The market is trading near its all-time highs, which can make it difficult to find attractively priced stocks to buy. But fear not, there are some great options out there, even for investors who like dividend stocks. Here’s why income investors will want to consider buying, or even doubling down on, Real estate income (NYSE:O), Hershey (NYSE:HSY)And Hormel Foods (NYSE:HRL).
1. Realty Income just increased its dividend
Realty Income is the largest net rent confidence in real estate investment (FPI). A net lease requires the tenant to pay most of the operating costs at the property level, which, greatly simplifying things, allows the landlord to simply collect the rent. While any individual property is high risk, net leases are typically single-tenant properties, so of Realty Income’s 15,400 properties, the risk is very low.
Add to that an investment-grade balance sheet, a globally diversified portfolio, and 30 years of annual dividend increases, and dividend investors will likely find the context here very attractive.
That said, rapidly rising interest rates have been a hurdle for the REIT sector, which uses leverage to finance its real estate acquisitions. Investors pushed down even the biggest and best REITs, leaving Realty Income with a 5.5% yield. This figure is near the highest levels over the past decade, suggesting the stock is on sale today.
But don’t think there’s a problem – Realty Income just increased its monthly dividend (again). This REIT is doing very well, even in the face of higher rates.
2. Hershey’s chocolate is getting more and more expensive
Hershey is an icon in the confectionery industry. THE consumer goods company has increased its dividend every year for 15 years, with an impressive annualized growth rate of around 10% over the past decade. And the 2.6% yield is historically attractive. The company’s growth plans include continued innovation efforts in its core portfolio, expansion into the savory snacks sector and a push into global markets with its most prominent brands. So far, so good.
The problem is that Hershey is facing an extraordinary increase in the price of a key input, cocoa. But so far, the company has managed to pass on the rising costs to consumers without much difficulty. And this massive increase appears to be at least partly due to speculation. So this problem will probably improve over time.
Then there are the potential downsides of new weight-loss drugs, which work by suppressing the appetite. Still, it seems unlikely that chocolate lovers will stop eating it altogether. But Wall Street remains concerned that Hershey is past its peak and is pushing the stock lower. This chocolate giant could be a great choice for contrarian investors.
3. Hormel regains its footing
One quarter doesn’t constitute a trend, but Hormel (the maker of SPAM) saw widespread strength across its business in the first quarter of its 2024 fiscal year. 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, avian flu, and a slowdown in the nuts segment of the snacks sector. Although this seems like a long list of problems, which it indeed is, each individual problem is likely to be temporary. If we think in decades, this food maker’s current price could be a good entry point.
For what? For starters, Hormel is a dividend king with 58 years of annual dividend increases behind it. Second, all of the negative factors mentioned above pushed the dividend yield up to a historically high level of 3.1%. That said, the strong first quarter has started to get long-term investors more interested in the stock. In other words, you should probably consider acting now if owning a Dividend King with a historically high yield sounds attractive to you.
Don’t Miss These Dividend Stocks
Even when the market is near record highs, savvy investors can find dividend stocks at attractive prices. You just need to do a little digging and, perhaps, be willing to invest in stocks facing temporary headwinds. This is 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 right now?
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Ruben Gregg Brewer holds positions in Hershey, Hormel Foods and Realty Income. The Motley Fool posts and recommends Realty Income. The Motley Fool recommends Hershey. The Mad Motley has a disclosure policy.
3 Dividend Stocks to Double Right Now was originally published by The Motley Fool
