The recent market pullback sent some quality dividend stocks lower, pushing their yields higher in the process. If you're looking to generate some income with the potential for capital appreciation, this could be a good time to increase your exposure to some attractive situations.
Realty Income (O 0.26%) and Camping World (CWH +0.29%) are providing healthy cash distributions for their investors, but that's just part of the bullish thesis. The catalysts are also there for share price upticks, opening the door for higher payouts in the future. Let's take a closer look.
NYSE: O
Key Data Points
1. Realty Income
This is the only real estate investment trust -- or REIT -- in this list. It's also the one with the largest dividend, currently yielding a healthy 5.6%. Realty Income operates a portfolio of 15,621 commercial real estate properties. With consumer confidence sliding in recent months, it's worth pointing out that non-discretionary businesses make up most of its portfolio. Realty Income estimates that roughly 91% of the lease payments that it collects is from retailers and service providers that are either recession resilient or are not challenged by e-commerce.
Convenience stores, supermarkets, and dollar stores make up its three largest industry concentrations, combining to contribute nearly 27% of its collectable rent. Despite its all-weather portfolio, the shares have declined in each of the last three years. Things didn't go so well with last month's fourth-quarter report. Its adjusted funds from operations missed analyst expectations, and the same can be said about its guidance for the year ahead.
This is still a timely pick here. Despite the soft quarter, it still boosted its monthly dividend last month. This is something that it has now done 130 times since going public 31 years ago. Its 2025 forecast for adjusted funds from operations is still comfortably ahead of its forward dividend rate, so there's no reason why the disbursements won't keep inching higher as the year plays out.
Approaching Realty Income solely as a dividend play would be a mistake. Even after sliding for three consecutive years, the stock has been a market beater over longer stretches of time. Investors have been treated to a compound annual total return of 13.4% since the REIT went public in 1994. Put another way, the lion's share of its returns have come from capital appreciation. It has delivered 29 consecutive years of positive total operational return (the sum of its earnings per share and its total distributions). With the stock trading slightly higher in 2025, it's in a good place to end the investment's three-year losing streak.
Image source: Getty Images.
2. Camping World
If you have a bleak view of the current state of affairs -- fearing that the escalating tariffs will usher in a closed economy era of autarky and fiscal protectionism -- can I interest you in an RV? Recreational vehicles have been a strong play for the graying of America, but what happens if there's a spike in interest to trade international getaways for domestic travel? RVs should see a boost in momentum, and Camping World happens to be the country's leading retailer in new and used motorhomes, travel trailers, and fifth wheels, but it only has 11% share of the market. It believes it can stretch that to 12% in 2025.
Camping World's stock and its dividend used to be higher. Its payout rate has fallen 80% over the past two years, and it's still yielding a respectable 2.8%. Its annual operating profit has also plummeted nearly 80% since peaking in 2021 when Camping World delivered its strongest revenue growth as a public company.
Camping World is in better shape than you think. Analysts see a return to revenue growth after back-to-back years of top-line declines. It has generated back-to-back quarters of beats on both ends of the income statement, and the company is trading for 21 times this year's projected earnings and less than 12 times next year's profit target. Not to live in the past, but this top dog in a fragmented industry is trading for less than 3 times what it earned in 2021. There's a clear path to a recovery in its business and a potentially dramatic boost to its dividend. These wheels were made for rolling.
