Unlocking the Power of Dividend Stocks
Dividend-paying companies have long been a staple of the S&P 500, offering investors a steady stream of income and a sense of stability in turbulent markets. While many of these top dividend stocks have recently reached new heights, there are still opportunities to be found in overlooked gems that have struggled of late but show signs of resilience.
Two Hidden Gems Worth Considering
AT&T (NYSE: T) and Realty Income (NYSE: O) are two dividend payers that have faced challenges in recent years but are now poised for a comeback. Despite their struggles, both companies have made significant strides in improving their financials, making them attractive options for investors seeking a mix of income and growth potential.
AT&T: A Telecom Giant on the Rise
After unwinding bad investments and shedding its media segment, AT&T has made significant progress in reducing its debt load and generating sufficient free cash flow to cover its dividend costs. The company’s $1.11 per share annual dividend may not be as enticing as it once was, but its 5.1% yield and improving financials make it an attractive option. Moreover, AT&T’s strong performance in the first three quarters of 2024, including 1.2 million postpaid phone net additions and a low churn rate, suggests that the company is finally turning a corner.
Realty Income: A REIT with a Unique Edge
Realty Income, a real estate investment trust (REIT), owns over 15,500 single-tenant, net-leased properties, providing a steady stream of revenue. Despite the challenges posed by higher interest rates, the company has continued to develop properties and expand its portfolio, including the acquisition of Spirit Realty in 2023. Realty Income’s monthly dividend has increased periodically, and its current yield of 5.2% makes it an attractive option for income seekers.
Why These Stocks Are Worth Holding Forever
Both AT&T and Realty Income offer investors a unique combination of income and growth potential. With their improving financials, strong performance, and attractive yields, these stocks are worth holding onto for the long haul. As the market continues to evolve, these companies are well-positioned to thrive, making them excellent additions to any dividend-focused portfolio.
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