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Yahoo
08-07-2025
- Business
- Yahoo
2 Magnificent S&P 500 Dividend Stocks Down as Much as 40% to Buy and Hold Forever
Realty Income is a high-yield REIT that has lost a quarter of its value since 2020. Hormel Foods is a meat-focused food maker that has lost 40% of its value since 2022. Hormel is a Dividend King while Realty Income has hiked its dividend annually for three decades. 10 stocks we like better than Realty Income › Investors often use the S&P 500 to track the performance of the stock market. But the index's real purpose is to be broadly representative of the U.S. economy; the committee overseeing the index selects 500 of the largest and most economically important U.S. companies for inclusion. That vetting process makes the S&P 500 a good fishing ground for stocks to buy. Right now, two magnificent S&P dividend stocks are deeply out of favor despite remaining important, and profitable, businesses. Here's why you might want to buy Realty Income (NYSE: O) and Hormel Foods (NYSE: HRL) and hold them forever. The truth is that Realty Income is probably one of the most boring companies you'll find in the real estate investment trust (REIT) sector. That, however, has long been one of the company's goals. It actually trademarked the nickname "The Monthly Dividend Company," which speaks to its commitment to its payouts. At this point, management has increased the dividend annually for 30 straight years, and also for the last 110 quarters. If you are looking for a dividend stock that is as reliable as a quartz watch, Realty Income should be on your buy list. Add in a 5.6% dividend yield at the current share price -- well above the S&P 500 index's scant 1.3% yield -- and you might want to move it from your buy list and right into your portfolio. The business backing those payouts is quite solid. Realty Income owns more than 15,600 single-unit properties across the United States and Europe, renting them out under triple net leases to companies across the retail and industrial sectors. It is the largest competitor in its space by a wide margin, which gives it scale advantages in raising growth capital and on the acquisition front. However, the REIT's large scale can be a headwind, too -- it takes a lot of new properties to move the needle for it financially. But slow and steady probably won't be too big an issue for conservative income investors when you combine it with the lofty yield. And right now, this S&P 500 constituent is down by about 25% from the peak it reached prior to the coronavirus pandemic despite its reliable dividend growth. That's a buying opportunity if you think in decades rather than days. Hormel Foods is not just in the S&P 500 index. It also happens to be on the list of Dividend Kings -- the small and exclusive club of companies that have increased their payouts annually for more than 50 consecutive years. Those elite companies have proven over time that they know how to manage through difficult periods while still rewarding investors well. The current period is one of those difficult times for Hormel, which is why the stock has fallen around 40% from its 2022 highs. The price drop has pushed Hormel's dividend yield up to 3.8%, near its historical peak, which is why long-term dividend investors should be looking at the stock right now. But don't buy it before considering the reasons why this S&P 500 stock is so unloved on Wall Street at the moment. The first is that Hormel is having some difficulties in passing all of its rising costs on to consumers. But other headwinds include the ongoing outbreak of avian flu, a slow rebound in China, and some early trouble with its acquisition of Planters. None of these problems individually is likely to upend the company's business over the long term, but it's facing them all at once. That's far from ideal, but even so, it seems likely that this Dividend King will muddle through like it has so many times over the past five decades. For example, Hormel is leaning into product innovation, which has been a strong suit for the company. It is also focused on increasing its efficiency as it works to streamline its operations, which will help reduce costs. And it is reworking its management team, bringing in new blood with experience both inside and outside of Hormel. That leadership team should be able to focus on the long term, too, because the company's largest shareholder is The Hormel Foundation, a philanthropic organization with a specific goal of ensuring the long-term survival of Hormel the company. Simply put, food maker Hormel can take its time and do the right things for the business without worrying too much about what Wall Street thinks about its near-term results. If that sounds like the kind of business you want to have in your portfolio, then you might want to jump on this Dividend King despite the headwinds it faces. Just because a company's stock price has fallen doesn't mean Wall Street is correctly assessing its long-term merits. Often, traders are taking a short-term view of things and ignoring both the company's history and its future potential. Realty Income and Hormel are both down as stocks but not out as companies. And that makes each one worth a close look for dividend investors with a buy-and-hold mentality. Before you buy stock in Realty Income, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Realty Income wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $695,481!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $969,935!* Now, it's worth noting Stock Advisor's total average return is 1,053% — a market-crushing outperformance compared to 179% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of July 7, 2025 Reuben Gregg Brewer has positions in Hormel Foods and Realty Income. The Motley Fool has positions in and recommends Realty Income. The Motley Fool has a disclosure policy. 2 Magnificent S&P 500 Dividend Stocks Down as Much as 40% to Buy and Hold Forever was originally published by The Motley Fool
