5 Regular Payout High-Yield VIG Dividends to Outpace the Fed

The Federal Reserve’s Chair Jerome Powell is under immense pressure from the Trump administration to loosen the monetary policy. The futures market has priced in two rate cuts this year, and these cuts will lead to Treasury bills yielding less. In turn, every income-starved fund, retiree, and retail investor will scramble for yield.

Dividend stocks that have regularly increased their payouts through the pandemic, through supply-chain chaos, and through last year’s banking mini-crisis will be among the biggest winners.

Those in the Vanguard Dividend Appreciation ETF (NYSEARCA:VIG) are worth paying more attention to. This is an ETF that tracks the performance of the S&P U.S. Dividend Growers Index. It also excludes some dividend stocks that may be yield traps.

The following five are some of the highest-yielding dividend stocks in the VIG ETF. They comfortably pay more than the long-term Fed inflation target and have increased their dividend payouts regularly.

Eastman Chemical Co (EMN)

Eastman Chemical Co (NYSE:EMN) makes chemicals, fibers, and plastics. The stock has been more or less flat over the past five years, though there have been some ups and downs from $70 to $110 in between. The current price is near the lower end of that range.

It is a slow-growing company, but one that has great cash flow and good long-term upside. Analysts see an EPS decline of 7.22% this year, though EPS is expected to recover by 11.41% the year after and grow by around 10% annually thereafter.

Lower interest rates will also help mitigate the net interest loss of $200 million that it reported last year.

EMN stock could cross $100 or more in the next 24 months as earnings improve and interest rates decline. In the meantime, you can collect its 4.38% dividend yield. Dividends have been increased for 15 consecutive years.

HP Inc (HPQ)

HP Inc (NYSE:HPQ) makes computers and printing machines. The segment responsible for computers constituted 67.6% of its operating revenue in FY 2024, with the Printing segment constituting 32.4%.

Again, this is not a red-hot growth company, but the cash flow is solid. AI trends could also nudge growth above expectations in the coming years. The price is quite cheap, as you’re paying less than 13 times free cash flow if you value it based on enterprise value. If you value it on trailing earnings, you’re paying less than 10 times.

HPQ comes with a 4.51% dividend yield and a dividend payout ratio of just 35%, so there’s significant room for more dividend hikes. Dividends have already been increased for 15 consecutive years. Alongside those dividends, you get a very aggressive track record of buybacks. The 3-year average share buyback ratio is 4.9%, better than 98.68% of HP Inc.’s sector peers.

Target (TGT)

Target (NYSE:TGT) is down 60% from its peak in 2021 as the post-COVID growth wave passes. The valuation now is much more attractive, and TGT stock could be bottoming out after bouncing off $100 several times.

Analysts see one more year of negative earnings growth in the fiscal year ending in January 2026, after which ~7-10% annual EPS growth is expected through 2030. Revenue is also expected to decline 1.83% in FY 2026 before growing 2-3% annually. This is in line with most other retail companies and should help TGT stock get back on track.

TGT stock comes with a 4.38% dividend yield. It is also a Dividend King with 56 consecutive years of dividend payments.

Comcast (CMCSA)

Comcast (NASDAQ:CMCSA) is a telecom and media giant. The company has been getting increasingly shareholder-friendly over the past few years, despite interest rate hikes increasing the debt servicing burden. The company posted $4.1 billion in net interest losses in FY 2024. However, it still managed to report $16.2 billion in net income, maintaining both dividends and buybacks.

Comcast has grown its top line and bottom line consistently over the long run. The growth has slowed in recent years, but analysts don’t expect a decline anytime soon.

CMCSA stock has a dividend yield of 4.02%, with 18 consecutive years of dividend hikes.

Merck & Co (MRK)

Merck & Co (NYSE:MRK) is a healthcare company with a diversified portfolio of medical products. MRK stock has been one of the most consistent names in the 2010s, and things were equally smooth-sailing in the 2020s until it started declining in 2024. MRK stock is down over 37% from its March 2024 peak. This is mostly due to Keytruda (responsible for around half of Merck’s revenue) patents expiring starting in 2028. The company has also faced competition from other companies in diabetes treatment and lower demand from China.

However, management can mitigate this due to its massive pipeline of drugs and combination regimens that can extend Keytruda’s label well beyond 2028.

Merck also derives only 8.6% of its revenue from China, and a majority of that revenue is not at risk.

The company has solid cash flows and is expected to grow sales 4-5% annually in the coming years, with 12% annual EPS growth. The current discounted price takes most of the risks into account, and MRK stock has likely bottomed out.

It comes with a 3.92% dividend yield, increased for 14 consecutive years.

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