Neha Chamaria, The Motley Fool
5 min read
In This Article:
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Investing in dividend stocks is one of the best ways to supplement your income.
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You can find some truly magnificent dividend stocks within the S&P 500 index.
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Make the most of any opportunity you get and buy some of these stocks while they're still down.
Dividends have contributed nearly 31% to the total returns of the S&P 500 (SNPINDEX: ^GSPC) index since 1926. That number alone proves what a great investment dividend stocks can be, provided you choose ones that pay regular dividends and preferably increase them over time.
The S&P 500 index itself has some of the finest dividend stocks, many of which have a long track record of dividend increases and have grown investors' money manifold over time. Buying some of these stocks while they're down could turn out to be one of your best investment moves. If you're wondering where to find them, here are three such magnificent S&P 500 dividend stocks that are down between 20% and 33% from their all-time highs to buy now and hold.
Realty Income (NYSE: O) is a magnificent dividend stock in the true sense. Realty Income has paid a monthly dividend for 30 consecutive years and increased it for 110 consecutive quarters now. The stock yields a solid 5.8%.
While real estate investment trusts (REITs) typically prioritize dividends, Realty Income takes so much pride in its monthly payments that it even calls itself "the monthly dividend company." Realty Income's dividend goal says it all: It aims to "deliver dependable monthly dividends that increase over time," backed by cash flows it earns from long-term net lease agreements.
Realty Income has a massive global portfolio of over 15,000 real estate properties it leases under triple net leases. That means its tenants bear major property-related expenses, such as insurance, property taxes, maintenance, and utilities, while Realty Income sits back and collects rents. It's a high-margin business. To top that, the REIT's properties are spread across 91 industries. The diversity helps the company navigate business downcycles.
Its business model, portfolio, and commitment to dividends make Realty Income one of the best dividend stocks in the S&P 500 that you could buy now and hold forever. With the stock now sitting almost 33% below its all-time highs, it's a great time to buy.
NextEra Energy's (NYSE: NEE) management recently said it will be "disappointed" if the company doesn't deliver close to or at the "top end" of its guidance range for 2025, 2026, and 2027. Between 2024 and 2027, the company expects to grow its adjusted earnings per share by 6% to 8% annually. It also expects operating cash flow to grow at an even faster clip and aims to raise its annual dividend by around 10% through at least 2026.
