More and more economists are warning that high inflation is here to stay for the next few years. Because of that, investors are becoming increasingly focused on using stocks to create an inflow of cash that earns them reliable income. To that end, dividend stocks offer folks returns through capital gains along with extra cash from regular payouts.

Academic research as well as market evidence show that investors typically bid up share prices of companies that pay generous dividends. Additionally, “dividend payouts may function as a signal of a company’s financial health, with an increase in dividends indicating that managers expect their business to have a higher cash flow in the future […] a higher value is signaled by higher dividends.”

So, identifying high-quality dividend stocks offering consistent returns is the key to creating a lucrative dividend income portfolio. Therefore, today I’ll discuss seven picks for investors who are looking to enjoy this kind of significant wealth growth.

This list includes fundamentally strong companies with solid earnings bases. In other words, their dividend payouts will likely be safe and sustainable. And, because these dividend stocks are reliable long-term bets, investors have the option to buy and hold onto them for decades.

• Abbvie (NYSE:ABBV)
• Altria (NYSE:MO)
• Annaly Capital Management (NYSE:NLY)
• AT&T (NYSE:T)
• Equitrans Midstream (NYSE:ETRN)
• iShares Global Utilities ETF (NYSEARCA:JXI)
• SPDR Portfolio S&P 500 High Dividend ETF (NYSEARCA:SPYD)

Dividend Stocks to Buy: Abbvie (ABBV)

52-week range: $79.11 – $118.35
Dividend yield: 4.44%

Headquartered in Illinois, Abbvie is a research-based biopharmaceutical company that supplies pharmaceuticals in key therapeutic areas, including immunology, oncology, neuroscience and virology. Moreover, its recent acquisition of Allergan has added several new drugs in aesthetics and women’s health.

ABBV reported its first-quarter results in late April. Adjusted net revenues grew 5.2% year-over-year (YOY) to $12.94 billion. Net earnings were $3.6 billion, up 18% YOY. Likewise, adjusted diluted earnings per share (EPS) increased about 22% YOY to $2.95. Finally, cash and equivalents stood at $9.8 billion, down roughly 76% YOY due to the cash paid for the Allergan acquisition. On the results, CEO Richard Gonzalez commented:

“Our new products are delivering impressive performance and we are on the cusp of potential commercial approvals for more than a dozen new products or indications over the next two years – including five expected approvals in 2021.”

This company’s financial performance is expected to get a significant boost from the inclusion of Botox producer Allergan to its sales mix. As a result, Abbvie is bullish on its near-term prospects, predicting that its diluted EPS may come in as high as $7.47 for 2021 — much higher than last year’s EPS.

What’s more, this pick of the dividend stocks is a member of the S&P Dividend Aristocrats Index and has increased its dividend by 225% since its inception in 2013. The shares currently hover around $118, up about 10% year-to-date (YTD).

ABBV stock recently hit its 52-week high on Jul. 12. Its forward price-earnings (P/E) and price-sales (P/S) ratios are 9.3 and 3.7, respectively. Despite currently trading close to its all-time high, ABBV stock still looks cheap, given that Johnson & Johnson (NYSE:JNJ) and Abbott Laboratories (NYSE:ABT) trade at nearly 18 and 27 times forward earnings.

Altria (MO)

52-week range: $35.83 – $52.59
Dividend yield: 7.24%

Based in Richmond, Virginia, Altria is a holding company that comprises Philip Morris USA, U.S. Smokeless Tobacco, John Middleton and Nu Mark. The company is also a stakeholder in Anheuser-Busch (NYSE:BUD) and the cannabis play Cronos (NASDAQ:CRON). Lastly, it owns about a third of the e-cigarette brand Juul.

Altria released Q1 results in late April. For the quarter, net revenues were $6 billion, down 5.1% YOY. Net income also came in at $1.42 billion, down 8.2% YOY. Adjusted EPS of $1.07 represents a decline of 1.8% from the prior-year quarter. Cash and equivalents stood at $5.8 billion, up 17% compared to the previous quarter. On the results, CEO Billy Gifford cited the following:

“Against a challenging comparison, our tobacco businesses performed well in the first quarter and we continued to make progress advancing our non-combustible portfolio.”

Currently, cigarettes and non-smokable tobacco account for most of its total sales. Except for its 10% stake in Anheuser-Busch, the company’s investments in other vice companies are also losing value. Basically, it seems like consumers aren’t yet as interested in cannabis and vaping as was forecast a few years ago.

MO stock currently hovers just below $48, up about 16% YTD. As one of the dividend stocks, it also maintains a long-term dividend payout ratio of around 75%, translating into a 7%-plus dividend yield — one of the highest yields among blue-chip stocks. Today, its forward P/E and P/S ratios stand at 10.35 and 4.16, respectively.

Dividend Stocks to Buy: Annaly Capital Management (NLY)   

52-week range: $6.92 – $9.64
Dividend yield: 10.39%

Next up on this list of dividend stocks is Annaly Capital Management, one of America’s largest mortgage real estate investment trusts (REITs). This company holds a diversified portfolio of securities, loans and equity in residential and commercial markets.

Like others on this list, Annaly released Q1 results in late April. Net interest income came in at $687.4 million. Additionally, GAAP net income was $1.75 billion compared to a net loss of $3.64 billion in the prior-year quarter. Lastly, core EPS came in at 29 cents, up 38% YOY, while cash and equivalents ended the quarter at $1.1 billion, down 60% YOY. CEO David Finkelstein commented on the results:

“The current environment reaffirms the strength of the housing sector, and we continue to be excited about the growing synergies between our agency and residential credit businesses.”

