When you're just starting to invest, it's easier to begin with small sums and build slowly as your experience grows. Plenty of excellent stocks trade for under $100. Of course, you might be able to buy fractional shares of certain high-priced stocks, but not all brokers provide that service. You don't have to invest in high-risk penny stocks, either.
Two stocks in just right sweet spot to consider now are Coca-Cola (KO +1.05%), which traces its founding back to the late 1800s, and Realty Income (O 0.09%), which was started more than 50 years ago. More than venerable companies, they have put themselves in positions for continued success, making them worthy of becoming part of your long-term holdings. Let's see why.
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1. Coca-Cola
Coca-Cola (KO +1.05%) has well-known and immensely popular beverages. It sells five out of the world's six best-selling soda brands. But the company doesn't merely rely on soda, which is subject to changing tastes and health trends. Coca-Cola also distributes other products, such as water, coffee, tea, and dairy- and plant-based beverages.
The company continues to expand its market share. Coca-Cola's adjusted sales, which removes foreign currency translation effects and acquisitions/divestitures, increased by 11% in the latest quarter, ended in September 2023. While higher prices and a changing mix accounted for 10 percentage points, increased volume was responsible for the balance.
NYSE: KO
Key Data Points
A mature company, Coca-Cola may not experience breakneck revenue increases. But higher revenue has led to increased profitability, with adjusted operating income growing by 15%, supporting dividends. Coca-Cola has also increased its dividend for 61 straight years, making the stock a Dividend King.
Coca-Cola's free cash flow of $7.9 billion was more than ample to pay the $4.1 billion of dividends. The stock has a 3.1% dividend yield, about double the S&P 500's 1.5%.
2. Realty Income
As a real estate investment trust (REIT), Realty Income must pay out at least 90% of its taxable income as dividends. For income-seeking investors, this provides a good structure for regular payouts.
The company currently gets about 83% of its rental payments from the retail sector. While that may unnerve some investors given the growing popularity of online shopping, management has done a nice job mitigating that risk.
The company seeks out tenants with minimal threats from e-commerce, such as grocery, dollar, and home improvement stores, and its occupancy levels have been around 99%. It also received a 6.9% increase on expiring leases in the third quarter.
NYSE: O
Key Data Points
Management has announced that it will acquire Spirit Realty Capital, which has properties like distribution centers, data centers, and industrial storage in addition to retail space, for $9.3 billion. The deal will diversify Realty Income's real estate portfolio.
Realty Income pays a monthly dividend, and has raised it consistently over time. In December, the board of directors hiked the payment from $0.256 to $0.2565, marking 105 straight quarterly increases. Management expects its adjusted funds from operations, a measure of cash available for distribution, to come in at about $4 per share compared to $3.08 at the new annual dividend rate. The stock sports a 5.4% dividend yield.
If you're looking for dividend stocks that you can buy for under $100, Coca-Cola and Realty Income top the list. Both have shown the willingness and ability to raise payments regularly. That should provide comfort during even the most trying times.
