Many investors are always looking for the next multibagger. While the strategy can be rewarding, it also often involves a lot of risk, tying up money that could be invested elsewhere and even incurring losses. But high-stakes investing isn’t the only way to put your money to work. The smartest investors, like Warren Buffett, look for stable stocks that can return a lot of capital to shareholders over a long period of time.
Dividend stocks in the S&P500 can be a good way to play this strategy. Over time, investors can turn pennies into dollars that can be converted into larger amounts. Here are two great S&P 500 dividend stocks that recently fell 9% and 21% that investors can buy and hold forever.
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Shares of Verizon Communications (NYSE: VZ) have fallen about 9% since peaking in early October and are lagging the broader market this year. The dip came after the company reported its third-quarter earnings results. Profit modestly exceeded expectations, while revenue disappointed due to lower sales of wireless equipment.
Investors may be concerned about Verizon’s debt load, which stood at more than $128 billion in the third quarter, although that is down from nearly $138 billion at the end of 2023. That gives Verizon a debt-to-equity ratio of about 1.32 . Investors would prefer to see this ratio lower, but for other highly leveraged companies this isn’t too worrying.
A key part of Verizon’s strategy is to increase its share of the fiber-optic Internet market, which is considered faster and more reliable than cable Internet. Although the company has work to do, it was recently acquired Border communication for $20 billion in cash. The transaction will increase Verizon’s fiber scale by adding 2.2 million fiber subscribers and bringing its total network to 25 million.
The strategy may take some time to play out, and Verizon compensates investors with a very generous 6.5% dividend yield. This dividend appears sustainable, as Verizon has increased its dividend for eighteen years in a row. The company’s quarterly payout ratio, which looks at how much of the dividend is covered by profits, can vary but is typically less than 60%. So this is a relatively safe dividend stock that investors should be able to buy and hold forever.
Ford‘S (NYSE:F) Shares are down nearly 22% from their mid-July highs this year, with earnings once again driving the decline. Ford’s profits fell short of what analysts expected due to vehicle recalls and warranty costs, which hurt profits. Ford’s electric car division also continues to lose money.
