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S&P 500 Sell-Off: 2 Ultra-High-Yield Dividend Stocks That Make for No-Brainer Buys
FFord Motor(F) The Motley Fool·2025-04-23 07:51

Core Viewpoint - The current volatility in the stock market presents an opportunity for investors to consider high-yield dividend stocks, particularly Ford and Pfizer, which have yields averaging 7% and are positioned well for long-term growth despite short-term challenges [1][6][14]. Group 1: Market Context - Over the past two months, major indices like the Dow Jones and S&P 500 have entered correction territory, with the Nasdaq Composite officially in a bear market [2]. - The S&P 500 experienced significant volatility, including its 12th largest four-day decline and fifth largest two-day drop in history [3]. Group 2: Dividend Stocks Performance - Historically, dividend stocks have outperformed non-payers, with an annualized return of 9.2% compared to 4.31% for non-dividend stocks over a 51-year period [5]. - The S&P 500 contains numerous dividend-paying companies, with fewer than 20 offering ultra-high yields, defined as four times greater than the S&P 500's current yield of 1.47% [6]. Group 3: Ford Motor Company - Ford has a current yield of 6.23%, which can approach 8% when including a recent special dividend of 0.15pershare[7].−Thecompanyfacesshort−termchallenges,includingtariffuncertaintiesandhigherwarrantycosts,buttheseareexpectedtobetemporary[8].−UndernewCEOJimFarley,Fordhasshownimprovementsinvehiclequality,asevidencedbyitsrankingintheU.S.InitialQualityStudy[10].−TheF−Seriestruckshavebeenthebest−sellinginAmericafor48years,contributingsignificantlytoFord′sprofitability[11].−Fordisadjustingitselectricvehicleinvestmentstrategytoalignwithmarketdemand,whichisapositivesignforlong−termprofitability[12].−Thestockappearsundervaluedatapproximately7timestheconsensusearningspersharefor2026[13].Group4:PfizerInc.−Pfizer′syieldiscurrentlyat7.770.15 per share [7]. - The company faces short-term challenges, including tariff uncertainties and higher warranty costs, but these are expected to be temporary [8]. - Under new CEO Jim Farley, Ford has shown improvements in vehicle quality, as evidenced by its ranking in the U.S. Initial Quality Study [10]. - The F-Series trucks have been the best-selling in America for 48 years, contributing significantly to Ford's profitability [11]. - Ford is adjusting its electric vehicle investment strategy to align with market demand, which is a positive sign for long-term profitability [12]. - The stock appears undervalued at approximately 7 times the consensus earnings per share for 2026 [13]. Group 4: Pfizer Inc. - Pfizer's yield is currently at 7.77%, with expectations for sustainability in the coming years [14]. - The company has faced challenges due to a decline in COVID-19 related sales, but overall net sales have increased by 52% over the past four years [16]. - The acquisition of Seagen for 43 billion is expected to enhance Pfizer's oncology portfolio, with one-time expenses now behind [17]. - Demand for Pfizer's products remains stable regardless of economic conditions, making it a defensive investment [18]. - Pfizer's forward price-to-earnings ratio of just over 7 indicates a historically low valuation for a well-established pharmaceutical company [19].