Yahoo
08-07-2025
- Business
- Yahoo
2 Magnificent S&P 500 Dividend Stocks Down as Much as 40% to Buy and Hold Forever
Realty Income is a high-yield REIT that has lost a quarter of its value since 2020. Hormel Foods is a meat-focused food maker that has lost 40% of its value since 2022. Hormel is a Dividend King while Realty Income has hiked its dividend annually for three decades. 10 stocks we like better than Realty Income › Investors often use the S&P 500 to track the performance of the stock market. But the index's real purpose is to be broadly representative of the U.S. economy; the committee overseeing the index selects 500 of the largest and most economically important U.S. companies for inclusion. That vetting process makes the S&P 500 a good fishing ground for stocks to buy. Right now, two magnificent S&P dividend stocks are deeply out of favor despite remaining important, and profitable, businesses. Here's why you might want to buy Realty Income (NYSE: O) and Hormel Foods (NYSE: HRL) and hold them forever. The truth is that Realty Income is probably one of the most boring companies you'll find in the real estate investment trust (REIT) sector. That, however, has long been one of the company's goals. It actually trademarked the nickname "The Monthly Dividend Company," which speaks to its commitment to its payouts. At this point, management has increased the dividend annually for 30 straight years, and also for the last 110 quarters. If you are looking for a dividend stock that is as reliable as a quartz watch, Realty Income should be on your buy list. Add in a 5.6% dividend yield at the current share price -- well above the S&P 500 index's scant 1.3% yield -- and you might want to move it from your buy list and right into your portfolio. The business backing those payouts is quite solid. Realty Income owns more than 15,600 single-unit properties across the United States and Europe, renting them out under triple net leases to companies across the retail and industrial sectors. It is the largest competitor in its space by a wide margin, which gives it scale advantages in raising growth capital and on the acquisition front. However, the REIT's large scale can be a headwind, too -- it takes a lot of new properties to move the needle for it financially. But slow and steady probably won't be too big an issue for conservative income investors when you combine it with the lofty yield. And right now, this S&P 500 constituent is down by about 25% from the peak it reached prior to the coronavirus pandemic despite its reliable dividend growth. That's a buying opportunity if you think in decades rather than days. Hormel Foods is not just in the S&P 500 index. It also happens to be on the list of Dividend Kings -- the small and exclusive club of companies that have increased their payouts annually for more than 50 consecutive years. Those elite companies have proven over time that they know how to manage through difficult periods while still rewarding investors well. The current period is one of those difficult times for Hormel, which is why the stock has fallen around 40% from its 2022 highs. The price drop has pushed Hormel's dividend yield up to 3.8%, near its historical peak, which is why long-term dividend investors should be looking at the stock right now. But don't buy it before considering the reasons why this S&P 500 stock is so unloved on Wall Street at the moment. The first is that Hormel is having some difficulties in passing all of its rising costs on to consumers. But other headwinds include the ongoing outbreak of avian flu, a slow rebound in China, and some early trouble with its acquisition of Planters. None of these problems individually is likely to upend the company's business over the long term, but it's facing them all at once. That's far from ideal, but even so, it seems likely that this Dividend King will muddle through like it has so many times over the past five decades. For example, Hormel is leaning into product innovation, which has been a strong suit for the company. It is also focused on increasing its efficiency as it works to streamline its operations, which will help reduce costs. And it is reworking its management team, bringing in new blood with experience both inside and outside of Hormel. That leadership team should be able to focus on the long term, too, because the company's largest shareholder is The Hormel Foundation, a philanthropic organization with a specific goal of ensuring the long-term survival of Hormel the company. Simply put, food maker Hormel can take its time and do the right things for the business without worrying too much about what Wall Street thinks about its near-term results. If that sounds like the kind of business you want to have in your portfolio, then you might want to jump on this Dividend King despite the headwinds it faces. Just because a company's stock price has fallen doesn't mean Wall Street is correctly assessing its long-term merits. Often, traders are taking a short-term view of things and ignoring both the company's history and its future potential. Realty Income and Hormel are both down as stocks but not out as companies. And that makes each one worth a close look for dividend investors with a buy-and-hold mentality. Before you buy stock in Realty Income, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Realty Income wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $695,481!