3 High-Yield Dividend Stocks That Are Screaming Buys Right Now

Dividend stocks have historically been fantastic long-term investments. The best ones supply an attractive and growing income stream along with steady stock-price appreciation. That can add up to a strong total return.

Chevron (NYSE: CVX), Realty Income (NYSE: O), and Verizon (NYSE: VZ) have terrific records of paying dividends. Even better, they currently trade at lower valuations, which has them offering high-dividend yields. With upside catalysts ahead, they look like screaming buys right now.

A high-octane dividend stock

Shares of Chevron have slumped more than 10% over the past year. The decline is due to delays in closing its needle-moving acquisition of Hess and lower oil prices. Because of that, Chevron currently offers a dividend yield of around 4.4%. That's much higher than chief rival ExxonMobil (3.2% dividend yield). While Exxon is the top dog in the oil patch, Chevron is a very strong No. 2.

Chevron can thrive at lower oil prices. The company stress-tested its business for a downside scenario where Brent crude oil (the global-benchmark price) averages $50 in the 2025 to 2027 time frame. The oil giant can produce enough cash to fund its high-return capital program and a growing dividend (something it has done for over three decades) with room to spare. That excess and its elite balance sheet will provide it with the capacity to buy back shares at the low end of its $10 billion to $20 billion annual range.

Crude prices are currently well above that level (in the low $70s). That's its upside scenario for the next few years. Under that pricing environment, Chevron could produce enough cash to repurchase shares at the upper end of its annual-target range without using its balance-sheet flexibility. Meanwhile, its acquisition of Hess, which Exxon is fighting to stop, will significantly enhance and extend its free-cash-flow growth outlook. It could double the company's cash flow at $70 a barrel by 2027. With strong downside protection and ample upside potential, Chevron looks very attractive these days.

As consistent as they come

Realty Income's stock price currently sits nearly 20% below its peak from a few years ago, mainly due to the impact of higher interest rates on the commercial real estate market. Because of that, this real estate investment trust (REIT) offers a very attractive dividend yielding nearly 5%.

The REIT has done a tremendous job growing its dividend over the years. It has raised its payout 127 times since coming public in 1994, including for the last 108 quarters in a row. It has grown its payout at a 4.3% compound annual rate over the last 30 years.

Realty Income is in an excellent position to continue increasing its dividend in the future. The REIT expects to grow its funds from operations at a 4% to 5% annual rate, driven by rent growth and accretive acquisitions. It has a massive investment opportunity ($5.4 trillion addressable market in the U.S. and $8.5 trillion in Europe). With interest rates finally starting to come down, the REIT could ramp up its acquisition volume in the future.

A ridiculously cheap dividend stock

Verizon currently offers a dividend yield of 6.2%, which is one of the highest in the S&P 500. That big-time yield is due to the company's dirt-cheap valuation. Verizon trades at a forward price-to-earnings (PE) ratio of less than 10 times. That's a more-than 50% discount to the S&P 500's 23.8 times forward-earnings multiple.

The telecom giant has been an excellent dividend-growth stock over the years. It delivered its 18th consecutive annual-dividend increase last month. That's the longest current dividend-growth streak in the U.S. telecom sector.

Verizon is taking a notable step to accelerate its growth by acquiring Frontier Communications. The $20 billion deal will yield at least $500 million in annual-cost savings. Meanwhile, it will increase the scale of its fiber network and extend its reach. In addition, the company has invested heavily in expanding its 5G network to enhance its growth. These investments will grow its cash flow, giving it the money to continue increasing its dividend and strengthening its balance sheet, and eventually begin buying back its dirt-cheap stock.

Top-notch income stocks

Chevron, Realty Income, and Verizon have consistently increased their dividends over the years. That should continue in the future, especially given the upside catalysts they have ahead. Add in their high yields and lower valuations, and this trio looks like screaming buys for those seeking investments with strong total-return potential.

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Matt DiLallo has positions in Chevron, Realty Income, and Verizon Communications. The Motley Fool has positions in and recommends Chevron and Realty Income. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy.