The market is trading near record highs, which can make it difficult to find attractively priced stocks to buy. But fear not: There are strong options available, even for investors who like dividend stocks. This is why income investors will want to consider buying, or even doubling, Real estate income (NYSE:O), Hershey (NYSE:HSY)And Hormel food (NYSE: HRL).
1. Realty Income just increased its dividend
Realty Income is the largest net-lease real estate investment trust (REIT). A net lease requires the tenant to pay most of the operating costs at the property level, which, which simplifies things considerably, allows the landlord to sit back and just collect the rent. While each individual property carries high risk, net leases are typically single-tenant properties, so for Realty Income’s 15,400 properties the risk is very low.
Add to that an investment-grade rated balance sheet, a globally diversified portfolio, and thirty years of annual dividend increases, and dividend investors are likely to find the backstory here very compelling.
That said, the rapid rise in interest rates has been a headwind for the REIT sector, which uses leverage to finance real estate purchases. Investors have lowered even the biggest and best REITs, leaving Realty Income with a 5.5% yield. That’s near the highest level in the past decade, suggesting the stock is on a sell-off today.
But don’t think there’s a problem: Realty Income just raised its monthly dividend payout (again). This REIT is performing well, even despite higher interest rates.
2. Hershey’s chocolate is getting more expensive
Hershey is an icon in the confectionery field. The consumer goods company has increased its dividend annually for fifteen years, with an impressive annualized dividend growth rate of around 10% over the past decade. And the yield of 2.6% is historically attractive. The company’s growth plans include continued innovation efforts across its core portfolio, expanding into salty snacks and entering global markets with the most prominent brands. So far so good.
The problem is that Hershey is facing an extraordinary increase in the price of a key commodity, cocoa. But so far the company has been able to pass the rising costs on to consumers without much difficulty. And the huge increase appears to have been at least partly driven by speculation. So this problem is likely to diminish over time.
Then there’s the potential headwind of new weight-loss drugs, which work by suppressing appetite. Still, it seems unlikely that chocolate lovers will stop eating chocolate altogether. But Wall Street remains concerned that Hershey has passed its peak and is pushing shares sharply lower. This chocolate giant could be an excellent choice for investors with a contrarian bent.
3. Hormel regains its position
One quarter doesn’t show a trend, but Hormel (the maker of SPAM) saw broad strength across its business in the first quarter of fiscal 2024. Each division saw volume gains after a period of weak performance. To be fair, the company still faces significant headwinds from inflation, a slow COVID recovery in China, bird flu, and a downturn in the nut segment of the snacks sector. While that seems like a long list of problems, and it is, each individual problem is likely temporary. If you think about decades from now, this food producer’s current price could be a good entry point.
Why? For starters, Hormel is a Dividend King with 58 years of annual dividend increases under its belt. And second, the collection of negative numbers mentioned above has pushed the dividend yield to an all-time high 3.1%. That said, the strong first quarter is starting to make long-term investors more interested in the stock. In other words, you should probably consider taking action now if owning a Dividend King with historically high yields is an attractive thought to you.
Don’t miss these dividend stocks
Even when the market is near record highs, discerning investors can find attractively priced dividend stocks. You just have to do a little digging and perhaps be willing to invest in stocks that are facing temporary headwinds. That’s exactly why Realty Income, Hershey, and Hormel have high yields and why you should probably consider doubling down on these iconic companies while you still can.
Should you invest €1,000 in real estate income now?
Consider the following before purchasing shares in Realty Income:
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Reuben Gregg Brewer has positions in Hershey, Hormel Foods and Realty Income. The Motley Fool holds positions in and recommends Realty Income. The Motley Fool recommends Hershey. The Motley Fool has a disclosure policy.
3 Dividend Stocks to Double Now was originally published by The Motley Fool
