The advantages of investing in dividend stocks may seem modest when the major market indexes reach all-time highs. However, the passive income they provide can serve as an excellent supplement to finances regardless of equity price movements.
Given that the S&P 500 currently yields just 1.2%, investors aiming to generate substantial dividend income will need to look beyond index funds. In this context, United Parcel Service (UPS), Brookfield Renewable, and Conagra Brands are positioned as compelling dividend stocks to consider purchasing.
UPS’ Business Strategy Shifts
The package delivery giant, United Parcel Service, has faced several challenges in recent years, including overestimating small package delivery demand and undergoing a lengthy and costly contract renegotiation with its workers. Recently, UPS announced a significant decision to reduce Amazon.com deliveries by 50% by the second half of 2026, a move that should be regarded positively by investors.
Navigating the reduction of low-margin Amazon deliveries will be challenging and deserves investor attention. Management’s approach seems logical as UPS aims to optimize its network by focusing more on high-margin deliveries, particularly from small and medium-sized businesses and healthcare firms. The plan involves reducing deliveries to costly and hard-to-reach residential addresses.
If successfully implemented, these changes are expected to benefit the company. This move aligns with UPS’ ongoing investments in automation and smart facilities to create its "network of the future." Such investments aim to improve productivity, allowing UPS to close inefficient facilities and reallocate resources away from less desirable Amazon deliveries. Currently, with a 5.6% dividend yield, UPS presents a promising opportunity for investors seeking income.
Brookfield Renewable’s Market Position
Brookfield Renewable has recently faced skepticism due to political headwinds in the U.S. market. Under the Trump administration, renewable energy development has encountered challenges, but the market’s reaction might have overlooked certain strengths in Brookfield’s business model.
The company’s operations are extensive, with over $100 billion in assets across 30 power markets in more than 20 countries. Brookfield Renewable’s dividends, which currently yield a 5.4% forward return, are primarily supported by long-term power purchase agreements. Approximately 90% of its funds from operations rely on contracts with an average duration of over 13 years, providing clear visibility into future cash flows and facilitating capital planning.
After a significant market correction, Brookfield Renewable is considered a top renewable energy dividend stock for patient investors interested in boosting their passive income.
Conagra Brands’ Current Outlook
Conagra Brands is trading near its five-year low, pressured by slowing demand in the packaged food industry. Recently, the company updated its fiscal 2025 guidance to reflect a more conservative outlook. CEO Sean Connolly acknowledged ongoing economic pressures and consumer behavior focused on affordability and value.
As the company’s stock price has declined in line with operating margins, Conagra is making progress in debt reduction and leverage management, despite not repurchasing stock. The company’s consistent annual dividend increases since 2021 have resulted in an attractive yield, the highest in a decade.
For investors who believe in Conagra’s ability to withstand current challenges, the combination of a low stock price and high yield, based on a forward price-to-earnings ratio of about 10.3, makes it an appealing option for value investors.
Disclosure
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is on The Motley Fool’s board of directors. Daniel Foelber and Lee Samaha hold no positions in the mentioned stocks, while Scott Levine has positions in Brookfield Renewable. The Motley Fool holds stakes in and recommends Amazon, Brookfield Renewable, Brookfield Renewable Partners, and United Parcel Service. The Motley Fool maintains a disclosure policy.
