Dividend stocks can provide you with some valuable income on a recurring basis. And the more you invest, the more you can collect in dividends. Given the decline in the stock market of late, now may be a great time for investors to scoop up some quality income stocks at attractive valuations.
Three high-yielding stocks you may want to consider loading up on right now are Realty Income (NYSE: O), United Parcel Service (NYSE: UPS), and Bank of Nova Scotia (NYSE: BNS). Here's how investing $17,000 into these stocks can set you up to earn more than $1,000 in annual dividends.
1. Realty Income
Realty Income offers investors an attractive dividend that yields 5.8%, which is more than four times what you would get with the average stock on the S&P 500(SNPINDEX: ^GSPC) at a 1.4% yield. By investing $5,000 into the real estate investment trust (REIT), you could collect around $290 per year in dividends from the stock.
REITs can be attractive options for dividend investors because they can generate not only recurring income, but also provide you with some stability. As long as tenants are paying their rent, a REIT will typically be in strong financial shape.
And with Realty Income, investors get some valuable diversification. By having more than 1,500 clients in its portfolio, Realty Income may not be as vulnerable to a downturn as other, less diversified REITs may be.
Realty Income is a rarity in that it pays its dividend on a monthly basis (most dividend stocks pay quarterly). Plus, it has increased its dividend 130 times since going public in 1994.
The REIT posted solid results for 2024, with its funds from operations per share coming in at $4.01, which was only down slightly from the $4.07 it reported in the previous year. With good stability and a monthly dividend, Realty Income can make for an excellent option for any dividend investor.
2. United Parcel Service
United Parcel Service, better known as just UPS, is another dividend stock I'd put on my buying list right now. Its yield is up to 6.7%, and investing $6,000 into it would generate more than $400 in annual dividends.
Shares of UPS fell in late January when the company posted its latest earnings numbers and said it would be cutting its Amazon deliveries by more than half. While that may sound like a bad development, it could end up being a great one for business, as CEO Carol Tomé says that helps guide the company toward more profitable contracts. And at the end of the day, profitability is what is of key importance to dividend investors, as opposed to just top-line growth.
It's a hard but important decision for UPS to come to, which comes at a key time, as economic conditions may deteriorate this year due to tariffs and trade wars. The stock's payout ratio is up around 100%, and a greater focus on profitability will give it some much-needed breathing room and more room for increases. UPS raised its quarterly dividend by $0.01 earlier this year, and the company has either increased or at least maintained its payout since it went public in 1999.
3. Bank of Nova Scotia
Another top dividend stock to own is Bank of Nova Scotia, also known as Scotiabank. What's remarkable about Scotiabank is the reliability it offers. It has been paying dividends continuously since 1833 and makes for a dependable dividend stock to buy and hold over the long term. Over the past decade, it has increased its dividend at an average rate of 5%.
The company has been a staple in the Canadian banking sector, and it consistently generates strong earnings and stable growth. In the trailing 12 months, its net income has totaled 7.2 billion Canadian dollars, approximately 22% of its top line. With a healthy profit margin and a dominant position in the banking industry, this is one of the safest income stocks you can buy and hold for the long term.
The Canadian-based bank's dividend yields 6.4%. By investing $6,000 into the stock, you could collect approximately $384 in dividends per year. Combined with the other investments on this list, that would put your total annual dividend income at a little over $1,070 from investments totaling $17,000.
Should you invest $1,000 in Realty Income right now?
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Realty Income. The Motley Fool recommends Bank Of Nova Scotia and United Parcel Service. The Motley Fool has a disclosure policy.
