Yield seekers can fall into hot water by insisting on a figure that’s a bit too high. Indeed, chasing yield tends to entail greater risk. And while it may not be the same as chasing share price momentum, I do find that investors should pay more attention to the actual firm than to the size of its yield. Undoubtedly, grabbing the top few stocks or ETFs with the highest yields may seem like a good way to boost your passive income stream so that you can retire earlier or more comfortably. However, the last thing a shrewd investor wants to do is put themselves in front of a dividend or distribution cut.
While higher yields don’t necessarily mean the payout will be slashed in short order, I do think that investors should take extra care and caution to ensure that the dividend is, in fact, well-covered and safe, even in the face of an economic contraction. With Trump tariffs and the threat of recession at the top of mind in the second half, yield seekers should only consider the names that have solid fundamentals and yields that are not only well-covered but positioned for appreciation over the long run.
In this piece, we’ll go through two cheap dividend stocks with yields hovering close to the 6% mark. The payouts are well-covered and look quite safe, making the following pair of stocks a worthy pick-up for income investors who not only want yield, but relative safety and stability.
Key Points
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Dividend safety matters more than the size of a yield. Verizon and Brookfield Renewable are two names with secure payouts in this climate.
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Recent strength in VZ and BEP could be worth getting behind as catalysts come into play.
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Verizon
Verizon (NYSE:VZ) has been an ailing dividend stock for many years now. More recently, though, it’s managed to garner some meaningful momentum. Indeed, 2024 was its first year in the green in quite a while. For 2025, VZ was off to a hot start, with shares up 7% year to date, a bit more than the S&P 500. While risks lie ahead, I think there’s more reason to own the stock than its 6.2% dividend yield.
First, shares are affordable, going for 10.2 times trailing price-to-earnings (P/E), which entails a pretty low bar ahead of coming quarters. Indeed, low expectations and a low valuation multiple are what you want to see when you’re a deep-value investor who’s looking for turnaround-driven gains.
Second, quarterly results haven’t been as bad as feared. The first quarter was relatively mild, with wireless service sales rising just shy of 3%. Still, EBITDA rose at a mid-single-digit pace. While the worst may very well be over with, Verizon must stay ahead of its fast-moving telecom rivals if it’s to claw back some market share. Boasting the best 5G network in the country and competitive prices, I believe, is no longer enough. Perhaps bundling opportunities could be key as Verizon aims to improve its value proposition in this harsher tariff-hit economic environment.
Finally, Verizon stock is lowly correlated, with a 0.38 beta, meaning shares could probably withstand another market-wide correction far better than your average U.S. stock. If anything, a tech- and AI-driven correction could cause a rotation back into the cheap dividend stocks that investors often neglect in a booming bull market.
Brookfield Renewable Energy Partners
Brookfield Renewable Energy Partners (NYSE:BEP) is a Canadian green energy play that currently sports a 5.8% yield. Like Verizon, shares of BEP are well off their highs, now down around 48% from the January 2021 peak. With the tariff impact to weigh heavily, I can understand why some investors would be hesitant to buy the name on the dip.
In any case, Brookfield Renewable Partners is a durable cash cow with a steady payout backed by a diversified portfolio of renewable projects. While medium-term growth may be hindered in the current climate, I continue to view the well-run name as a long-term hold on weakness. Tariffs are a short-lived headwind, while the long-term shift to net-zero targets, I believe, is a powerful secular tailwind for BEP and its peer group.
Though shares are down and out, I am encouraged by the near-30% gain off those ominous April 2025 lows. Could this latest rally be the start of something more substantial? We’ll have to wait and see. Either way, if you want a nice, growing payout, BEP is a stellar option in my books.
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