Investing in profitable companies when their stock prices provide high returns can be very rewarding in the long run. If you have a few hundred dollars that you don’t need to reduce debt or cover other living expenses, there are solid companies with attractive offers. Dividend returns now.
Real estate income (NYSE:O), goal (NYSE: TGT)and Philip Morris International (NYSE: M) It has much higher dividend yields Standard & Poor’s 500 Average 1.24%. That’s why three Fool.com contributors think they’re smart buys for 2025 and beyond.
Jennifer Seibel (real estate income): Realty Income is one of the best stocks to own at any time, but 2025 could be a big year for the real estate industry overall, and Realty Income’s business could be stronger than usual.
Realty Income is a real estate investment trust (REIT). This is a structure in which companies pay out 90% of their profits as dividends, which is why REITs are great dividend stocks. The typical situation is that they own properties and rent them out, usually to a specific sector. Realty Income is a retail real estate investment trust that leases properties to retail chains such as… Walmart and Home Depot.
Since it rents mostly to high-quality tenants selling necessities, it has shown resilience over the past five years, starting with the pandemic and ending with the recent poor real estate climate. The occupancy rate is 98.7%, and it rarely drops below that.
It has become one of the largest REITs in the world with more than 15,000 properties, and is growing through a combination of buying new properties and acquiring smaller REITs. It has a comfortable cash position to maintain and has set plenty of new goals to expand and fund its dividend.
There are several reasons why Realty Income is one of the best REITs out there. One is the strength of its actions. Great dividend stocks start with an established business. Other features to add on top of this are a long history of raises, reliable payouts and a high return.
Realty Income has paid a dividend for 654 consecutive months, and has raised it for 109 consecutive quarters. It’s one of the few companies that pays a monthly dividend, which is an added feature that makes it even more attractive. Dividend yields are 5.9% at the current price, which is well above the S&P 500 average, and higher than many REITs.
Often times, when a REIT’s dividend yield becomes too high, it is a red flag and comes with risks. Realty Income stock has fallen on consumer pessimism about the real estate industry, but it is managing effectively through the turmoil. The yield is usually high, but is higher than average due to short-term concerns. This is more of an opportunity to buy the dip, which investors should not miss. It’s an opportunity to buy premium all-weather stock that pays rain or shine with high yields, and every month to boot.
John Ballard (goal): Cautious consumer spending has weighed on many retailers, including Target, over the past year. Cautious shopper and other cost pressures resulting from port strikes weighed on Target’s business and stock performance.
For a long-term dividend-focused investor, it’s a good buying opportunity. Target has paid a dividend since 1967, which speaks volumes about the strength of its retail operations.
The stock currently offers an attractive forward dividend yield of 3.24% at a share price of $138, yet the company pays out only 47% of earnings as dividends. This suggests that Target can maintain and grow its profits for years to come.
People will be in the spending mood again. To its credit, Target is still seeing positive traffic to its stores, but a 2% decline in average ticket prices dragged down comparable store sales, which grew just 0.3% year over year last quarter. Management cited weakness in the apparel and home categories, but this should provide an opportunity for growth when the economy improves.
Longer term, Target should leverage its focus on exclusive products through partnerships and increased sales through its Target Circle 360 program, which helped drive nearly 20% growth in same-day delivery last quarter.
Overall, Target’s history of paying dividends, increasing profits, and delivering value to shoppers should provide shareholders with growing passive income for many years.
Jeremy Bowman (Philip Morris): If you have less than $200 to invest in the stock market, and you’re looking for dividend stocks to buy, I can think of few better options than Philip Morris.
Tobacco stocks have outperformed major competitors such as… Altria and British American Tobacco By successfully focusing on next-generation products such as iQOS heat-not-burn tobacco sticks and Zyn nicotine pouches, which it acquired in 2022 through its acquisition of Swedish Match. In fact, next-generation products now make up nearly 40% of the company’s revenue.
Fueled by strong growth in those categories and a strong performance in its traditional cigarette business, which supplies brands like Marlboro to international markets, Philip Morris stock jumped 28% in 2024 and appears poised for further growth in 2025.
The company has just begun selling iQOS in the US after acquiring its distribution rights from Altria, and is investing in Zyn’s new manufacturing capacity in the US, showing its confidence in the continued growth of nicotine pouches. In the third quarter, the company reported 17% organic growth in smoke-free products. Total revenue rose 11.6% on an organic basis to $9.9 billion, as the company also had its highest market share in combustibles since its spin-off from Altria in 2008. Organic operating income rose 14% to $3.7 billion, and Its profits. Per stock guidance for the year.
Like other global stocks, Philip Morris stock fell after the election, as investors fear a stronger dollar will put pressure on the company’s results. This reaction seems exaggerated, since Philip Morris has little exposure to tariffs and operates in a recession-resistant industry.
After this pullback, the stock now offers a 4.5% dividend yield and is trading at a reasonable price-to-earnings ratio of 19. With momentum building in products like iQOS and Zyn, the stock looks like a solid buy for 2025, especially for market insiders. Investors looking for dividend income.
Before you buy shares of Realty Income, consider the following:
the Motley Fool stock advisor The analyst team has just defined what they think it is Top 10 stocks For investors to buy now… and Realty Income wasn’t one of them. The 10 stocks that were discounted could deliver huge returns in the coming years.
Think when Nvidia I prepared this list on April 15, 2005… If you invested $1,000 at the time of our recommendation, You will have $885,388!*
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Jennifer Seibel He has no position in any of the stocks mentioned. Jeremy Bowman He has positions at Target. John Ballard He has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Home Depot, Realty Income, Target, and Walmart. The Motley Fool recommends British American Tobacco Plc and Philip Morris International and recommends the following options: long January 2026 $40 calls on British American Tobacco and short January 2026 $40 calls on British American Tobacco. The Motley Fool has Disclosure policy.
3 Higher Dividend Stocks to Buy in 2025 for $200 Originally published by The Motley Fool