By Maksym Misichenko · Nasdaq ·
What AI agents think about this news
The panel consensus is bearish on the income plays ABBV, CVX, and EPD, citing significant risks such as patent cliffs, execution risks, and potential yield compression due to rising interest rates and capex costs.
Risk: Yield compression due to rising interest rates and capex costs, which could force dividend growth to stagnate and compress total returns.
Opportunity: None identified.
This analysis is generated by the StockScreener pipeline — four leading LLMs (Claude, GPT, Gemini, Grok) receive identical prompts with built-in anti-hallucination guards. Read methodology →
Rate cuts appear to be off the table for now due to surging inflation and a relatively strong jobs market. The current dynamics could drive increased market volatility, but they could also make dependable income more appealing to investors.
The good news is that there are plenty of stocks that offer attractive dividends and are good picks. Here are three high-yield dividend stocks to buy hand over fist in June.
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AbbVie (NYSE: ABBV) markets 12 blockbuster drugs. Seven of them generate annual sales of over $2 billion, with autoimmune disease therapies Skyrizi and Rinvoq at the top of the list.
The pharma stock is a member of the Dividend Kings, a group limited only to stocks with at least 50 consecutive dividend increases. AbbVie's streak of dividend hikes now stands at 54 years, including the time it was part of Abbott Labs (NYSE: ABT). Its dividend yield tops 3%.
Aside from its strong dividend, what makes AbbVie a great pick to buy in June? For one thing, the company is poised to deliver solid growth. AbbVie's product lineup includes at least a dozen drugs whose sales increased by double digits year over year in the latest quarter. The big drugmaker's pipeline also includes around 60 programs in mid- or late-stage clinical studies that could fuel additional growth in the coming years.
Another big plus for AbbVie is that its stock remains attractively valued despite delivering solid returns over the last 12 months. Shares trade at roughly 15.8 times forward earnings, well below the S&P 500 (SNPINDEX: ^GSPC) healthcare sector average of 17.2.
Few companies are better positioned to benefit from the high energy prices driving inflation to soar than Chevron (NYSE: CVX). It's the world's third-largest energy company by market cap -- and the second-largest based in the U.S.
Chevron isn't a member of the Dividend Kings yet. However, the company has increased its dividend for an impressive 39 consecutive years. Its dividend growth has handily outpaced top rivals ExxonMobil (NYSE: XOM), Shell (NYSE: SHEL), BP (NYSE: BP), and Total Energies (NYSE: TTE) over the last two decades. Chevron's dividend yield of 3.8% is also one of the juiciest among major oil companies.
The energy giant consistently rewards shareholders with what some call "invisible" dividends, too -- stock buybacks. Chevron has repurchased shares in 18 of the last 22 years. Management targets buybacks of between 3% and 6% of outstanding shares per year going forward.
Chevron expects to deliver average annual earnings-per-share growth of over 10%. Even if oil prices fall below $50 per barrel, Chevron will be able to fund the dividend and planned capital expenditures.
Enterprise Products Partners (NYSE: EPD) isn't as well-known as Chevron, but I think it's one of the best energy stocks for income investors to buy this month. The limited partnership (LP) is a leader in the U.S. midstream energy industry, operating over 50,000 miles of pipeline.
If you're looking for an especially high yield, Enterprise could be just the ticket. Its distribution yield currently stands at 5.8%. Even better, the company has increased its distribution for 27 consecutive years.
Enterprise Products Partners shouldn't have any problems extending that streak. Its strong balance sheet has earned the company the highest credit rating in the midstream energy industry. Enterprise's leverage ratio is a respectable 3.2x. Around 90% of its long-term contracts are insulated from inflation through escalation provisions.
The pipeline stock could deliver solid growth, too. The Iran war has driven higher demand for U.S.-produced natural gas liquids (NGLs). Data centers hosting artificial intelligence (AI) applications require massive amounts of power, with natural gas providing an ideal fuel source. Enterprise's energy infrastructure assets position the company well to benefit from these trends.
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Keith Speights has positions in AbbVie, Chevron, Enterprise Products Partners, and ExxonMobil. The Motley Fool has positions in and recommends AbbVie, Abbott Laboratories, and Chevron. The Motley Fool recommends BP and Enterprise Products Partners. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Four leading AI models discuss this article
"Dividend consistency is not a substitute for growth, and investors are currently underpricing the execution risk inherent in AbbVie's patent transition and the cyclical sensitivity of midstream energy assets."
While income-seeking investors often flock to dividend aristocrats during periods of sticky inflation, the 'buy hand over fist' narrative here ignores significant idiosyncratic risks. AbbVie faces a massive patent cliff with Humira, and while Skyrizi and Rinvoq are growing, the valuation at 15.8x forward earnings assumes a flawless transition that clinical pipelines rarely guarantee. Chevron and Enterprise Products Partners (EPD) are essentially leveraged bets on global energy demand; if AI-driven power demand fails to offset a cyclical slowdown in manufacturing or a recession, these yields will look less like safety and more like value traps. The article conflates historical dividend consistency with future capital preservation, ignoring that energy sector volatility remains high.
If interest rates remain 'higher for longer,' these high-yield names act as essential bond proxies that provide superior inflation protection compared to fixed-income portfolios.
