Key Points

Investors may prefer to hunt for strong dividends right now, as opposed to playing in the volatile stock market. While not as many can be found in the tech-heavy Nasdaq Composite Index, there are still several stocks with strong dividends. Good dividend companies have a solid history of regularly paying dividends, and generate enough free cash flow to keep paying the dividend. 10 stocks we like better than Sirius XM ›

The stock market is anything but normal right now. Not even halfway through the year, the broader benchmark S&P 500 index fell nearly 20% from highs made in February, only to make a full recovery for the year (as of May 22). Investors are still grappling with how high tariffs will ultimately be, the potential impact of a major tax bill being proposed by House Republicans, and whether or not the economy will fall into a recession or see inflation reverse course and rise again.

With so many variables, some investors may prefer to find stocks that generate reliable passive income through dividends. Here are the smartest high-yielding dividend stocks in the Nasdaq Composite index to buy with $1,500 right now.

Amgen: Consistent dividend growth supported by strong free cash flow

Pharmaceutical company Amgen(NASDAQ: AMGN) develops a range of drugs to treat a variety of different diseases and medical conditions. Some of its largest drugs include Enbrel for treatment of several autoimmune diseases, Prolia for osteoporosis, XGEVA for strengthening bones, Otezla for managing inflammation, and Repatha for lowering cholesterol.

Amgen is regularly developing new drugs including its much anticipated weight-loss drug MariTide, which the company has recently initiated two phase 3 trials for.Image source: Getty Images.

Amgen reported solid first-quarter earnings, with adjusted earnings of $4.90 per share easily beating Wall Street estimates of $4.26. Revenue also grew 9% year over year. Management's guidance for 2025 remained unchanged and was roughly in line with what analysts had been projecting at the midpoint of the guidance range.

The company has regularly paid dividends since 2011 and has increased the dividend in all 14 years as well. The dividend yield is now close to 3.5%. While quarterly free cash flow has trailed dividend payments as of late, management expects free cash flow to rebound to 2023 levels of $7.4 billion, which would easily cover the $5.2 billion of expected dividend payments for the year.

Sirius XM: Paid to wait (patiently)

Sirius XM(NASDAQ: SIRI) is one of the largest digital audio companies in the U.S. as the operator of Sirius satellite radio and the Pandora music streaming service. The company says it reaches 160 million listeners each month. Sirius has struggled immensely with the stock down about 57% over the last five years (as of May 20). Rising competition and declining subscribers have hit the company hard.

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Management is attempting to turn things around by investing in its tech platform, building out its podcast network, and streamlining its various subscription and pricing offerings. Last September, the company laid out a long-term plan of growing subscribers by 25% to 50 million and increasing free cash flow by 50% to $1.8 billion. But it seems like investors are going to need to be patient.

In the first quarter of the year, revenue fell 4.3% year over year, while total U.S. subscribers declined 2%. Management, however, is implementing a cost-savings plan that calls for hitting a $200 million run rate by the end of 2025.

Luckily, investors are paid at a 4.9% dividend yield for their time. Sirius has regularly paid and increased its annual dividend since 2017. Additionally, the company's trailing free-cash-flow yield of close to 10% easily covers the dividend. The stock's performance hinges on tangible progress, especially regarding subscriber growth; until then, it's uncertain. But the dividend yield is strong, free-cash-flow generation is robust, and the stock is cheap.

Should you invest $1,000 in Sirius XM right now?

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Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amgen. The Motley Fool has a disclosure policy.

The Smartest High-Yielding Dividend Stocks in the Nasdaq Composite Index to Buy With $1,500 Right Now was originally published by The Motley Fool

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