Key Points
Diversification and dividends can be investors' best friends. A well-chosen collection of dividend stocks could safeguard your hard-earned money and help you build lasting wealth.
To aid your search for these passive income generators, here are two top dividend-growth stocks that are particularly attractive buys today.
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Dividend stock to buy No. 1: Walt Disney
From theme parks to cruise ships to streaming video services, Walt Disney (NYSE: DIS) provides its shareholders with many ways to profit. Better still, the entertainment giant's diversified business segments also help to reduce the risks for investors.
Operating income in Disney's experiences division, which houses its theme parks, resorts, cruise lines, and consumer products businesses, jumped 13% year over year to $2.5 billion in the quarter ended June 28. Disney intends to invest tens of billions of dollars in the coming years to expand its highly profitable theme parks around the world. The recently announced resort in Abu Dhabi and a slate of new attractions at Disney's other parks should help to drive revenue and profit growth higher in the decade ahead.
Streaming is set to fuel additional earnings growth. Disney debuted its much-awaited ESPN direct-to-consumer streaming service on Aug. 21. For $29.99 per month, subscribers can gain access to all of ESPN's TV networks, including popular shows like SportsCenter and roughly 47,000 live sporting events per year. Additionally, for the first 12 months, customers can bundle the new ESPN streaming service with Disney+ and Hulu (with ads) for the same price.
For its part, management sees the company's operating profit for its direct-to-consumer segment reaching as high as $1.3 billion in fiscal 2025. In turn, Disney's companywide adjusted earnings are projected to increase by 18% to $5.85 per share. That's an impressive rate of growth for a business of Disney's size, one that should continue to support a rising stock price and sustained dividend growth.
Dividend stock to buy No. 2: Realty Income
Real estate can be another excellent source of passive income. But buying and renting houses or commercial properties often comes with a host of headaches and unforeseen costs for individual investors. Realty Income (NYSE: O) offers a better way to profit from this wealth-building asset class -- and without the pains of being a landlord.
Realty Income operates as a real estate investment trust (REIT). REITs must pass at least 90% of their taxable income on to shareholders. For Realty Income, these hefty cash payouts amount to an annual forward dividend yield of 5.5%.
Like Disney, Realty Income believes in diversifying its revenue streams. The REIT owns 15,600 commercial properties that it leases to more than 1,600 different clients across 91 separate industries. This broad customer diversification lessens the risks for Realty Income's shareholders.
Moreover, this prudently managed REIT caters to companies with defensive business models that hold up well during challenging economic times. Grocery, convenience, drug, and discount retail stores count among the top 10 industries Realty Income serves. Major customers include 7-Eleven, CVS Health, and Walmart.
Realty Income's occupancy rates have thus not dipped below 96% dating back to 1992. The REIT, in turn, has earned its place as one of the most reliable and consistent dividend payers available in the stock market today. Since its founding in 1969, Realty Income has rewarded its shareholders with 662 consecutive monthly dividends, along with 111 straight quarterly payout raises.
In the months and years ahead, lower interest rates -- a major aim of President Donald Trump -- could further boost the REIT's profits. Realty Income would welcome the opportunity to obtain growth financing at more attractive rates. And investors would no doubt cheer the larger dividends that would likely follow.
Should you invest $1,000 in Realty Income right now?
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Realty Income, Walmart, and Walt Disney. The Motley Fool recommends CVS Health. The Motley Fool has a disclosure policy.