It’s been quite a year for the S&P 500. The index has risen 21% since January.
Big gains get a lot of attention, but not all stocks perform well. PepsiCo (NASDAQ: PEP) was flat, while Alexandria Real Estate Equities (NYSE: ARE) stock fell 10%. While this may give some investors pause, the decline presents a buying opportunity for long-term investors, especially those looking for dividends.
These three companies are doing well, and investors can receive dividends while waiting for stock prices to recover. Let’s dig deeper into why you should consider adding them to your long-term stock holdings.
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1. PepsiCo
PepisiCo produces beverages, snacks, and ready-to-eat foods under brands such as Pepsi, Gatorade, Doritos, Quaker Chewy, and Rice-A-Roni. They remain popular with consumers and the retailers who stock their shelves.
However, revenue growth has slowed recently. In the third quarter (ending Sept. 7), adjusted revenue, which excludes items such as currency translation, rose 1.3%. This was due to price increases, which increased by 3 percentage points while volume decreased by 2 points. And investors are reacting to stock prices lagging far behind the broader market.
But that doesn’t seem to be because consumers specifically turned away from PepsiCo products. This is evidenced by the fact that other consumer product companies, such as McDonald’s, have also reported poor performance due to consumer costs. With inflationary pressures easing, normal purchasing behavior should return, which would benefit PepsiCo.
Meanwhile, management has been closely monitoring expenses. Adjusted earnings per share increased 5% in the third quarter.
Patient investors can enjoy receiving dividends while waiting for sales growth to accelerate. In a positive sign, the board increased quarterly payments by 7% earlier this year. Amazingly, this marks the 52nd consecutive year of dividend increases, making this stock a Dividend King.
Paying $5.42 per year, this stock has a dividend yield of 3.2%. This is much higher than the S&P 500’s 1.3%.
2. Alexandria Real Estate Stock
Alexandria Real Estate Equities is a real estate investment trust (REIT) that owns office real estate. Investors are certainly not satisfied with this year’s performance, as the company’s stock price has fallen by double digits. While the office sector has challenges, including pressures from the popular work-from-home movement that took hold in the wake of the coronavirus outbreak, Alexandria is uniquely positioned as tenants need to provide stable rent payments and cash flow. in a position.
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We rent to life sciences companies located in major research centers such as New York, Boston, San Francisco, Seattle, and North Carolina’s Research Triangle. Tenants include multinational pharmaceutical companies, life science product and service providers, and public biotechnology companies. Fortunately, maximum impact usually requires face-to-face work and collaboration. After all, scientists must use expensive laboratory equipment that is difficult to transport.
You can see this by looking at the occupancy rate. The company’s property occupancy rate was 94.6% in the second quarter. Alexandria’s second-quarter adjusted funds from operations (FFO), a key cash flow metric for REITs, totaled $2.36 per share in the latest quarter, an increase of 5.4% year-over-year. Management expects adjusted FFO per share to be between $9.41 and $9.53 this year, up from $8.97 in 2023.
Alexandria has been increasing its dividend for years. Most recently, starting in July, the company raised its quarterly dividend from $1.27 to $1.30. The stock has a dividend yield of 4.5%, which is good compared to other REITs. The FTSE Nareit All Equity Index yielded 3.6% at the end of September.
Should you invest $1,000 in PepsiCo right now?
Before buying PepsiCo stock, consider the following:
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Lawrence Rothman, CFA, has no position in any stocks mentioned. The Motley Fool has a position in Alexandria Real Estate and recommends Alexandria Real Estate. The Motley Fool has a disclosure policy.
2 Great S&P 500 Dividend Stocks, From Flat to 10% Down to Buy and Hold Forever Originally published by The Motley Fool
