Many dividend stocks lost their luster in 2022 and 2023 as rising interest rates drove jittery investors toward safer CDs, Treasury bills, and other fixed-income investments. However, many of those high-yielding dividend stocks stabilized in 2024 as the Federal Reserve finally implemented three interest rate cuts.
The 10-year Treasury yield is still hovering near 4.7% as of this writing, but the Fed plans to cut interest rates at least two more times in 2025. As that happens, more investors will likely rotate back toward the market’s high-yielding dividend stocks.
But before that rotation occurs, you should probably buy some of those stocks while they’re still trading at historically low valuations with high yields. If you have at least $1,000 to spare, you can easily churn out $40-$70 in extra annual income with these underappreciated dividend stocks: Verizon Communications (NYSE: VZ), Vici Properties (NYSE: VICI), and Opera (NASDAQ: OPRA).
Verizon might initially seem like a lousy dividend stock. Over the past five years, the telecom giant’s share prices have tumbled 36%. Even after including its reinvested dividends, it delivered a negative total return of 14% over that timespan. It struggled to grow its core wireless business, fend off its competitors, and meaningfully reduce its debt.
But after that decline, Verizon stock looks dirt cheap at just 8 times forward earnings and pays a hefty forward dividend yield of 7.1%. That low valuation and high yield should limit its downside potential if it turns its business around.
In 2023, Verizon’s revenue fell 2% as its consumer segment struggled to gain new wireless subscribers and its business segment faced tougher macro headwinds. But in the first nine months of 2024, its total revenue rose 0.3% year over year as the growth of its consumer segment offset its business segment’s declining revenue.
That recovery was driven by its localized incentives and marketing campaigns, customizable “myPlans,” distribution partnership with Walmart, and the recent acquisition of the prepaid wireless provider TracFone. The wireless segment’s earnings margins are also stabilizing as it cuts costs to offset its lower-margin promotions.
For the full year, analysts expect Verizon’s revenue to stay flat as its adjusted earnings per share (EPS) dips 2%. But for 2025, they expect its revenue and adjusted EPS to grow 2% and 3%, respectively. So, if you believe this telecom giant is finally due for a turnaround, it would be smart to buy its high-yielding stock at this discount valuation.