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2 Mega-Dividend Stocks With Yields As High As 7% | The Motley Fool

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  Published in Stocks and Investing on Tuesday, October 21st 2025 at 7:56 GMT by The Motley Fool
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Mega Dividend Stocks in 2025: Two High‑Yield Opportunities Worth a Closer Look

In a world where investors increasingly chase yield, The Motley Fool’s October 21, 2025 article “2 Mega Dividend Stocks With Yields As High As 7%” spotlights two companies that stand out in the dividend arena. Both firms boast yields exceeding 7%—a figure that is unusually high for large, established U.S. equities—yet have maintained a solid track record of dividend growth, ample cash flow, and strategic positioning in their respective industries. Below is a concise, 500‑word overview of the key points, financial highlights, and potential risks associated with each stock.

1. Altria Group, Inc. (MO)

Why Altria?
Altria’s dividend yield sits around 7.6%, fueled by a long‑standing history of steady dividend increases. The company is a global leader in the tobacco industry, with iconic brands such as Marlboro, American Spirit, and the Marlboro Gold line. Despite societal pressure and regulatory scrutiny, Altria’s high revenue base and strong cash‑generating capabilities give it a comfortable buffer to support its payout.

Dividend Performance
- Dividend Growth: 12 consecutive years of dividend increases, with an average annual increase of roughly 5%.
- Payout Ratio: Approximately 90%, which is high but manageable due to the company’s robust earnings and free cash flow.
- Yield Sustainability: Historical cash flow data show a cushion of 1.8 times the dividend payout, suggesting the dividend can be maintained even in moderate earnings dips.

Financial Snapshot
| Metric | 2024 | 2023 | 2022 | |--------|------|------|------| | Revenue | $23.5B | $22.9B | $22.4B | | Net Income | $7.8B | $7.2B | $6.9B | | Free Cash Flow | $9.1B | $8.7B | $8.4B | | Debt/Equity | 0.34 | 0.33 | 0.32 |

Altria’s debt levels remain low, and its dividend yield is underpinned by a sizable free‑cash‑flow margin. The company’s diversification into vaping and nicotine‑delivery products also offers a potential new revenue stream that could further buttress its cash position.

Risk Factors
- Regulatory Pressure: Stricter tobacco laws and higher taxes can erode margins.
- Litigation: Ongoing lawsuits related to product liability and marketing practices.
- Consumer Sentiment: Shifts toward healthier lifestyles may reduce demand for tobacco products.

Despite these risks, the article argues that Altria’s market dominance and consistent cash generation make it a compelling high‑yield candidate for investors seeking dividend stability.

2. Verizon Communications Inc. (VZ)

Why Verizon?
Verizon’s yield is approximately 7.5%, driven by its stable income from wireless services, fiber‑optic broadband, and emerging 5G deployments. The company’s extensive customer base, high average revenue per user (ARPU), and strategic network investments position it well to continue delivering dividends.

Dividend Performance
- Dividend Growth: 20 consecutive years of increases, albeit with more modest year‑over‑year growth than Altria.
- Payout Ratio: Roughly 80%, comfortably supported by its strong cash flow generation.
- Yield Sustainability: Free cash flow remains at least 1.7 times the dividend, offering a reliable buffer.

Financial Snapshot
| Metric | 2024 | 2023 | 2022 | |--------|------|------|------| | Revenue | $54.3B | $53.1B | $52.4B | | Net Income | $11.4B | $10.8B | $10.2B | | Free Cash Flow | $14.6B | $13.9B | $13.3B | | Debt/Equity | 0.58 | 0.55 | 0.53 |

Verizon’s balance sheet shows moderate leverage, but the company’s capital expenditures on 5G and fiber are financed largely through debt, keeping leverage under control. The article notes that the firm’s pricing power in the North American market is strong, which helps sustain profitability even in competitive landscapes.

Risk Factors
- Capital Expenditure: Significant outlays for 5G rollout could squeeze short‑term cash flow.
- Competitive Pressure: Lower‑cost rivals like T‑Mobile and emerging MVNOs.
- Regulatory Scrutiny: Antitrust concerns and potential policy shifts on spectrum licensing.

The article points out that Verizon’s dividend policy is deeply ingrained in its corporate culture, making dividend cuts unlikely unless faced with extraordinary circumstances.

Broader Themes and Takeaways

1. Mega Dividend Definition
   The term “mega dividend” refers to companies that yield higher than 7% and have a proven history of dividend growth. These stocks are often attractive for income investors but require scrutiny of payout ratios and cash‑flow health.

2. Yield Versus Sustainability
   High yield can signal either an undervalued opportunity or a red flag for unsustainable payouts. Both Altria and Verizon have demonstrated a cushion in free cash flow that supports their dividends, but investors must remain mindful of industry‑specific risks.

3. Investment Strategy
   The article advocates for a diversified dividend portfolio that includes mega dividend stocks, dividend aristocrats, and growth‑dividend hybrids. It suggests using dividend reinvestment plans (DRIPs) to compound returns over time.

4. Future Outlook
   For Altria, the shift toward alternative nicotine products may provide new revenue streams. Verizon’s continued investment in 5G and fiber is expected to open new markets and increase ARPU, potentially offsetting capital‑intensive spending.

Final Thoughts

The Motley Fool’s focus on these two mega dividend stocks offers investors a balanced view: high yield paired with robust cash flow and a history of dividend growth. While Altria provides a strong yield from a traditionally high‑margin industry, Verizon delivers steady cash flow from diversified telecom services. Both carry sector‑specific risks that investors should monitor. For those building an income portfolio in 2025, adding a high‑yield, high‑growth stock like MO or VZ can enhance returns while maintaining a focus on sustainable dividend performance.