Investing in a high-yielding dividend stock can be an easy way to supplement your income. If you were to buy $10,000 worth of a stock that yields 4%, that would add an extra $400 just in dividend income. At a time of inflation and when everything seems increasingly unaffordable, holding dividend stocks can be more important than ever.
That's why when high-yielding dividend stocks go on sale, income investors should pay close attention. Buying on the dip can help lock in some better-than-normal payouts. Two stocks that have been falling of late and fit that criteria are Walgreens Boots Alliance (WBA -0.11%) and Kraft Heinz (KHC 0.98%).
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1. Walgreens Boots Alliance
Walgreens is an exceptional dividend stock that balances both a high yield with consistency. A Dividend Aristocrat, it has a track record for not just paying but also increasing dividends for more than 40 years in a row. However, along with the S&P 500's decline of 9% in the past month, Walgreens is also down by a comparable amount.
The stock recently hit a new 52-week low and yields 4.7% right now -- better than the S&P 500 average of around 1.4%. On a $10,000 investment, that will generate at least $470 in dividends on an annual basis. Given its streak and financial stability (the company is usually a lock to post a profit), it's likely that investors will be collecting more on their initial investment over time. In 10 years, Walgreens has doubled its dividend.
And what's great about the business is that while its stores did get a boost from COVID-19 vaccinations and the related traffic, it's still a trusted neighborhood pharmacy that should provide some consistency for investors. In each of the past four fiscal years, Walgreens has generated between $131 billion and $140 billion in annual revenue.
It's also building on the trust it has with consumers with a $5.2 billion investment it announced last year to partner with VillageMD to launch hundreds of primary care practices at its stores. By further mixing the convenience of retail with the necessity of healthcare, the company could benefit greatly from that investment.
Walgreens is much more than just a good dividend stock. This is a quality investment you can hang on to for the long haul.
2. Kraft Heinz
Kraft doesn't have the track record of Walgreens as a dividend stock. It cut its dividend a few years ago. But now, with a more sustainable payout, the stock is a much safer and better long-term buy. The company reported diluted earnings per share of $0.63 for the period ending March 26, 58% higher than its quarterly dividend of 0.40. Even the $0.46 EPS it posted in the prior-year period would still be sufficient to cover the current payout.
Although inflation may chip away at some of its profits this year, Kraft has been raising prices to offset some of the impact. And with top brands in its portfolio, including both Kraft and Heinz, it could be one of the better inflation-resistant stocks to be holding right now.
Shares of Kraft are down 10% in the past month after its top customer, Walmart, recently released a disappointing earnings report. But the good news for Kraft investors is that Walmart's sales were still up 2.4% year over year -- beating expectations -- and that could bode well for the food company. Kraft's products are staples in homes across the country, and even if there's a slowdown this year, that's not something that's likely to last over the long haul.
Kraft's yield is now up around 4.2% and could make for an excellent addition to an income investor's portfolio right now. On a $10,000 investment, you could be earning $420 from the stock's payouts.
