If you’ve got $5,000 that you can afford to invest in the stock market, you may want to consider putting that money into dividend stocks. Fears of an imminent recession are mounting, and dividend stocks can be good defensive investments. Not only can they provide some steady and recurring income, but those companies with track records of being able to consistently make these recurring payments are among the safer stock investments you can own.
Three stocks that are currently offering yields greater than the S&P 500‘s average of 1.3% are Realty Income (O -0.91%), Vici Properties (VICI -1.68%), and AT&T (T 1.44%). Here’s why they could be great options to add to your portfolio today.
Realty Income
Realty Income is a diversified real estate investment trust (REIT) that leases properties to a wide range of tenants. That diversification is what makes it such a compelling investment to hold on to for the long term — its clients are in 89 industries, helping to minimize its exposure to any single sector of the market.
The REIT reported funds from operations (FFO) per share of $4.01 for all of 2024. While that’s down slightly from 2023’s total of $4.07, it remains well in excess of its annualized dividend payout of $3.22 per share. That gives Realty Income a healthy buffer to continue paying dividends at their recent levels even if worsening economic conditions impact its financial situation.
With a yield of 5.5% at the time of this writing, this income stock would generate $275 in annual dividends on a $5,000 initial investment. Over the past 12 months, the stock has risen by 12%, and more gains could be on the way as investors look for safe, income-generating investments to buy and hold.
Vici Properties
Another REIT to consider putting in your portfolio is Vici Properties, which focuses on gaming & entertainment properties in North America, including racetracks, casinos, and bowling entertainment centers. These businesses can do well during an array of economic conditions as they provide consumers with attractive entertainment options.
In 2024, Vici reported revenue of $3.8 billion, which was an increase of around 7% from 2023. The REIT’s FFO per share of $2.56 was also higher than the $2.48 it reported in 2023, and it’s far higher than its current annual dividend rate of $1.73.
The dividend is yielding 5.3% as of this writing, which means that on a $5,000 investment, you can expect to collect approximately $265 in dividends over the course of a full year. While Vici’s portfolio of properties may not be as diverse as Realty Income’s, its stock can still be a good buy, especially given its inexpensive valuation of less than 13 times trailing earnings.
AT&T
Shares of telecom giant AT&T can also provide investors with strong recurring cash flow. Its 4.1% yield at the current share price is the lowest on this list, but that would still generate $205 in recurring income over a full year on a $5,000 investment. AT&T’s yield was higher a year ago, but the stock has risen by more than 57% in 12 months, which proportionally reduced the yield.
Investors are recognizing that AT&T’s business, and its dividend, are much safer and more stable than they appeared to be in the past. In 2024, the company’s free cash flow rose by nearly $1 billion to $17.6 billion, while it distributed $8.2 billion in dividends.
AT&T is quite capable of continuing to pay its current dividend, and it may not be surprising if the company even increases it, given how well it has been doing. This year, management is projecting low-single-digit percentage growth, which should provide investors with ongoing stability.
David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Realty Income. The Motley Fool recommends Vici Properties. The Motley Fool has a disclosure policy.
