I love dividend stocks, but I'm fairly picky about what I buy. My preference is for companies that have proven dividend histories and relatively attractive yields. I believe that this combination suggests a promising company that is currently out of favor.
Two stocks that pass through my dividend screens today are Realty Income (O +0.10%) and Bank of Nova Scotia (BNS +0.51%). Here's a look at each one and a quick dive into Schwab U.S. Dividend Equity ETF (SCHD +0.69%), which could be a great complement to your dividend portfolio or even the only dividend investment you ever own.
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1. Realty Income is built to be boring
Realty Income is a real estate investment trust (REIT) that invests in single-tenant, net-lease properties. A net lease requires the tenant to pay for most property-level operating costs. Although any single property is high risk, the risk is very low when you spread it across the more than 15,000 properties Realty Income owns. It is the largest player in its net-lease peer group by a wide margin.
NYSE: O
Key Data Points
The company's portfolio is focused on the retail sector, where assets are easily bought, sold, and released as needed. However, it adds industrial assets and some one-off property types (such as vineyards and casinos) to increase diversification. Additionally, the company's portfolio spans the U.S. market and Europe, providing geographic diversification as well. An investment-grade rated balance sheet rounds out the foundation and positions Realty Income as a fairly safe dividend stock for even the most conservative investors.
Notably, the dividend has been increased annually for 30 years. The yield is near a 10-year high at 5.5%. The one problem with Realty Income is that it is about as exciting as watching paint dry, with management preferring to run the business in a slow and reliable manner to ensure steady dividend growth. However, if you are a conservative investor, that probably won't bother you one bit.
2. Bank of Nova Scotia is rejiggering its approach
Next up is Bank of Nova Scotia, which is more commonly referred to by its nickname Scotiabank. The stock has a 4.4% dividend yield backed by a dividend that has been paid every year since 1833. This is the kind of dividend stock you could buy and comfortably hold for the long term, since it is pretty obvious that the board of directors places a high value on rewarding investors with dividends. That said, Scotiabank is undergoing some significant changes.
While the Canadian bank's peers largely chose to invest in the U.S. market for growth, Scotiabank jumped over the country to focus on Central and South America. The hope was that the emerging markets in the region would offer more growth potential. Economic and political uncertainty, however, proved to be a problem, and Scotiabank ultimately lagged behind its peers. It is now exiting less desirable regions and refocusing on Mexico, the United States, and Canada. Things are moving fairly rapidly, noting that the dividend was held steady in 2024, to accommodate the business transition, but started to be increased again in 2025.
NYSE: BNS
Key Data Points
To be fair, Scotiabank's shares have rallied in recent months, and the dividend yield is toward the low side of the 10-year range. But the average large bank's yield is just 2.4%. If you are looking for a bank stock, Scotiabank is an attractive choice. Assuming results continue to improve, there's still plenty of room to close the valuation gap here.
3. One and done with Schwab U.S. Dividend Equity ETF
Schwab U.S. Dividend Equity ETF clearly isn't a stock. It is an exchange-traded fund (ETF). But it does something very interesting. First, it only looks at stocks with at least 10 consecutive annual dividend increases (eliminating REITs). Then it creates a composite score that examines cash flow to total debt, return on equity, dividend yield, and a company's five-year dividend growth rate. The 100 top-rated stocks get into the ETF with a market cap weighting.
Without getting into the nitty-gritty of it, the Schwab U.S. Dividend Equity ETF is essentially seeking financially strong companies that are well-managed and have attractive yields backed by growing dividends. This is essentially what most long-term dividend investors aim to do when they purchase individual stocks. You can have this ETF do it for you, and it will only cost you a tiny 0.06% expense ratio. Meanwhile, you'll collect a fairly attractive 3.8% yield without having to put in all of the work needed to manage your own portfolio.
NYSEMKT: SCHD
Key Data Points
Schwab U.S. Dividend Equity ETF could be the only dividend investment you need. Alternatively, it could be a foundational investment on which you layer high-conviction ideas, such as Realty Income and Scotiabank. Either way, it should be at the top of your dividend list right now.
Different ways to generate income
There's no one way to invest in dividend stocks. If you like boring and reliable investments, Realty Income will probably be a good fit for you. If you like turnaround stories, Scotiabank's business revamp is gaining traction. And if you simply want to keep your life simple, consider outsourcing to Schwab U.S. Dividend Equity ETF.