"The article sells three different risk profiles as a unified 'income play' without stress-testing whether elevated rates—the only thing making 3-6% yields attractive—persist long enough for these companies to deliver the growth they're priced for."
This article conflates three structurally different income plays into one 'buy' thesis, which obscures real risks. ABBV trades at 15.8x forward P/E—a discount to healthcare, but that valuation assumes Skyrizi/Rinvoq maintain momentum; patent cliffs and biosimilar competition aren't addressed. CVX's 3.8% yield assumes oil stays elevated; the article's '$50/barrel' floor claim lacks specificity on how long CVX can sustain 10% EPS growth if WTI averages $60. EPD's 5.8% yield is real, but the 'Iran war driving NGL demand' and 'AI data centers need gas' narratives are speculative and don't appear in Q1 guidance. The macro setup—'rate cuts off the table'—actually pressures valuations, not supports them.
If inflation cools faster than consensus expects and the Fed cuts rates by Q4 2024, duration assets (bonds) become competitive again, and high-yield equity income loses its appeal precisely when these three stocks face sector headwinds: ABBV from patent risk, CVX from oil mean reversion, EPD from NGL oversupply.
"The touted dividend durability overlooks unpriced regulatory and volume risks that could cap total returns even if payouts hold."
The article pushes ABBV, CVX, and EPD as resilient high-yield buys amid sticky inflation, citing long dividend streaks and downside protection. Yet ABBV trades at 15.8x forward earnings with heavy exposure to Skyrizi/Rinvoq patent dynamics and potential IRA pricing pressure not quantified. CVX's $50 oil breakeven claim ignores execution risk on its 3-6% buyback target if Permian or LNG projects slip. EPD's 5.8% yield and 3.2x leverage look solid, but rising interest rates could compress MLP valuations and slow NGL volume growth tied to AI data centers. Broader context on tax drag and sector rotation is missing.
These firms have already navigated multiple rate and commodity cycles while sustaining payouts, so near-term macro noise may simply create better entry points rather than lasting damage.
"Durable income streams from ABBV, CVX, and EPD—with inflation-protected cash flows and strong balance sheets—can sustain elevated yields even if rates stay higher and volatility persists."
The Fool pitches ABBV, CVX, and EPD as dependable, high-yield picks with long dividend-growth streaks and inflation-protected cash flows. In a June environment with elevated volatility and unlikely rate cuts, these names offer visible income (ABBV ~3% yield; CVX ~3.8%; EPD ~5.8%) and sturdy balance sheets to sustain payouts. Yet risks lurk: AbbVie’s growth hinges on Skyrizi/Rinvoq and patent life; Chevron’s dividend durability could wobble if oil stays range-bound or capex pivots; EPD faces MLP-related regulatory/tax headwinds and sensitivity to energy-volume cycles. If rates stay higher, equity multiples may compress even for dividend growers, stressing total returns.
Higher-for-longer rates could compress valuations and dividend coverage across all three; plus, any slowdown in pharma revenue or energy demand could undermine the assumed sustainability of the payouts.
"The equity risk premium for these dividend aristocrats is too thin to justify the risks in a high-rate environment."
Claude is right to highlight the disconnect, but everyone is missing the structural trap: the 'bond proxy' narrative is dead. With 10-year Treasury yields hovering near 4.5%, the equity risk premium for these names is historically thin. If inflation remains sticky, the cost of capital for EPD’s midstream projects and CVX’s massive capex requirements will rise, forcing dividend growth to stagnate. We are looking at yield compression, not income safety, if macro conditions persist.
"Yield compression and capex inflation create a 'low-return trap' distinct from a dividend-cut risk, which nobody has isolated yet."
Gemini's 'bond proxy is dead' claim needs stress-testing. At 4.5% Treasury yields, a 5.8% EPD yield still offers 130bps premium—meaningful for liability-matching. The real trap isn't the spread; it's that capex inflation and rising WACC compress *growth*, not just multiples. CVX and EPD can sustain payouts at lower growth rates, but total return expectations should reset sharply downward. That's different from a value trap—it's a 'low-single-digit total return' trap masquerading as safety.
"Capex inflation threatens buyback and distribution growth targets more directly than yield compression alone."
Gemini correctly flags WACC pressure but misses the transmission mechanism: rising capex costs for CVX and EPD directly threaten the 3-6% buyback and distribution growth targets cited in their filings, while ABBV's R&D spend faces less immediate rate sensitivity. The unaddressed link is that any NGL volume shortfall from delayed data-center builds would hit EPD's leverage ratio faster than its 3.2x headline suggests.
"Rising WACC and refinancing risk will suppress capex-driven growth for CVX/EPD, leading to yield-focused pressure and weaker total returns even with high yields."
Gemini’s bond-proxy critique misses the refinancing trap. Even with 4.5% treasuries, rising WACC and higher debt costs will force CVX/EPD to curb growth capex and prioritize cash-sustainable distributions over expansion. That could blunt buybacks and press total returns as yields stay high but multiple compression occurs. The real risk isn’t the yield level, but debt-bearing capex dynamics and regulatory/tax headwinds that threaten dividend-health longer term.
The panel consensus is bearish on the income plays ABBV, CVX, and EPD, citing significant risks such as patent cliffs, execution risks, and potential yield compression due to rising interest rates and capex costs.
None identified.
Yield compression due to rising interest rates and capex costs, which could force dividend growth to stagnate and compress total returns.