1 Magnificent S&P 500 Dividend Stock Down 35% to Buy and Hold Forever

Core Viewpoint - Old Dominion Freight Line (ODFL) has experienced a significant stock decline of approximately 35% from its 52-week high, despite maintaining a strong balance sheet and reliable dividend growth [1][2]. Financial Performance - In the second quarter of 2025, Old Dominion reported a 6% year-over-year revenue decline and a 14% decrease in earnings per share, attributed to reduced freight volumes leading to higher fixed costs [4]. - The operating ratio increased to 74.6%, up from 71.9% in the same quarter last year, indicating rising operational expenses relative to revenue [4]. Pricing Power and Service Quality - Despite the revenue drop, Old Dominion managed to increase revenue per hundredweight (excluding fuel surcharges) by over 5%, showcasing its ability to protect pricing power [5]. - The company maintained elite service levels, achieving 99% on-time deliveries and an industry-best cargo claims ratio of just 0.1% [5]. Dividend Strategy - The board declared a quarterly dividend of $0.28 per share, reflecting a 7.7% increase from the previous year, with a current yield of approximately 0.7% [7]. - In the first half of 2025, Old Dominion generated around $622 million in operating cash flow, with $119 million allocated to dividends, allowing for reinvestment and buybacks [7]. Shareholder Returns and Capital Expenditure - Old Dominion returned about $543 million to shareholders in the first six months of 2025, with $425 million through share repurchases [8]. - The company committed approximately $450 million in capital spending for the year, focusing on real estate, service-center expansion, and acquiring tractors and trailers [8]. Strategic Positioning - Old Dominion's balanced approach of returning cash to shareholders while investing in network expansion positions it well for future freight demand recovery [9]. - The company’s disciplined capital allocation and low debt levels contribute to its resilience and competitive advantage in the trucking industry [10]. Long-term Outlook - Despite potential prolonged freight cycles and valuation pressures, Old Dominion continues to invest in growth while competitors may pull back, allowing it to gain market share [11]. - The current stock price, approximately one-third below its recent high, presents a buying opportunity for long-term investors seeking quality and value in an S&P 500 dividend stock [11].