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2 Top Dividend Stocks to Buy and Hold Forever
ORealty Income(O) The Motley Fool·2024-09-25 09:25

Group 1: Realty Income - Realty Income is known as "the monthly dividend company" due to its 12 annual dividend distributions, offering a yield of 5.13%, significantly higher than the S&P 500 average of 1.32% [2] - The company focuses on stable industries such as grocery stores, convenience stores, and dollar stores, making it resilient in various economic conditions, especially with a 35% recession probability forecasted by J.P. Morgan Chase [3] - Realty Income has a market cap of 54billion,makingittheseventhlargestREITglobally,whichmayposechallengesinfindingnewpropertieswhilemaintainingqualitystandards,althoughinternationalexpansionpresentslongtermopportunities[4]Approximately11.254 billion, making it the seventh largest REIT globally, which may pose challenges in finding new properties while maintaining quality standards, although international expansion presents long-term opportunities [4] - Approximately 11.2% of Realty Income's annual rent is derived from the U.K., indicating that Europe is expected to play a more significant role in the company's future business [5] Group 2: Phillip Morris International - The tobacco industry is traditionally favored by income-focused investors due to its habit-forming products, which maintain consumer demand regardless of economic conditions [5] - Phillip Morris is transitioning from traditional combustible cigarettes to alternative products like Iqos, which heats tobacco instead of burning it, in response to health-related challenges [6] - In the second quarter, Phillip Morris reported a 9.6% increase in net revenue to 9.5 billion, driven by a 13.1% volume increase in heated tobacco products and a 20% increase in oral nicotine products, with the smoke-free segment achieving a gross profit margin of 22.2% compared to 5.5% for combustibles [7] - The company offers a dividend yield of 4.47% and has increased its payout for 15 consecutive years, although it has suspended share repurchases until at least 2026 to focus on debt reduction following a $16 billion acquisition of Swedish Match in 2022 [8] Group 3: Investment Comparison - Both Realty Income and Phillip Morris International are considered excellent long-term investments, but they cater to different investment strategies [9] - Realty Income provides a larger dividend yield and a more stable business model, while Phillip Morris is expected to achieve greater stock-price appreciation through its shift to higher-margin alternative products [9]