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $969,935!* Now, it's worth noting Stock Advisor's total average return is 1,053% — a market-crushing outperformance compared to 179% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of July 7, 2025 Reuben Gregg Brewer has positions in Hormel Foods and Realty Income. The Motley Fool has positions in and recommends Realty Income. The Motley Fool has a disclosure policy. 2 Magnificent S&P 500 Dividend Stocks Down as Much as 40% to Buy and Hold Forever was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
03-07-2025
- Business
- Yahoo
If I Could Buy Only 1 High-Yield Dividend Stock for Passive Income in July, This Would Be It
Realty Income is the quintessential dividend stock to buy for passive income. The REIT pays a very bankable monthly dividend. Its strong financial profile allows it to grow its portfolio and dividend payment. 10 stocks we like better than Realty Income › I'm on a mission to reach financial independence through passive income. Investing in high-yielding dividend stocks is a core piece of my strategy, so I tend to buy several dividend stocks each month as I have cash to invest. However, if I had to limit myself to just one high-yield dividend stock this July, Realty Income (NYSE: O) would be it. Here's why I think it's the quintessential income investment. Realty Income isn't like other real estate investment trusts (REITs). While the sector as a whole is an ideal spot for generating passive income, Realty Income really takes that concept to another level. The company's stated mission is "to invest in people and places to deliver dependable monthly dividends that increase over time." That's why Realty Income has become known as The Monthly Dividend Company. It has an impeccable record of paying dividends. Realty Income has declared 660 consecutive monthly dividends since its formation, and the REIT has raised its payment 131 times since its public market listing in 1994. It has also increased its dividend for 111 consecutive quarters and 30 straight years, and it's grown its dividend at a 4.2% compound annual rate during that period. The foundation of the REIT's dividend is its high-quality real estate portfolio. Realty Income owns 15,600 properties in retail, industrial, gaming, and other sectors across the U.S. and Europe, net leased to the world's leading companies. Net leases provide it with stable rental income because tenants cover all property operating expenses, including routine maintenance, real estate taxes, and building insurance. The company owns properties leased to tenants in industries resilient to economic downturns and isolated from the pressures of e-commerce. These account for 91% of its total rent. Realty Income fortifies its foundation with a top-tier financial profile. It has one of the 10 highest credit ratings in the REIT sector, which provides it with low borrowing costs and significant financial flexibility. It also has a conservative dividend payout ratio of about 75% of its adjusted funds from operations (FFO). Realty Income's real estate portfolio produces highly resilient cash flows. Meanwhile, its strong financial profile gives it the flexibility to continue growing in any market environment. It has a remarkable history of delivering durable earnings growth. Its adjusted FFO per share has risen at a 5% annual rate over the past three decades. The REIT has had only one year when it didn't deliver positive adjusted FFO per share growth. That was in 2009, during the depth of the financial crisis. Realty Income is in an excellent position to continue growing. The REIT's conservative dividend payout ratio enables it to retain meaningful excess free cash flow, approaching $1 billion annually, and its elite balance sheet provides it with the capacity to grow. On top of that, the REIT is tapping into the massive private capital market by launching its U.S. Core Plus Fund. That strategy will provide it with additional capital to invest and management fee income. The company has a massive opportunity to continue expanding its portfolio. While it's the seventh largest global REIT with $59 billion of real estate in eight countries, that's only a tiny fraction of the global net lease market opportunity, which it estimates is $14 trillion across the U.S. and Europe. Realty Income has been steadily expanding its opportunity set by adding new investment verticals with additional properties such as gaming and data centers, new European countries, and credit investments. Given the size of the market opportunity, Realty Income can remain selective by closing only the best investment opportunities. Although it sourced $43 billion of deals last year, its investment volume of $3.9 billion represented 9% of its investment potential. Realty Income is an incredible dividend stock. The REIT pays a high-yielding monthly dividend of 5.5% that steadily grows and backs that payout with a top-notch portfolio and financial profile, providing investors with a bankable income stream. Realty Income's combination of payment frequency, yield, growth, and financial strength is why I would choose to buy its shares if I could purchase just one dividend stock this month. Before you buy stock in Realty Income, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Realty Income wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $697,627!