around 99%, Realty Income is considered one of the safest dividend stocks for income-seeking investors [14]

Group 1: Eli Lilly - Eli Lilly's stock price has fallen significantly, but analysts expect a rebound with a consensus price target of $950.17, indicating a potential increase of over 29% from a recent price of $735 per share [4] - The decline in stock price was attributed to disappointing results from a clinical trial for orforglipron, which showed a 12.4% average weight reduction after 72 weeks, compared to a 20.9% reduction with Zepbound [5] - Total sales of tirzepatide, an active ingredient in Zepbound and Mounjaro, surged by 121% year over year, reaching $14.7 billion in the first half of 2025, indicating strong growth potential [6] - Eli Lilly's dividend yield is currently low at 0.8%, but the company has more than doubled its dividend payout over the past five years, suggesting future income potential [9] Group 2: ConocoPhillips - ConocoPhillips shares are down about 30% from their all-time high, but analysts have a consensus target of $120.95, implying a potential gain of about 28% from a recent price of $95 per share [10] - The company has maintained a quarterly dividend payout of $0.78 per share, resulting in a dividend yield of 3.3%, while also prioritizing shareholder returns through share buybacks [10][11] - ConocoPhillips is expected to see annual free cash flow rise by more than $7 billion over the next four years, supported by asset sales and tax benefits [12]