After watching the benchmark S&P500 If the index rises 24% in 2023, investors might assume that all the good stocks are out of their price range. Nothing could be further from reality. Just $100 is more than enough to buy any of the high-yielding dividend stocks on this list.
The companies behind these three actions offer dividend payments that have been increasing steadily for years. They are also well-positioned to continue increasing their payouts in the years to come. Read on to see why they look like smart stocks to buy now for almost any investor who wants to start generating a passive income stream.
Real estate income
Real estate income (NYSE:O) is one of the largest real estate investment trusts (REIT) which collects rent from commercial buildings which it owns but which it does not operate. As a REIT, it can legally avoid paying income taxes if it distributes substantially all of its profits to shareholders as dividends.
At recent prices, Realty Income offers a dividend yield of 5.4% and sends payments every month. Last December, the company increased its payouts for the 105th consecutive quarter.
The steadily increasing cash flows reported by Realty Income for decades appear likely to continue. The company has tenants sign net leases that transfer all variable costs of owning the building, such as maintenance and taxes, to the tenants. With annual rent increases built into long-term leases, cash flow is highly predictable as long as tenants can make ends meet.
Realty Income’s large and diverse portfolio has impressed credit rating agencies. The REIT benefits from an A3 rating of Moody’s this allows it to borrow at significantly lower rates than its smaller peers.
Realty Income shares have risen since the Federal Open Market Committee indicated potential interest rate cuts in December. Despite the rise, the stock still trades at about 13.7 times funds from operations (FFO), an earnings metric used to value REITs. This valuation is more than fair and makes the stock look like a smart buy right now.
Altria Group
If you think Realty Income has a long history of collecting dividends, wait until you hear about Altria Group (NYSE:MO). Last August, the tobacco giant which markets the leading Marlboro brand in the United States increased its dividend for the 58th time in 54 years.
At recent prices, Altria shares offer a mind-blowing 9.6% dividend yield. The stock is under pressure as investors worry about the proliferation of flavored e-cigarettes that the company cannot sell.
The U.S. Food and Drug Administration (FDA) banned fruity flavors that teens and adults seem to prefer in 2020. Until recently, enforcement of the ban has been weak. From now on, however, popular flavored vaping products, such as Elf Bar, may become much harder to find.
Last year, Altria Group acquired NJOY, which is the only pod e-cigarette with FDA marketing authorization. With the assistance of Altria’s highly experienced legal team, NJOY filed lawsuits against 34 manufacturers, distributors and retailers of illicit vaping products last October.
In addition to extensive litigation aimed at keeping illicit vaporizers out of the U.S. market, the FDA joined forces with Customs and Border Protection in December. Together, the agencies seized 41 shipments of illegal e-cigarettes.
Altria Group reported adjusted earnings per share up 3.3% in the first nine months of 2023. With increasing enforcement of the FDA’s flavor ban, NJOY sales could generate even more revenue. growth in the coming years, but the stock price does not reflect this opportunity. .
Altria Group shares trade at just 8.2 times current earnings. Picking up a few shares at this bargain price seems like a relatively safe way to increase your passive income stream.
Coca-Cola
Coca-Cola (NYSE:KO) is one of the few companies with a longer history of consecutive annual dividend increases than Altria. Last February, the leader in sugary sodas increased its dividend for the 61st consecutive year.
At recent prices, Coca-Cola offers a dividend yield of 3.1% and a very good chance of seeing more dividend increases in the coming years. In North America, sugary sodas have long been losing popularity, but the company’s well-known brands allow it to offset falling volumes with higher prices. During the first nine months of 2023, revenue in North America increased 8% year-on-year, although sales volume remained stable.
Coca-Cola is counting on rising prices to maintain its revenues in North America, but that is not the case everywhere. In Latin America, volume increased 7% year-over-year in the first nine months of 2024. The combination of increased volume in Latin America and price increases everywhere increased total revenue by 8% over the same period.
At recent prices, you can buy Coca-Cola for 24 times current earnings. This multiple implies steady growth ahead, but at a slower pace than we have seen. Powerful brands give the company a strong chance of continuing to grow at a high single-digit percentage in the years to come. Buying this stock now to hold it for the long term seems like a smart move for almost any income-seeking investor.
Should you invest $1,000 in real estate income right now?
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Cory Renauer has no position in any of the stocks mentioned. The Motley Fool holds positions and recommends Moody’s and Realty Income. The Motley Fool recommends the following options: Long January 2024 $47.50 calls on Coca-Cola. The Motley Fool has a disclosure policy.
3 High-Yielding Dividend Stocks You Can Buy for Under $100 Right Now was originally published by The Motley Fool