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $939,655!* Now, it's worth noting Stock Advisor's total average return is 1,045% — a market-crushing outperformance compared to 178% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 30, 2025 Matt DiLallo has positions in Realty Income. The Motley Fool has positions in and recommends Realty Income. The Motley Fool has a disclosure policy. If I Could Buy Only 1 High-Yield Dividend Stock for Passive Income in July, This Would Be It was originally published by The Motley Fool
Yahoo
21-06-2025
- Business
- Yahoo
How Realty Income Investors Are Benefiting From One Of Real Estate's Most Overlooked Tax Advantages
Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below. Realty Income Corp (NYSE:O) has become something of a gold standard for investors who are chasing monthly income. It's one of the few publicly traded companies with the guts, and the track record, to trademark its nickname: The Monthly Dividend Company®. With more than 15,600 commercial properties and over 660 consecutive monthly dividend payments under its belt, Realty Income is a REIT investors turn to when they want predictable income, even in unpredictable markets. But there's another perk Realty Income offers its shareholders that doesn't show up in the yield column, and many investors don't even realize they're benefiting from it. It's called depreciation, and as most real estate investors know, it can be one of the most powerful tax advantages available. In 2024, Realty Income paid out $3.126 per share in dividends, more than 126% of its estimated taxable income. That may sound like a red flag at first, but it's actually a feature of REIT taxation, not a flaw. REITs are required to distribute at least 90% of their taxable income to shareholders in exchange for avoiding corporate income tax. But "taxable income" and "cash flow" are two very different things. Thanks to depreciation, a non-cash expense that reduces taxable income without reducing actual earnings, REITs like Realty Income can pay out more in dividends than they report in taxable income. When that happens, the portion of dividends that are greater than the taxable income are treated differently. Here's how that played out for shareholders last year: $2.17598 per share was classified as ordinary income $0.94952 per share was classified as a nontaxable distribution That nontaxable portion isn't free money. It reduces the investor's cost basis in the stock, which can lead to higher capital gains taxes if and when the shares are sold. But for long-term holders, that trade-off can be more favorable than paying ordinary income tax every year on the full dividend amount. In short: depreciation lets investors defer taxes today and potentially pay a lower rate later. Most investors are drawn to Realty Income for its reliable dividend and consistent growth. Earlier this month, the company announced its 131st dividend increase since being listed on the NYSE, bumping the monthly payout from $0.2685 to $0.2690 per share. That may not sound like much, but when you compound reliable growth over decades, it adds up. Despite ongoing challenges in the real estate market, analysts still see upside for the stock. Recent price targets from UBS, Scotiabank, and Wedbush suggest an average price target of $60.33, compared to the current price near $57.75. And that's on top of a 5.61% yield. Realty Income isn't just a favorite among retail investors, it's also a sizable holding for several large institutional investors, like Vanguard Group Inc, BlackRock Inc. and State Street Corporation, which collectively hold nearly 300 million shares valued at over $17 billion. But this isn't the only real estate play that's been gaining the attention of major Wall Street firms. In 2024, there were more than $1.1 billion in securitizations for an asset class that has been flying under the radar until recently, and that number is expected to more than double this year. This emerging asset class lets investors capture the upside of rising home values with a built-in cushion if prices fall. While Realty Income is built on commercial tenants like Walgreens, 7-Eleven, and FedEx, there's a parallel real estate market that may be even more compelling: owner-occupied home equity. Americans have more than $34 trillion in equity tied up in their homes, a number that has more than tripled since 2013. And some of the biggest names on Wall Street have figured out how to tap into this growth. The strategy involves something called Home Equity Agreements (HEAs), and if you've never heard of this before it's because individual investors have been excluded from participating in this growing market. Until now anyway... One of the first companies to begin operating in the home equity market recently launched a new fund available to individual accredited investors – U.S. Home Equity Fund I. The fund is targeting a 14%-17% net IRR to investors with a strategy that can provide positive returns even in a market Shutterstock This article How Realty Income Investors Are Benefiting From One Of Real Estate's Most Overlooked Tax Advantages originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved.
