Securities in This Article
Hi, I’m David Harrell, editor of the Morningstar DividendInvestor newsletter. In today’s video, we’re taking a look at the dividend prospects of three stocks that are popular with income investors.
3 Dividend Stocks for May 2026
- Pfizer PFE
- Sysco SYY
- Watsco WSO
Pharmaceutical giant Pfizer PFE currently yields 6.6%, well above its five-year average of 4.5%. Dividend growth has been relatively modest at 2.5% annualized over the past five years, and the company did not provide a raise with its first-quarter dividend for 2026, ending a streak of annual increases that dated back to 2011. Morningstar analysts think that Pfizer will struggle to grow the top and bottom lines in the midterm due to patent expirations, and that dividend growth will remain low, with the diversified portfolio providing relatively steady free cash flows that will support low-single-digit increases to the dividend in the long run. They forecast that the current annual dividend rate of $1.72 will increase to $1.80 by 2029. The stock currently trades around a 15% discount to its $32 fair value estimate, placing it in 4-star territory.
Sysco SYY, the largest US foodservice distributor, not the tech company with a similar-sounding name, can point to 56 years of consecutive annual dividend increases, as its CFO acknowledged during a Jan. 27 earnings call, saying that the company was, quote, “proud of our strong track record of dividend growth and dividend aristocrat status.” The stock currently yields 3.0%, and Sysco has increased its dividend at a 3.5% annualized rate over the past five years. However, while the recently announced acquisition of food distributor Jetro Restaurant Depot could increase shareholder value in the long term, the amount of debt required to fund the purchase could result in minimal dividend increases in the near term. Trading at more than a 10% discount to its $84 fair value estimate, Sysco also receives a 4-star rating.
Watsco WSO is the largest HVAC and refrigeration products distributor in North America. In conjunction with its Feb. 17 earnings release, the company announced a 10% increase in its dividend rate. Watsco has now raised its annual payout for 12 consecutive years, following a dividend cut in 2013. Dividend growth over the past five years has been solid at 11.1% annualized. The stock currently yields 3.1%, above its 2.7% average over the past five years.
Morningstar analysts note that Watsco doesn’t repurchase its shares; with substantial insider ownership by a single family, dividends are given preference. While the annual dividend rate has exceeded earnings per share for the past three years, the dividend is well covered by cash flow. Morningstar analysts forecast that the current annual dividend rate of $13.20 will increase to $19.33 by 2030. The firm released Q1 results on April 28, which exceeded some estimates, but the stock price dropped about 5%, and the stock is now trading at a very modest discount to its fair value estimate, placing it in 3-star territory.
I’m David Harrell from Morningstar DividendInvestor. Thanks for watching.
Watch 3 Dividend Stocks for April 2026.
The author or authors own shares in one or more securities mentioned in this article.
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