Three high-dividend stocks to watch in 2025

Generating passive income is an increasingly popular strategy to ensure financial stability and independence. One proven way to do this is by investing in stocks that pay regular dividends. These stocks not only offer stable returns, but also often present an opportunity for capital appreciation.

In this article, we take a look at three major companies - Kraft Heinz, PepsiCo and Mondelez International - whose dividend programs are among the most interesting in the market.

Kraft Heinz $KHC: Strong dividends and familiar brands

Kraft Heinz is one of the world's leading food and beverage companies and is behind iconic brands such as Heinz, Philadelphia, Velveeta and Kraft Mac & Cheese. The company's current dividend yield is approximately 5.2%, well above the market average. This means that for every $100 invested, this stock generates approximately $5.20 in annual dividend income for you.

Although Kraft Heinz cut its dividend in 2019 to gain more financial flexibility and reduce its debt, this decision proved to be strategically sound. The company now has a lower debt-to-earnings ratio (currently 2.9) and is generating enough free cash flow to not only cover its dividend but also conduct share repurchases. In the third quarter of 2024, Kraft Heinz reported free cash flow of $2 billion, with approximately $1.5 billion paid in dividends. With these numbers, the company is well positioned to maintain its dividend policy going forward.

PepsiCo $PEP: A tradition of dividend growth

PepsiCo is one of the most recognizable global brands in the food and beverage industry. The company's portfolio includes products such as Lay's, Doritos, Gatorade, Quaker and of course Pepsi-Cola. Many of these brands have annual sales in excess of a billion dollars.

PepsiCo is particularly popular among investors because of its long history of dividend increases. For 52 years, the company has increased its payout to shareholders every year, making it one of the coveted Dividend Kings. The current dividend yield is 3.5%, and in 2024 alone, PepsiCo paid out more than $7.2 billion in dividends to shareholders. In addition, the company is planning another $1 billion worth of share buybacks.

PepsiCo is achieving these results thanks to strong cash flow and a robust balance sheet. It had $8 billion in cash and short-term investments at the end of the third quarter of 2024. Steady earnings growth and financial discipline ensure that PepsiCo will remain a reliable choice for those seeking long-term passive income.

Mondelez International $MDLZ: Fast-growing dividend

Mondelez International, maker of popular brands like Oreo, Milka, Ritz and Chips Ahoy!, dominates the global candy and cookie market. The company currently offers a dividend yield of 3.1% and has increased its dividend by an average of more than 10% per year over the past five years.

For the first three quarters of 2024, Mondelez generated free cash flow of $2.5 billion, of which $1.7 billion was paid in dividends. The company is also actively conducting share buybacks, on which it has spent $1.2 billion this year. Mondelez has a strong market position and its strategy ensures that it has sufficient funds not only to maintain but also to continue increasing dividends.

Disclaimer: You will find a lot of inspiration on Bulios, but stock selection and portfolio construction is up to you, so always do a thorough analysis of your own.

Source: TheMotleyFool