2 Mega-Dividend Stocks With Yields As High As 7%

Investing in dividend stocks can be a great way to generate passive income in a more reliable manner than investing in stocks for pure appreciation. The key is to find stocks with good dividend track records that can generate enough earnings and free cash flow to continue paying the current dividend and raise it in the future.

While stocks with high dividend yields can generate skepticism from the market, there are a number that are trustworthy. Here are two mega-dividend stocks with yields as high as 7%.

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Pfizer: Continuing to build a solid drug pipeline and navigate tariffs

The large U.S. drugmaker Pfizer (NYSE: PFE) played a key role in administering COVID-19 vaccines that helped ease the economy out of the pandemic. But following this monumental effort, investors questioned what the company's next hit would be.

In 2023, Pfizer announced the $43 billion acquisition of Seagen to significantly bolster its oncology pipeline. Management's big pitch to investors for the acquisition is that Seagen's pipeline could contribute $10 billion in adjusted revenue by 2030. Along with other acquisitions, the company expects to lift revenue by over $20 billion by 2030. However, the purpose of this is to counteract a projected $17 billion in lost revenue between this year and 2030, as patents on certain drugs that grant Pfizer exclusivity expire.

Pfizer has also been beefing up on weight-loss drugs. It recently announced the acquisition of Metsera in a deal that could be worth up to $7.3 billion. Wall Street analyst David Risinger, who works for Leerink, estimates that Metsera's pipeline could eventually yield over $5 billion of revenue. Pfizer has also been navigating the ongoing tariff saga. Recently, the Trump administration granted Pfizer a three-year exemption from pharma-specific tariffs. In return, Pfizer will invest an additional $70 billion into U.S. manufacturing and research.

Pfizer has a solid dividend track record, having now paid and raised its dividend for 16 straight years. The yield is also quite impressive at over 7%. Management remains committed to the dividend, and is focusing on growing revenue and prudently managing expenses to drive growth in the company's operating margins. With a trailing 12-month free cash flow yield approaching 9%, the company is still safely covering its dividend.

Verizon: A strategic revamp and steady dividend

The large telecommunications company Verizon (NYSE: VZ) has signaled that change is coming. It recently announced that Dan Schulman, a member of the board of directors and the former CEO of PayPal, will become the new CEO of Verizon, replacing Hans Vestberg.

For years, Verizon has been working to increase its subscriber base by expanding its fiber-optic network in order to offer its customers superior service. It's also been increasing subscription numbers for its fixed wireless access product, which is wireless service for those living in areas without access to fiber-optic cables.

But the results have not been well received by the market, according to New Street analyst David Barden. He noted that Verizon has added 5 million organic postpaid phones, while the industry has added roughly 55 million since Vestberg took the job.

"When Hans joined, Verizon was capturing over 20% of annual industry postpaid phone net adds; that share has fallen to an average of 5% over the last four years," Barden wrote in his research note, according to Barrons. Verizon's stock has fallen roughly 30% over the past five years.

Citing anonymous sources, The Wall Street Journal reported that Schulman will now focus on getting more from Verizon's assets and increasing customer satisfaction.

Despite changes to Verizon's strategy, the dividend still looks good. The company has now paid and increased its dividend for 19 straight years, and offers a great yield of 6.8%, partly due to how the stock has struggled in recent years. With a 12-month trailing free cash flow yield of nearly 11.5%, the dividend is well supported.

Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends PayPal and Pfizer. The Motley Fool recommends Verizon Communications and recommends the following options: long January 2027 $42.50 calls on PayPal and short December 2025 $75 calls on PayPal. The Motley Fool has a disclosure policy.