Globe and Mail
15-06-2025
- Business
- Globe and Mail
Do You Want to Maximize Your Returns? Buy This Low-Risk, High-Yield Dividend Stock.
Many investors tend to fall into one of two camps. They're either trying to maximize their income or their growth. A singularly focused strategy like that can sometimes miss the mark if your stocks stop generating income or growing. A better strategy is to focus on maximizing your total return by investing in companies that pay a growing dividend. That combination of income and growth can really add up over the years. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » Realty Income (NYSE: O) has done an excellent job of maximizing investors' returns over the years. The real estate investment trust (REIT) currently offers a high-yielding income stream and solid growth prospects at a value price. Because of that, it's in a strong position to help investors maximize their returns in the future. A bankable income stream The hallmark of Realty Income is its monthly dividend. The REIT calls itself The Monthly Dividend Company. It has declared 660 consecutive monthly dividends since its formation and increased its dividend payment 131 times since its public market listing in 1994. The REIT has unbroken streaks of 111 straight quarters and 30 consecutive years of dividend increases and has grown its payout at a 4.2% compound annual rate during this period. Realty Income's dividend currently yields 5.6%, and that high-yielding payout is on a rock-solid foundation. The REIT generates very stable income. It owns a diversified portfolio of high-quality real estate (retail, industrial, gaming, and other properties), net leased to many of the world's leading companies. Net leases produce very stable rental income because tenants cover all property operating costs, including routine maintenance, real estate taxes, and building insurance. The REIT pays out a conservative percentage of its stable cash flow in dividends (75% of its adjusted funds from operations, or FFO). That allows it to retain excess free cash flow to fund new income-generating real estate investments. Realty Income also has one of the 10 best balance sheets in the REIT sector. Remarkably resilient growth Realty Income has been able to steadily increase its dividend because it has delivered remarkably consistent growth. Since its public market listing, the company has delivered positive adjusted FFO per share growth every year, except one (2009, during the financial crisis). It has grown during periods of higher interest rates (5% compound annual FFO growth from 1996 to 2008) and low interest rates (5.4% compound annual growth from 2009 to 2022). It has also grown through multiple periods of economic stress (the Dot-com bust, the housing market crash, the pandemic, and the regional banking crisis). Two factors have contributed to its durable growth: the REIT's high-quality net lease real estate portfolio and fortress-like financial profile. Its portfolio produces stable income to pay dividends, while its financial profile allows it to expand its portfolio in any market environment. This combination of durable income and growth has added up over the long term. The REIT has paid an average dividend yield of 6% since its initial public offering in 1994. Meanwhile, it has historically delivered 5% average annual adjusted FFO per share growth. These factors have combined to provide investors with an average annual total operational return (dividend income plus adjusted FFO growth rate) of around 11%. On top of that, it has delivered valuation multipleexpansion since its IPO, which has pushed its compound annual total return to 13.6% since its public market listing. Compelling return potential from here Realty Income continues to offer investors a very bankable, high-yielding dividend, which will provide them with a low-risk base return. Additionally, the company has tremendous long-term growth potential. The total addressable market for net lease real estate in the U.S. and Europe is $14 billion. That provides the REIT with a very long runway to continue growing its adjusted FFO per share at a mid-single-digit annual rate over the long term. In addition to all that, Realty Income trades at a compelling valuation compared to other REITs. It currently sells for about 13 times its adjusted FFO, which is well below the 18x average of other REITs in the S&P 500. Realty Income trades at a discount to its REIT peers, despite consistently delivering a higher operational return compared to its peers (9.7% average over the past five years, compared to 7.7%). When taken together, Realty Income's dividend yield, growth potential, and low valuation put the REIT in an excellent position to deliver attractive total returns in the future. Because of that, it's a great all-around stock to buy if you want to maximize your return potential. Should you invest $1,000 in Realty Income right now? Before you buy stock in Realty Income, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Realty Income wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $653,702!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $870,207!* Now, it's worth noting Stock Advisor 's total average return is988% — a market-crushing outperformance compared to172%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 9, 2025
