I don't know about you, but during turbulent market times, dividend stocks are at the top of my buy list. That's not to say that dividend-paying stocks don't experience volatility along with the rest of the market, but companies with a solid history of not only distributing but also increasing their dividends, in both bull and bear markets, are particularly intriguing buys to increase overall returns and generate more capital.
On that note, if you have $1,000 to invest -- and you don't need it for any near-term bills, to build up your emergency fund, or to pay off high-interest debt -- you could split it to invest in several shares of these two powerhouse dividend stocks.
1. Apple: A tech behemoth that keeps on growing
Apple's (AAPL -0.57%) 0.7% dividend yield doesn't look all that tempting, but it's easy to see why this stock is a go-to for many investors. Not only has Apple generated a total return of 180% for investors over the past three years (compared to the S&P 500's total return of 32%), but it's also increased its dividend by nearly 20% during that period.
Shares of Apple have taken a beating recently following a report from Bloomberg that the tech giant is scaling back iPhone 14 production, and a subsequent downgrade of the stock from a Bank of America analyst. Even so, a more objective look at the situation reveals that the reaction investors have had may be an overreaction.
It's reasonable to expect that in the current macroeconomic environment, consumer spending -- particularly on discretionary items -- will see some decisive pullback. It would be naive to think that even Apple could be completely immune to fluctuations in consumer spending.
Over the long term, Apple's diverse and profitable business structure, not to mention its huge, loyal customer base should continue to drive enviable growth for both its balance sheet and its long-term investors. In January, Apple said it had an installed base of 1.8 billion devices. On the latest quarterly conference call with analysts, Apple executives did not give a number but noted "an all-time record for our installed base of active devices."
According to a recent report by Counterpoint Research, Apple controls 57% of the global premium smartphone market. Even with the economic weakness we're seeing right now, Apple still reported record revenue in the most recent quarter, and that record number of installed devices.
In the first nine months of 2022, Apple's net sales rose 7.7% year over year, while net income increased 6.7%. Not only that, but of all its business segments, the iPhone and services (including Apple TV+ and Apple Music) categories generated the highest sales -- $162.9 billion and $58.9 billion, respectively, -- in the nine-month period.
While Apple's dividend yield may not be nearly as high as those of other staunch dividend payers, the company's commitment to maintaining and regularly increasing its payout -- which it has by more than 140% over the last decade -- is attractive for income investors. That, coupled with its diverse business that for more than four decades has remained on the cutting edge of tech innovation help make a long-term investment in this compelling business worth considering.
Apple trades for about $140 per share, so a $500 investment would get you about 3.5 shares.
2. Realty Income: A monthly dividend payer
Another fantastic dividend-paying investment, Realty Income (O 1.46%) is a real estate investment trust (REIT) with an impressive portfolio of single-tenant properties distributed across North America and Europe. Currently, Realty Income generates an annual yield of a mighty 5.1% for investors.
Like other REITs, Realty Income's structure requires it to pay out no less than 90% of its taxable earnings as shareholder dividends. Founded in 1969, Realty Income has a dividend history so impressive that the company is one of the Dividend Aristocrats, having not only maintained but increased its dividend every year for 28 years and counting.
Realty Income is one of a handful of dividend stocks that pays its dividend out monthly, rather than quarterly. And since becoming a publicly traded company 28 years ago, it has boosted its dividend 117 times in total.
The REIT leases its portfolio of more than 11,000 commercial properties to over 1,100 clients in dozens of industries, including grocery stores, convenience stores, drug stores, and restaurants. Its tenants include the likes of Walgreens Boots Alliance, FedEx, Dollar General, and 7-Eleven. While tenants in certain industries like restaurants may be more vulnerable in the event of a recession, the industries from which Realty Income garners its highest concentration of rent are grocery stores, convenience stores, and dollar stores, which remain go-to locations for consumers, even when spending is down.
In the most recent quarter, Realty Income's revenue, net income, and adjusted funds from operations (FFO), the most useful metric to evaluate a REIT's profitability, rose by 75%, 79%, and 78% respectively, on a year-over-year basis. Looking back over the past decade, Realty Income's annual revenue and FFO have increased by 329% and 344%.
If you're searching for a reliable dividend stock to buy and hold for many, many years, few can compete with the consistency and stability that Realty Income offers. Realty Income trades for about $60 per share, so $500 would get you about eight shares.
