Exploring Top Dividend Stocks Amid Market Volatility

This year has been quite unpredictable for investors, particularly as the benchmark S&P 500 experienced a dip into correction territory and neared bear market status earlier this month. Amidst uncertainty created by the Trump administration’s proposed tariffs—which could dampen business activity—market volatility has become a focal point.

Given the recent sell-off, now may be an opportune moment to consider adding dividend stocks to your portfolio. These stocks typically show a strong history of capital management, outperform their non-dividend peers, and demonstrate less volatility. Here are three solid dividend-paying stocks worth considering.

Where to invest $1,000 right now? Our analyst team has identified the 10 best stocks to buy at this moment. Continue »

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Realty Income

Realty Income (NYSE: O) appeals to many investors due to its monthly dividend payments and a solid dividend yield of 5.6%. The real estate investment trust (REIT) owns more than 15,600 properties, with tenants that include 7-Eleven, Dollar General, and Walgreens.

The company generates strong cash flow through its triple net lease agreements, wherein tenants handle costs like property taxes, maintenance, and insurance. This allows Realty Income to maintain competitive rent pricing while securing a stable cash flow.

This business model helps Realty Income create a dependable income stream, especially critical as inflation has raised costs in recent years. Renting provides tenants with the flexibility to avoid the risks tied to falling property values and asset depreciation.

However, the primary risk for Realty Income revolves around a potential slowdown in consumer spending leading to an economic downturn. This trend might harm retail tenants, potentially affecting their sales and lease agreements.

Despite these concerns, Realty Income maintains a well-diversified portfolio, with no single industry representing more than 10.2% of its annual base rent, and no tenant contributing over 3.5%. The REIT’s occupancy rate has averaged 98.2% over the last 25 years, and even during the Great Recession, occupancy never fell below 96.6%.

Digital Realty Trust

Digital Realty Trust (NYSE: DLR) focuses on providing infrastructure for cloud computing, artificial intelligence (AI), and other technology through its extensive data centers. These facilities allow companies to rent space and share resources, benefiting from enhanced security, reliable power, and efficient cooling systems without owning physical sites.

The REIT operates over 300 data centers across 50 metropolitan areas in 25 countries. It serves more than 5,000 clients, including cloud providers, financial institutions, and healthcare businesses. Nearly half of its tenants are rated investment-grade, and no single tenant contributes more than 11.5% of its annualized recurring revenue. Key clients include IBM, Oracle, JPMorgan Chase, AT&T, and Verizon.

Digital Realty is well-positioned to meet the growing demand from hyperscalers, reflecting an encouraging order book. A report by consulting firm McKinsey predicts that the demand for AI-ready data center capacity will grow at an average rate of 33% per year until 2030.

This REIT currently offers a 3.3% dividend yield, making it a potential buy-the-dip opportunity after experiencing a 25% decline from its peak in December.

Prologis

Prologis (NYSE: PLD) stands among the largest REITs globally, specializing in owning and leasing warehouses and distribution centers that support e-commerce, retail, and manufacturing sectors. Its properties streamline inventory storage and supply chain management for its tenants.

With operations across 20 countries, Prologis boasts a portfolio that sprawls over 1.2 billion square feet of logistics space catering to 6,500 clients. Major clients include Amazon, FedEx, and Walmart.

Prologis may face challenges due to tariffs affecting global trade, which could create short-term uncertainty for tenants. Nonetheless, during a recent earnings call, CEO Hamid Moghadam noted that “over the long term, limited new supply and high construction costs support continued rent growth.”

The company anticipates that e-commerce will contribute to 56% of retail sales growth in 2024. As e-commerce penetration in the U.S. is projected to rise from 24% today to 30% by 2030, this trend favors Prologis and should drive long-term demand for its logistics properties.

Currently down 23% from its recent peak in March, Prologis offers a 4% dividend yield, presenting a solid choice for long-term investors despite some near-term fluctuations.

Should You Invest $1,000 in Realty Income Right Now?

Before proceeding with an investment in Stock in Realty Income, consider the following:

The Motley Fool Stock Advisor analyst team has identified the 10 best stocks for investors at this time, and notably, Realty Income did not make the list. The included stocks have the potential to yield significant returns over the coming years.

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