The average dividend yield in the S&P 500 Index remains low at 1.3%. As a result, income investors should focus on higher-yielding securities if they want additional income from their stock portfolios. 

One of the biggest benefits of investing in dividend stocks is the magic of compounding. Over time, investors can generate outsized returns through reinvesting dividends.

The following 3 high dividend stocks have yields above 4%, and will compound dividends for shareholders over the long run.

Kenvue Inc. (KVUE)

Kenvue Inc. (KVUE) is a consumer healthcare company that was spun off from Johnson & Johnson. Kenvue has three segments, including Self Care, Skin Health and Beauty, and Essential Health. 

Self-Care’s product portfolio includes cough, cold, allergy, smoking cessation, and pain care products among others. Skin Health and Beauty holds products such as face, body, hair, and sun care. Essential Health contains products for women’s health, wound care, oral care, and baby care. Well-known brands in Kenvue’s product line up include Tylenol, Listerine, Band-Aid, Neutrogena, Nicorette, and Zyrtec. These businesses contributed approximately 17% of Johnson & Johnson’s annual revenue. 

While Kenvue is a new, standalone business, it carries Johnson & Johnson’s 60+ year dividend increase streak. On July 25th, 2024, Kenvue announced that it was raising its quarterly dividend 2.5% to $0.205. 

On February 6^th, the company released fourth-quarter and full-year financial results. Fourth-quarter net sales declined 0.1% year-over-year, although organic sales increased 1.7%, offset by unfavorable currency translation. Fourth-quarter adjusted diluted earnings per share fell to $0.26 from $0.31 in the prior-year period. 

For the full year, net sales rose 0.1% due to organic growth of 1.5%, partially offset by currency translation. Organic sales growth was driven by 2.7% price increases, partially offset by 1.2% volume decline.

For 2024, Kenvue’s adjusted diluted earnings per share were $1.14, a decline from $1.29 in 2023.

Kenvue consists of just the consumer products businesses, which often produced the lowest levels of growth. Therefore, we expect that Kenvue will grow earnings-per share by 3% annually through 2030. KVUE stock currently yields 4.0%.

Verizon Communications (VZ)

Verizon Communications was created by a merger between Bell Atlantic Corp and GTE Corp in June 2000. Verizon is one of the largest wireless carriers in the country. Wireless contributes three-quarters of all revenues, and broadband and cable services account for about a quarter of sales. The company’s network covers ~300 million people and 98% of the U.S.

On January 24th, 2025, Verizon announced fourth quarter and full year results. For the quarter, revenue grew 1.7% to $35.7 billion, which beat estimates by $360 million.

Adjusted earnings-per-share of $1.10 compared favorably to $1.08 in the prior year and was in-line with expectations. For the year, grew 0.6% to $134.8 billion while adjusted earnings-per-share $4.59 compared to $4.71 in 2023.

For the quarter, Verizon had postpaid phone net additions of 568K, which was better than the 449K net additions the company had in the same period last year. Retail postpaid net additions totaled 426K. Wireless retail postpaid phone churn rate remains low at 0.89%. Wireless revenue grew 3.1% to $20.0 billion while the Consumer segment increased 2.2% to $27.6 billion.

One of Verizon’s key competitive advantages is that is often considered the best wireless carrier in the U.S. This is evidenced by the company’s wireless net additions and very low churn rate. This reliable service allows Verizon to maintain its customer base as well as give the company an opportunity to move customers to higher-priced plans. Verizon’s 5G service coverage area gives it an advantage over other carriers. 

VZ has increased its dividend for 20 years and shares currently yield 6.8%.

Pfizer Inc. (PFE)

Pfizer Inc. is a global pharmaceutical company focusing on prescription drugs and vaccines. Pfizer’s CEO completed a series of transactions significantly altering the company structure and strategy. 

Pfizer’s top products are Eliquis, Prevnar family, Paxlovid, Comirnaty, Vyndaqel family, Ibrance, and Xtandi. Pfizer had revenue of $63.6B in 2024. 

The company recently reported fourth-quarter operating results. Revenue increased 21% operationally, while adjusted earnings-per-share increased to $0.63 for the quarter. Revenue growth came from the existing portfolio, while EPS was boosted by lower expenses. 

Global Biopharmaceuticals sales gained 22% led by gains in Primary Care (+27%), Specialty Care (+12%), and Oncology (+27%). Other top-performing products include Eliquis (+14%), Vyndaqel/ Vyndamax (+61%), and Xtandi (+24). New launches, Octagam, Padcev, Adcetris, Tukysa, and Tivdak are growing rapidly. 

Pfizer’s current product line is expected to produce top line and bottom-line growth out to 2030 because of significant R&D and acquisitions. As a result, Pfizer’s current product line is growing. Previously declining volumes and sales of Paxlovid and Comirnaty have largely stabilized. 

Future growth will come from increasing sales for approved indications, extensions, R&D, bolt-on acquisitions, and margin expansion. Pfizer has a strong pipeline in oncology, inflammation & immunology, internal medicine, and vaccines.

Pfizer is one of the largest pharmaceutical companies in the world. As such, it has scale in R&D, manufacturing, regulatory affairs, distribution, and marketing around the world. This gives Pfizer the ability to bring new therapies to market, partner with smaller companies, or acquire entire companies outright. The current pipeline is robust, and some will likely be blockbuster drugs even after attrition.

PFE currently yields 6.7%.

Disclosure: No positions in any stocks mentioned