This company generates nearly all of its revenue from the spread between interest earned on its assets and interest payments made on its borrowings. Using its portfolio as collateral for short-term low-interest loans, Annaly has increased its net interest spread to an impressive 3.34% during the first quarter.

NLY stock currently hovers around $8.50, the same price it was trading at the end of 2020. Additionally, as a mortgage REIT, Annaly offers a breathtaking dividend yield of more than 10% at the current stock price.

That said, Annaly’s exposure to interest rate fluctuations often leads to swings in the stock price, especially during periods of Federal Reserve meetings. However, buying NLY stock on its recent post-meeting dip and reinvesting the generous dividend payouts could lead to significant returns for passive-income investors. Currently, its forward P/E ratio is 7.68.

AT&T (T)

52-week range: $26.35 – $33.88
Dividend yield: 7.32%

AT&T is a global provider of telecommunications, media and technology services. The company operates under several segments.

This name also released its Q1 results in late April. Consolidated revenues totaled $43.9 billion, up 2.7% YOY. Net income also soared to $7.5 billion. Additionally, adjusted EPS was 86 cents, representing a 2.4% YOY increase. Free cash flow came in at $5.9 billion, up 51% YOY. On the results, CEO John Stankey remarked the following:

“We had another strong quarter of postpaid phone net adds, higher gross adds, lower churn and good growth in Mobility EBITDA. We also continue to increase penetration in markets where we offer fiber broadband and we’re moving quickly to deploy more fiber.”

On top of its strong quarter, AT&T and Discovery (NASDAQ:DISCA) recently announced their merger and launch of a standalone global entertainment company. Right now, AT&T is in the process of streamlining its business by selling 30% of DirecTV and merging WarnerMedia into the new entity.

As one of the dividend stocks, this company has grown its dividend for 37 years. Additionally, its payout ratio of 66.22% translates into a dividend yield of over 7%. However, the company soon plans to decrease its payments and give up its “Dividend Aristocrat” status as part of WarnerMedia’s spinoff. Therefore, potential investors may want to follow the developments closely.

Today, T stock trades for slightly above $28 territory, down just 1% YTD. The stock also looks cheap at 9.05 times forward earnings and a P/S ratio of 1.17. Given the recent merger, investors should definitely keep AT&T stock on their radar.

Dividend Stocks to Buy: Equitrans Midstream (ETRN)

52-week range: $6.23 – $11.66
Dividend yield: 7.10%

Next up on this dividend stocks list, Equitrans Midstream is a midstream company focusing on gas gathering systems, gas transmission and storage systems and water services that support natural gas development and production across the Appalachian Basin. The company primarily serves natural gas producers, commercial and industrial users, marketers and local distribution companies.

On May 4, ETRN announced its first-quarter financial results for 2021. Operating revenue came in at $380 million, down roughly 16% YOY. Adjusted net income was $83 million, down about 30% YOY. Finally, adjusted EPS fell 59% YOY to 19 cents while free cash flow came in at $110 million. CEO Diana Charletta had the following to say on the results:

“We were ahead of our forecast for the first quarter, with strong results in multiple areas including gathered volume, seasonal park and loan activity, and delivered water volume.”

ETRN stock currently hovers a little above $8, up 3.7% YTD. Additionally, while ETRN has underperformed broader U.S. markets, it still carries significant upside potential in the long term. Today, the forward P/E and P/S ratios are 8.8 and 2.56, respectively.

iShares Global Utilities ETF (JXI)

52-week range: $53.95 – $63.42
Dividend yield: 3.01%
Expense ratio: 0.46%

Our next choice on this list of dividend stocks is actually an exchange-traded fund (ETF). The iShares Global Utilities ETF provides exposure to global utility companies that supply electricity, gas and water. JXI stock represents 69 holdings and tracks the S&P Global 1200 Utilities Sector Index. Assets under management are about $146 million.

Currently, Electric Utilities (59.59%) tops the list of sectors, followed by Multi-Utilities (30.30%) and Gas Utilities (5.35%). The top 10 holdings constitute about 44% of the fund and include names like Nextera Energy (NYSE:NEE), Duke Energy (NYSE:DUK) and others.

Year-to-date, JXI is up about 2.25%. Moreover, the ETF has soared 11% over the past 52 weeks. Interested readers could consider buying the dips.

Dividend Stocks to Buy: SPDR Portfolio S&P 500 High Dividend ETF (SPYD)

52-week range: $26.15 – $42.64
Dividend yield: 4.79%
Expense ratio: 0.07% per year

Last up on this list of dividend stocks is another ETF. Specifically, the SPDR Portfolio S&P 500 High Dividend ETF provides exposure to high dividend-yielding companies within the S&P 500 Index. SPYD stock, which tracks the S&P 500 High Dividend Index, started trading in October 2015. The fund currently has around $4.67 billion under management.

In terms of sector allocations, Financials lead with 23.09%, followed by Real Estate (20.42%), Utilities (13.34%), Energy (12.98%), Information Technology (6.55%) and Communication Services (6.37%).

SPYD currently has 77 equally weighted holdings. The top ten holdings comprise around 15% of the fund’s total net assets. Today, the ETF’s top three holdings are Seagate Technology (NASDAQ:STX), Iron Mountain (NYSE:IRM) and ConocoPhillips (NYSE:COP).

Year-to-date, SPYD is up nearly 21%. Additionally, it has soared more than 39% over the past 12 months. All in all, investors who are seeking reliable passive income but don’t want to commit capital into a single stock should consider SPYD stock, which offers a diversified basket of names.

On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Tezcan Gecgil has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation.