Investors gravitate towards dividend stocks for varied reasons. These companies offer consistent quarterly payouts, providing a reliable income stream. The reinvestment of dividends stands out as a proven method to amass wealth over the long haul. What’s more, dividend-paying firms tend to be more resilient and financially robust, offering a degree of immunity in the face of economic downturns.
Keeping these compelling factors at the forefront, let’s delve into two high-yield dividend stocks that harbor considerable upside potential and merit immediate consideration.
A Realty Empire Expanding its Horizons
Realty Income (NYSE: O), a real estate investment trust (REIT), stands as a stalwart associate to globally renowned corporations. Focused on commercial real estate, the company boasts a hefty portfolio comprising over 15,540 properties predominantly in the U.S. and the U.K.
Often misconceived, Realty Income operates on a more stable foundation than most investors acknowledge, with 90% of its total rent contributors resilient against economic slumps and shielded from e-commerce headwinds—critical attributes for fostering customer loyalty over the long haul.
Central to its ethos, Realty Income has consecutively upped its dividend for 108 quarters, boasting a 4.3% compound annual growth rate (CAGR) in payouts since 1994. Following its latest bump, the dividend yield now stands at a generous 5%.
Chart source: Realty Income
Beyond its attractive dividend yield, Realty Income boasts avenues for expansion, including venturing into other sectors within the U.S. like data center development.
Moreover, the REIT holds promising opportunities in Europe beyond its core U.K. assets. Management envisions a $14 trillion global total addressable market for net lease properties, with nearly $60 billion in top-quality acquisition prospects already identified. Realty Income emerges as a prime dividend stock equipped with a 5% yield, growth prospects in the U.S. and Europe, and a stable business buttressed by recession-resistant properties.
EV Challenges Offset by Ford Pro Inspiration
Ford Motor Company (NYSE: F) shines as an intriguing dividend stock for myriad reasons. Trading at a modest 10.8 price-to-earnings ratio (P/E), it boasts a robust 5.5% dividend yield, characterized by a history of lucrative additional payouts in cash-rich scenarios. Ford’s potential for growth emanates from two primary fronts: its model e electric vehicle (EV) unit and the burgeoning Ford Pro segment.
With Ford Pro at the forefront, the company has molded its commercial arm into a flourishing high-margin growth endeavor. During the second quarter, this division raked in $2.6 billion in earnings before interest and taxes (EBIT), outshining Ford Blue—the traditional gasoline vehicle segment—in generating only $1.1 billion.
Boasting an EBIT margin of 15.1% vis-à-vis Ford Blue’s 4.4%, Ford Pro witnessed a 9% revenue uptick in Q2, tripling the wholesale growth rate and signaling robust pricing power.
While Ford Pro burgeons and presents an upward trajectory within the company, its model e division, responsible for EVs, confronts a contrary scenario. Projections by management hint at potential losses amounting to $5.5 billion by 2024.
To mitigate these substantial losses, Ford has curtailed or axed around $12 billion in EV investments. As battery costs dwindle and EV scale intensifies, financials are poised for improvement, especially as EVs gradually gain market share from conventional vehicles. Even achieving breakeven in the EV segment will catalyze a significant bottom-line uptick for the automaker.
The Ideal Investment Opportunity
Both entities present a tempting 5%-plus dividend yield, coupled with substantial upside potential for long-term investors. Realty Income harbors ample growth prospects in the U.S. and Europe, while Ford stands to enhance its financial outlook by trimming losses in its EV division and nurturing the thriving Ford Pro unit.
Contemplating a $1,000 Investment in Ford Motor Company?
Prior to delving into Ford Motor Company stocks, it’s prudent to consider the following:
The analyst team at Motley Fool Stock Advisor has pinpointed what they consider the 10 best stocks for investors to snap up presently… and notably, Ford Motor Company didn’t make the list. The selected top 10 stocks hold potential for substantial returns in the foreseeable future.
Remember when Nvidia earned this accolade on April 15, 2005… imagine investing $1,000 at the time of the recommendation; you’d be sitting on $743,952*!
Stock Advisor offers investors a straightforward roadmap to success, supplying guidance on portfolio construction, periodic insights from analysts, and two fresh stock picks each month. The Stock Advisor service has outperformed the S&P 500 fourfold since 2002*.
*Stock Advisor returns as of September 23, 2024
