Back in 2000s, the infamous Dot-com Bubble burst and the burgeoning tech sector plummeted, dragging the Nasdaq Composite—which was heavily weighted with tech stocks—down with it. And while most of the market was in the red, none of the other sectors experienced the downturn more than tech. As a result, it took the Nasdaq Composite 15 years to surpass its 2000s highs, while the S&P 500 took less than seven. 

That’s why I like to say, “Never put all your eggs in one basket—unless you want to see all your eggs fall from dizzying heights, all simultaneously.”

Diversification is an excellent strategy for investors, regardless of experience. By scattering your holdings across different types of companies, you can help ensure your portfolio is impervious to market shocks affecting individual sectors. Couple that strategy with investing in dividend stocks, and you have an excellent chance of building a bulletproof long-term portfolio. 

In today’s analysis, I’ll show you a way to build a diversified dividend porfolio, courtesy of Barchart. Let’s get to it. 

How I Came Up With The Following Stocks

As usual, I started with the Barchart Stock Screener and used the following filters: 

• Dividend Payout Ratio: 40% to 60%. The dividend payout ratio is the portion of a company’s after-tax earnings to pay shareholders dividends. The healthy range starts from 30% to about 50%, but today, I set the range higher to get higher-yielding results. 
• Market Cap: $100 billion and above. I aimed for larger and, therefore, more stable companies. 
• Number of Analysts and Current Analyst Rating: 12 or more, and 3.5 (Moderate Buy) to 5 (Strong Buy). This is my go-to setup for looking for companies that have Wall Street’s favor. 
• Annual Dividend Yield: 3% or more. Last, I limited results to companies that pay more than 3% dividends for more income. 

After running the screen, the filters yielded ten companies. I then arranged the results from highest to lowest yields. Furthermore, as I’m looking for a diversified selection, I only took the top three companies in different sectors. The companies I’ll discuss are highlighted in green here: 

With all those in place, let’s discuss these companies, starting with the one with the highest yield: 

Verizon Communications (VZ)

Verizon Communications is one of the world’s largest telecommunications companies. Its operations are primarily in the United States, and it offers mobile phone plans, 5G and 4G LTE coverage, and a wide range of data plans for different demographics. It also offers fiber internet, TV, and traditional phone services for its residential customers. 

Aside from that, Verizon provides enterprise services like cloud computing, cybersecurity, and IoT (Internet of Things) applications. 

Over the last 52 weeks, VZ’s stock price is down by 1.22%. Its Q3 2024 financials were uneventful, owing to large one-time charges from acquisitions and severance costs, though adjusted earnings exceeded analyst estimates by 1 cent. 

And, despite those issues, the company’s cash flow remains healthy. So much so that I have no worries that VZ is still an excellent, high-yielding dividend stock. It recently increased its quarterly dividends from 66.50 cents to 67.80 cents, marking its 18th consecutive year of increased payouts. On a forward basis, that’s a 6.85% annual yield with a 58.05% payout ratio. VZ stock also holds a consensus moderate buy rating from analysts. 

Chevron (CVX)

Like the last company, Chevron is a market leader in its field. They are the third-largest oil company in the world. The company is operates in the upstream, midstream, and downstream segments and is also engaged in exploration, production, refining, marketing, and distribution of petroleum and natural gas, as well as power generation and chemical manufacturing. 

Chevron pays $1.63 quarterly in dividends, or $6.52 annually, which translates to a respectable 4.43% yield. It’s also expected to announce a dividend increase for 2025, marking its 38th year of consecutive growth while maintaining a healthy dividend payout ratio of 55.85%. This Dividend Aristocrat is also a strong buy contender, according to analysts. 

Amgen (AMGN)

A quick look at AMGN’s stock chart might make you rethink its addition to your portfolio, but hear me out. As a quick introduction, Amgen is a biopharma company that develops and manufactures biologic therapies—that is to say, medicine derived from living organisms. Its top products are Enbrel for treating autoimmune diseases, Prolia for most-menopausal osteoporosis, and Otezla for psoriasis and psoriatic arthritis. 

Going back, AMGN’s stock price is near its latest low, and its general bearish movement is mostly due to a scrapped drug pipeline and disappointing clinical results for its weight-loss drug MariTide over the last year. I think investors are staying in the sidelines while they wait for its Q4 2024 report. 

But if you want to head off the potential buying spree this year, you can still get a good deal on this dividend stock - before everyone else jumps in. Amgen pays $2.38 per share, quarterly or $9.52 annually, reflecting a 3.67% yield. The company has increased its dividends since it started paying them back in 2013. Today, the company's payout ratio is at a healthy 45.81%. And while its scores are mixed, analyst ratings still average to a moderate buy. 

Final Thoughts

Finding the right dividend stock for a diversified portfolio can be easily done, as long as you know what to look for. Like always, you can use the filters and criteria above for your analysis as a baseline, but I highly recommend developing your own strategy for picking top stocks. After all, due diligence is never optional when it comes to investing. 

On the date of publication, Rick Orford did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.