It's been a roller coaster year for investors, with the benchmark S&P 500 dipping into correction territory and flirting with a bear market earlier this month. With the Trump administration vowing to implement tariffs that might depress business activity, volatility has taken center stage.
Given the sell-off, now is a good time to consider adding dividend stocks to your portfolio. These companies display a history of strong capital management, outperform their non-dividend counterparts, and exhibit less volatility. Here are three excellent dividend payers to consider buying today.
Image source: Getty Images.
Realty Income
Realty Income (O 0.95%) is appealing to investors because of its monthly dividend payment. The real estate investment trust (REIT) has a dividend yield of 5.6%, backed by its retail property footprint, which includes over 15,600 properties and tenants like 7-Eleven, Dollar General, and Walgreens.
Realty Income generates strong cash flow by using triple net leases, meaning tenants are responsible for property taxes, maintenance, and insurance. As a result, it can offer lower rents while still producing a steady cash flow.
NYSE: O
Key Data Points
This business model creates a reliable income stream since the company doesn't have to absorb property costs, which can fluctuate over time. This has been particularly important in recent years, when insurance costs and other expenses have risen with inflation.
Tenants benefit from renting because it lets them avoid risks associated with declining property values and asset depreciation. It also provides greater flexibility to relocate or close down operations without the burden of managing the property.
The risk for Realty Income is a slowdown in consumer spending leading to a widespread economic downturn. This could affect retailers, which could see sales dip, causing them to consolidate operations and break leases.
That said, the REIT has a well-diversified portfolio spread across tenants in various industries. No one industry makes up more than 10.2% of its annual base rent, and no tenant accounts for more than 3.5%.
The company has maintained a strong portfolio, and its average occupancy rate during the past quarter-century is 98.2%. Even during the Great Recession nearly two decades ago, Realty Income never saw occupancy dip below 96.6%.
Digital Realty Trust
Digital Realty Trust (DLR +0.24%) provides infrastructure for cloud computing, artificial intelligence (AI), and other technology through its data centers. Companies can rent space in these facilities, and the arrangement lets businesses share resources. They benefit from enhanced security, a reliable power supply, and effective cooling systems without the need to own their facilities.
NYSE: DLR
Key Data Points
The REIT operates more than 300 data centers in 50 metropolitan areas in 25 countries. Some of its more than 5,000 customers include cloud providers, financial institutions, healthcare companies, and technology services. Nearly half of Digital Realty's tenants have an investment-grade rating, and no one tenant makes up more than 11.5% of its annualized recurring revenue. Its customers include IBM, Oracle, JPMorgan Chase, AT&T, and Verizon.
The company should continue to enjoy robust demand from hyperscalers, as seen by its order book. According to consulting firm McKinsey, the need for AI-ready data center capacity will rise at an average rate of 33% annually by 2030.
Digital Realty offers a dividend of 3.3% and looks like another buy-the-dip opportunity following its recent 25% decline from its December peak.
Prologis
Prologis (PLD 0.19%) is one of the largest REITs in the world. It owns and leases warehouses and distribution centers and provides space for e-commerce, retail, and manufacturing businesses. Its facilities help these companies store inventory and manage their supply chains effectively.
NYSE: PLD
Key Data Points
The company operates properties across key locations to meet the increasing demand in these markets. It has a global presence, with properties in 20 countries serving 6,500 customers and over 1.2 billion square feet of logistics space. Some of its major tenants include Amazon, FedEx, and Walmart.
The company could feel the impact of tariffs because tenants rely heavily on global trade for the products they sell and could face some short-term uncertainty as customers take a cautious approach. However, during its recent earnings call, Chief Executive Officer Hamid Moghadam said that "over the long term, limited new supply and high construction costs support continued rent growth."
In 2024, e-commerce accounted for 56% of the sales growth forn retail goods. The strength of e-commerce trends favor Prologis and should drive demand for logistics real estate in the longer term. The company projects that U.S. e-commerce penetration will reach 30% by 2030, up from 24% today.
Prologis is down 23% from its recent March peak and offers a dividend of 4%. While it may face some near-term uncertainty, this dividend stock is a solid choice for long-term investors today.
