Investing in dividend stocks can be very comforting. The passive income you receive might not add up to a big sum at first. But as your portfolio of companies continues to grow and increase dividend payments over time, you can eventually achieve a portfolio that’s paying you enough money to pay monthly bills and other expenses.
The following companies have great prospects, and all are offering above-average dividend yields. Investors could see years of income growth from Home Depot (NYSE: HD), Nike (NYSE: NKE), and Realty Income (NYSE: O). Here’s why three Motley Fool contributors believe these dividend stocks are timely buys.
Jennifer Saibil (Home Depot): If you had invested in Home Depot’s initial public offering (IPO) in 1981, you’d likely be a millionaire today. Just $100 invested at the IPO is worth $2 million today, and that’s before the dividend. With the addition of the dividend, you’d have $3.7 million.
Home Depot has paid a dividend since 1987, and it’s grown 280% over the past 10 years. At the current price, Home Depot’s dividend yields 2.1%.
What makes Home Depot such a compelling stock is that it offers stock gains plus passive income. Despite current, pressured conditions, Home Depot stock is up 30% over the past year, in line with the market. However, it’s a perennial market beater because it’s so reliable for high sales growth and profits.
In the 2023 fiscal third quarter (ended Oct. 27), sales increased 6.6% year over year. Comparable sales were down 1.3%, and earnings per share (EPS) went from $3.81 last year to $3.67 this year. However, that exceeded expectations all around and raised guidance for the full year.
Home Depot is the largest home improvement chain in the world, with 2,300 stores in North America, but it’s still opening new stores. It’s investing in its growth right now and positioning itself for stronger performance when conditions improve. It’s building out some inbound channels to better stock its national warehouses, and it made some recent acquisitions that expand its reach, such as SRS Distribution, a company that services the pro segment.
Home Depot is reliable for a growing stock price and an increasing dividend, and it’s an excellent choice for almost any investor.
John Ballard (Nike): Shares of Nike have taken a big hit this year over weak sales performance. The choppy consumer spending environment has hit some retail brands more than others. Nike’s sales were down 10% year over year in the most recent quarter.
