Since the market is now trading close to its all-time highs, it may be challenging to discover stocks at affordable prices. But investors who prefer Dividend Stocks also have good possibilities, so don’t lose hope. Here’s why income investors should purchase Realty Income (NYSE: O), Hershey (NYSE: HSY), and Hormel Foods (NYSE: HRL)—or even double up on them.
1. Realty Income just increased its yield
Realty Income is the most prominent net lease real estate investment trust (REIT). By requiring the tenant to pay the bulk of property-level operating costs, a net lease simplifies matters. The owner may now just focus on collecting rent. Although there is a significant risk associated with any one property, net leases are often for single-tenant buildings, therefore when taking into account Realty Income’s 15,400 properties, the risk is comparatively low.
Dividend investors will probably find this company’s history particularly appealing given its highly varied organization, investment-grade credit rating on its balance sheet, and thirty years of continuous dividend increase.
However, the rapid rise in interest rates has caused problems for the REIT industry, which relies on leverage to finance real estate transactions. Investors have driven down the rates of even the largest and greatest REITs; Realty Income currently offers a 5.5% return. The stock is currently inexpensive, as evidenced by the fact that those are not too distant from the peaks of the previous ten years.
But don’t go in expecting to take a chance because Realty Income has increased its monthly dividend (again). This REIT is still performing admirably despite the increased rates.
2. The price of Hershey’s chocolate is skyrocketing.
In the candy industry, Hershey is a household name. The consumer staples firm has grown its dividend every year for the last fifteen years, achieving a remarkable ten-year annualized dividend growth rate of around 10%. Moreover, the 2.6% yield has historically been appealing. The company’s growth strategies include continuing to innovate its core offering, branching out into salty snacks, and using its most well-known brands to penetrate international markets. Everything is going OK so far.
The issue is that the cost of cocoa, a crucial ingredient, has increased dramatically for Hershey. However, the business has thus far had little issue passing on growing expenses to customers. Furthermore, conjecture appears to be a contributing factor in the significant increase. Thus, this problem should become better with time.
Then there is the possible adverse effect of newly developed appetite-suppressive weight-loss medications. Even said, it doesn’t seem probable that chocolate enthusiasts will give up the confection entirely. Wall Street, however, is still concerned that Hershey has outlived its appeal and is driving down the stock significantly. For investors that lean contrarian, this massive chocolate company could be a fantastic option.
3. Hormel is recovering its foothold
Hormel, the business that makes SPAM, reported notable commercial success in the first quarter of its fiscal year. One quarter often does not, however, point to a trend. Every industry experienced a rise in volume following a time of poor performance. To be honest, the firm continues to confront serious obstacles from the COVID-19 pandemic, inflation, the avian flu, and a downturn in the nut sector of the snacking market.
Even if it looks like a large list of worries, most are most likely only temporary. Examining the current expenses of this food industry across several decades could be a good place to start.
Reasons? Hormel is an income king, to start with, having increased revenues for 58 years running. Furthermore, the plethora of negative factors already covered has led to an extraordinary 3.1% dividend yield.
Nevertheless, long-term buyers are beginning to show interest in the firm after its strong first quarter. Put otherwise, if you believe you may benefit from owning a Dividend King with a historically high yield, you should give it considerable thought.
Grab these dividend stocks before they disappear.
Even during market highs, discriminating investors may find dividend stocks at a reasonable price. All you have to do is delve a bit and maybe be prepared to invest in stocks that are experiencing short-term setbacks.
That’s precisely the reason Realty Income, Hershey, and Hormel offer strong yields and you should probably think about doubling down on these well-known businesses while you can.
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Source
Yahoo Finance
