### Investors Turn to High-Yield Dividend Stocks as Interest Rates Plummet

With the Federal Reserve shifting towards lower interest rates, the economic ripple effects are pushing investors towards new opportunities for passive income. As the attractiveness of high-yield savings accounts diminishes, dividend-focused investors are now eyeing robust sectors like consumer spending and healthcare. Here, three high-yield dividend stocks emerge as promising options with solid financial backing and recession-proof business models.

Pharmaceutical titan Pfizer (NYSE: PFE) gained significant traction during the COVID-19 pandemic with its vaccine and treatment products. However, its stock has recently plunged to multi-year lows, following a contraction in revenue and earnings. Despite this downturn, analysts predict an 8% to 9% annual earnings growth for the next three to five years. Pfizer has redirected its focus on oncology and has used its pandemic profits to acquire Seagen for $43 billion in the previous year. In light of this, Pfizer's management raised dividends by 2.4% last December, demonstrating confidence in their payout's sustainability. Currently, the dividend represents about 64% of estimated 2024 earnings, and the stock trades at just 11 times its estimated 2024 earnings, making it a compelling investment.

Another reliable dividend stock is Altria (NYSE: MO), a veteran in the tobacco industry with a legacy of rewarding shareholders for over five decades. Altria’s portfolio includes Marlboro cigarettes along with leading cigar and smokeless tobacco brands in the United States. Altria is distinguished as a Dividend King, having consistently raised its dividends for more than fifty years. With a payout ratio at 80% of the projected 2024 earnings, the dividend is well-supported by an investment-grade balance sheet and a stake in Anheuser-Busch. Despite a yearly decline in cigarette shipments, price increases and share repurchases have allowed Altria to project a modest earnings growth of 3% to 4% over the next few years. Altria's shares trade at 10 times the estimated 2024 earnings, providing an 8% dividend yield, offering a high yield that is hard to match.

Lastly, real estate investment trusts (REITs) like Realty Income (NYSE: O) provide a way to invest in real estate without direct property ownership. Realty Income, known for its monthly dividend payments, has maintained and increased its dividends for 29 consecutive years. With a payout ratio at 75% of this year’s estimated funds from operations (FFO), Realty Income offers stability. The company leases over 15,000 properties to reliable retail businesses, such as grocery stores and pharmacies, ensuring steady rental income. Additionally, lower interest rates benefit REITs by reducing borrowing costs, enhancing profitability for Realty Income. The stock trades at nearly 15 times its estimated 2024 FFO, reflecting a fair valuation considering its promising outlook.

Though tempting, potential investors should do due diligence before committing to Pfizer, Altria, or Realty Income amidst the changing financial landscape.