My Top High-Yield Dividend Stock to Buy for Passive Income, Even If There's a Stock Market Crash

Don’t let the strong bull market of recent years confuse you. Over the long term, stocks may trend higher in price, but during periods of stock market weakness, they can be very volatile. That’s why, if you’re looking for your portfolio to generate income and/or steady returns over a long time frame, you need to make sure to own a few high-quality blue chip dividend stocks.

Why? Regardless of the stock market’s direction, these names can generally be counted on to deliver steady cash returns. A prime example of what I’m talking about is Altria Group (MO 0.57%). Altria may have its own set of controversies, and it’s not the right stock for everyone, but if you have no issues with its underlying business, it is a top choice for an anchor position in a long-term portfolio.

Altria Group is a strong fit for an income-focused investor

The main reason I’m selecting Altria Group, the parent company of Philip Morris USA, is not that the company operates in a recession-resistant industry with inelastic demand. There are several U.S.-listed tobacco stocks, but none match Altria’s strong combination of a high dividend yield, a long track record of dividend growth, and relatively low price volatility.

Currently, Altria shares sport a high forward dividend yield of 5.9%.  The company has also raised its quarterly dividend for 57 consecutive years. This makes Altria one of the Dividend Kings, or stocks with at least 50 consecutive years of annual dividend growth. Altria’s annual dividend growth has also come in at mid-single-digit levels over the past decade.

In terms of volatility, Altria shares have a five-year monthly beta of 0.50. Beta is a measure of an individual stock’s volatility relative to the S&P 500 (^GSPC 0.22%) index. A beta above 1 signals a stock with higher-than-average volatility, while a beta under 1 signals lower volatility. Altria’s current beta suggests that it fluctuates half as far as the stock market on an average day.

Finding similar names to anchor your portfolio

Don’t get me wrong. I’m not saying you should include only Altria in your low-volatility, income-focused portfolio. Like any individual stock, Altria comes with its own set of company- and industry-specific risks and uncertainties. For instance, Altria’s future earnings and dividend growth hinge heavily on the success of the company’s efforts to “move beyond smoking,” or to pivot toward non-combustible tobacco and nicotine products.

Altria’s efforts in this field, coupled with cigarette price hikes, have helped the company maintain enough growth to sustain its Dividend Kings status. However, this uncertainty still lingers until such products become a significantly higher portion of its overall business. That’s also the case with Philip Morris International (PM 1.78%), formerly Altria’s spun-off overseas subsidiary, but now a direct competitor in verticals like nicotine pouches.

Hence, while Altria is my top low-volatility choice for income investors, to truly “anchor” a portfolio, consider adding stocks with similar defensive and dividend-growth bona fides. That is, seek out shares in companies operating in recession-resistant sectors like consumer staples, healthcare, and utilities that, alongside earnings consistency, have decades-long dividend growth track records. With enough of these anchoring a portfolio, even during down markets, investors can generate steady income without needing to sell positions.