Double your investment in these Two High-Yield Dividend Stocks immediately.
When a stock ventures into bear territory, risk-takers often see it as an opportunity to buy at a discount. Dividend stocks can be particularly enticing, as a lower buy price translates into a higher dividend yield on your investment. However, deciding which dividend stocks are worth investing in during a bear market can be tricky.
Let's explore two such stocks - Realty Income and PepsiCo - that are currently offering high dividend yields due to temporary challenges.
Realty Income
Realty Income, also known as "The Monthly Dividend Company," is an real estate investment trust (REIT) that specializes in single-tenant commercial properties. Despite reaching an all-time high nearly five years ago, the stock is currently 37% below its peak, likely due to the pandemic and rising interest rates.
However, investors who have bought more recently have enjoyed a high dividend yield of 6.1%, nearly five times the S&P 500 average of 1.25%. Realty Income has increased its payouts annually since it became a REIT in 1994 and continues to pay shareholders every month.
The growth Realty Income has achieved in a higher interest rate environment is impressive. Thanks to its acquisition and in-house property development, it now owns approximately 15,500 properties, which has boosted its financial performance. Quarterly revenue has risen from $414 million to over $1.3 billion, and its funds from operations (FFO) income, a measure of a REIT's free cash flow, has surged to $864 million from $277 million.
Despite these positive developments, some investors continue to punish Realty Income stock due to interest rates. However, with its growing property assets, dividends, and FFO income, it might be time to reconsider this REIT.
PepsiCo
PepsiCo, known for its flagship beverage Pepsi and a massive food business with Frito-Lay and Quaker Foods, has faced temporary challenges. Price increases have reduced demand for its products, and potential changes in product ingredients or discontinuation of offerings due to the incoming administration may further impact its business. As a result, the stock has fallen about 27% from its peak.
However, PepsiCo is taking steps to win back customers. Instead of cutting prices, it is increasing the size of its offerings and reducing variety packs to drive sales. With its lower stock price, its yield has risen to 3.8%, nearly three times the S&P 500 average.
Despite the recent struggles, PepsiCo's financials still reflect a resilient company. In the third quarter of 2024, its revenue of $23 billion fell less than 1% yearly, and its net income of $2.9 billion remained relatively stable. With its high-yielding, rising payout, and low valuation, PepsiCo might be an attractive choice for income investors.
Consider Other Dividend Stocks
Several dividend stocks are currently offering high yields due to market conditions, including Chevron, Medtronic, ExxonMobil, General Mills, and Mondelez International. Each of these companies has strong fundamentals, consistent dividend payments, and resilience in various economic conditions, making them suitable for investors seeking stable income and potential long-term growth.
[Enrichment Data: See the end of the base article for additional information on these stocks.]
In light of the current market conditions, many investors are looking to diversify their portfolios with high-yield dividend stocks. Finance experts often recommend considering stocks like Chevron, Medtronic, ExxonMobil, General Mills, and Mondelez International. These companies, similar to Realty Income and PepsiCo, have shown resilience and consistent dividend payments, making them attractive options for investors looking for stable income and potential long-term growth, even during a bear market.
When allocating funds for investing, it's crucial to consider the overall financial health and dividend policies of these companies. Analyzing their financial statements, economic data, and industry trends can help investors make informed decisions and select stocks that best fit their investment strategy and risk tolerance. By treating investing in dividend stocks as a long-term financial plan, investors can potentially benefit from both regular income and capital appreciation as market conditions change.