3 Dividend Stocks to Buy for the Gift That Keeps on Giving

By Investor Empires On Dec 14, 2024

Investing in dividend stocks can be very convenient. the Passive income The amount you receive may not amount to much at first. But as your portfolio of companies continues to grow and dividend payments increase over time, you can eventually achieve a portfolio that pays you enough money to pay your monthly bills and other expenses.

The following companies have great prospects, and all offer above-average dividend yields. Investors can see years of income growth from Home Depot (NYSE: HD), Nike (NYSE: NE)and Real estate income (NYSE:O). That’s why three Motley Fool contributors believe these dividend stocks are buys at the right time.

Jennifer Seibel (Home Depot): If you had invested in Home Depot’s IPO in 1981, you would likely be a millionaire today. An investment of just $100 in an IPO would be worth $2 million today, and that’s before dividends. Adding in the profits, you would have $3.7 million.

Home Depot has paid a dividend since 1987, and has grown 280% over the past 10 years. At the current price, Home Depot’s dividend is 2.1%.

What makes Home Depot a compelling stock is that it offers stock gains as well as passive income. Despite the current and stressful conditions, Home Depot stock is up 30% over the past year, in line with the market. However, it is a perennial market beater because it is highly reliable for significant growth in sales and profits.

In the third quarter of fiscal 2023 (ending October 27), sales increased 6.6% year-on-year. Comparable sales fell 1.3%, and earnings per share (EPS) rose from $3.81 last year to $3.67 this year. However, this beat expectations everywhere and raised guidance for the full year.

Home Depot is the world’s largest home improvement chain, with 2,300 stores in North America, but it is still opening new stores. It is investing in its growth right now and positioning itself for stronger performance when conditions improve. It’s building some inbound channels to improve its national warehouse stocking, and has made some recent acquisitions that expand its reach, such as SRS Distribution, a company serving the professional sector.

Reliable for its rising stock prices and growing profits, Home Depot is an excellent choice for almost any investor.

John Ballard (Nike): Nike shares have taken a big hit this year due to poor sales performance. The volatile consumer spending environment has affected some retail brands more than others. Nike’s sales fell 10% year over year last quarter.

Some of the decline in sales was self-inflicted, as management shifted its product mix away from classic styles, such as the Air Force 1, Air Jordan 1, and Dunk. But customer traffic is still below management’s expectations at Nike Direct, including in the stores and digital platforms the company operates.

For dividend investors, this is a great time to consider buying stocks. The stock has a long history of delivering outstanding returns, and the trailing return is the highest since 2009. Even with declining sales this year, the company still generated more than $5 billion in net profits over 12 months to fund the dividend payments. Last quarter, Nike returned $1.8 billion to shareholders through dividends and stock repurchases.

The company can grow for a long time, because it operates in a growing industry worth $358 billion, according to Statista. Additionally, Nike CEO Elliott Hill, who just took over in October, can revitalize the brand and return the business to growth.

With shares trading at a reasonable valuation and offering its highest yield in 15 years, Nike investors should benefit from a balance of capital appreciation and income for years to come.

Jeremy Bowman (real estate income): If you’re looking for dividend stocks to keep on giving, it’s hard to find a better option than Realty Income.

This real estate investment trust (REIT) may not be a household name, but you’ll certainly be familiar with its tenants, which include the likes of 7-Eleven and Walgreens.

The company specializes in three-way leases, which means tenants pay for maintenance, insurance and property taxes. He also favors recession-resistant companies like the department stores and pharmacies mentioned above.

This business model makes Realty Income one of the safest REIT stocks, and one of the most reliable dividend payers. First, it’s one of the few companies that pays a dividend on a monthly basis, which is a favorite of some investors because it makes it easier to match dividend income with monthly bills.

Realty Income also has a track record of raising its dividend every quarter – again, something few dividend payers do. In September, it raised the quarterly dividend from $0.767 to $0.789, an increase of 2.9%, its 108th consecutive quarterly dividend increase. Realty Income now offers an attractive 5.7% dividend yield.

Finally, as a real estate investment trust, the company should also benefit from lower interest rates, which will make it cheaper to borrow money and easier for it to refinance its existing debt.

Realty Income’s upside may be more limited than other REITs, but it’s hard to find a better option if you’re looking for a generous yield and consistent, reliable dividend growth.

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Jennifer Seibel He has no position in any of the stocks mentioned. Jeremy Bowman He has positions at Nike. John Ballard He has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Home Depot, Nike, and Realty Income. The Motley Fool has Disclosure policy.

3 dividend shares to purchase to purchase the gift that keeps on giving Originally published by The Motley Fool