Trade-offs are inevitable when it comes to investing. The biggest one is the relationship between risk and returns. If you want lower risk, you'll usually have to forego the possibility of big returns.
However, some investing trade-offs aren't unavoidable. For example, you don't necessarily have to give up on the potential for growth when you buy attractive dividend stocks. Here are three high-yield dividend stocks with solid growth prospects.
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You're not going to find many stocks with the dividend pedigree that AbbVie (NYSE: ABBV) has. AbbVie is a Dividend Aristocrat with 49 consecutive years of dividend increases. Since its spin-off from Abbott Labs in 2013, the company has boosted its dividend payout by 225%. Its dividend yield currently stands at over 5%.
What about growth? AbbVie's revenue soared 59% year over year in the fourth quarter of 2020 with adjusted earnings per share (EPS) jumping 32%. However, there's an important asterisk: Much of this increase resulted from AbbVie's acquisition of Allergan. Still, the company delivered 6.8% revenue growth on a comparable operational basis.
AbbVie expects adjusted EPS will increase by nearly 18% in 2021. It also looks for strong sales growth over the next couple of years. In 2023, though, the company projects its sales will decline due to the loss of exclusivity for its top-selling drug Humira.
Don't worry: The dip will be a short-lived one. Thanks to its lineup of powerhouse new drugs including Rinvoq, Skyrizi, Ubrelvy, and Vraylar, AbbVie projects modest revenue growth in 2024 followed by strong growth beginning in 2025 throughout the rest of the decade.
Enterprise Products Partners
Enterprise Products Partners (NYSE: EPD) definitely offers a dividend that's bound to catch investors' attention. The midstream energy company's dividend currently yields more than 8%. It has also increased its annual distribution for 22 consecutive years.
You might not be as impressed by Enterprise Products' recent growth story, however. In 2020, the company's revenue and earnings sank 17% year over year. The COVID-19 pandemic seriously disrupted the global economy, causing oil and gas prices to plunge.
Things are looking up for Enterprise, though. CEO Jim Teague expressed optimism in the company's fourth quarter update that "the combination of the vaccines, significant government stimulus and shorter economic cycles associated with pandemics and natural disasters will lead to the world emerging from this economic sudden stop in 2021." There's reason to believe that Teague's confidence is well founded.
The midstream energy company's prospects could improve even more in the coming years. Enterprise expects to begin operations at three new projects this year, including two in the second half of 2021, that should really start to pay off down the road.
Pfizer (NYSE: PFE) has been a longtime favorite for income-seeking investors. It still is, with a dividend yield of nearly 4.4%.
On the other hand, Pfizer hasn't enjoyed much favor for its growth in recent years. But the dynamics for the company are much different now. Pfizer is no longer held back by declining sales for older drugs that have lost exclusivity, thanks to its merger of Upjohn with Mylan in November.
The company now projects annual revenue growth of at least 6% and adjusted EPS growth of at least 10% over the next few years. Importantly, though, those projections don't include the impact of Pfizer's COVID-19 programs.
Pfizer's COVID-19 vaccine could generate sales of $20 billion or more this year. It's uncertain how much of that revenue will be recurring. However, the company's CFO recently said that Pfizer expects annual revaccination will be likely. That could mean Pfizer will be able to count on billions of dollars in sales from its COVID vaccine for years to come.
10 stocks we like better than Pfizer
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