The market is volatile right now, but that doesn't mean you should run and hide. The key is to stick with well-run companies and to own them for the long term. If you have $1,000, or more, to put to work and can afford to sit tight for 10 years, or longer, there are good companies on sale that you might want to look at adding to your portfolio. Three top options are W.P. Carey (NYSE: WPC), Chevron (NYSE: CVX), and PepsiCo (NASDAQ: PEP). Here's a primer on each one.
1. W.P. Carey let dividend investors down
The bad news first with real estate investment trust (REIT) W.P. Carey: It reset its dividend in 2024 after the strategic decision to exit the office sector, which made up around 16% of its rents. That move strengthened the business, which is now focused on warehouse, industrial, and retail properties. But the hit to the rent roll was too high to avoid lowering the dividend. The quarter after the reset, however, the dividend got right back onto the quarterly increase cadence that existed before the reset. That shows that W.P. Carey is operating from a position of strength, not weakness.
That strength includes the opportunity to invest the cash raised from the office exit. It bought assets throughout 2024, but a lot were acquired in the back half of the year. That means that these assets will start to benefit from the top and bottom lines in 2025. W.P. Carey's lofty 5.8% dividend yield is well supported and highly likely to keep growing throughout the year. Note that the average REIT yield is only 4%, so buying W.P. Carey today gets you a well-above-peers yield backed by a well-positioned and still-growing landlord.
2. Chevron is getting hit by politics
Integrated energy giant Chevron is trying to buy peer Hess, but Hess' partnerships with other energy companies are causing problems. Chevron's dealings with Venezuela have also become a hot potato in the current global upheaval around tariffs. Investors have punished the stock, leaving it with a 5% yield compared to a 3.8% yield for its closest competitor (and Hess partner) ExxonMobil. The average energy stock, meanwhile, has a yield of just 3.1% or so.
The long-term view here, however, is what investors should focus on. First, despite the inherent volatility of the energy sector, Chevron has increased its dividend annually for 38 years. Meanwhile, it has a rock solid balance sheet, with a debt-to-equity ratio of roughly 0.15x. This gives it the financial wherewithal to deal with all the issues it's facing, including low oil prices, while continuing to invest in its business and pay its dividend. Yes, Chevron is facing headwinds, but if you think in decades, this is an opportunity to buy a very well-run energy company while it looks relatively cheap.
3. PepsiCo's growth has slowed down
Beverage, snack, and packaged food giant PepsiCo's growth got a big boost coming out of the coronavirus pandemic. The inflation during that period allowed the company to push through outsized price increases. It can't do that anymore, and its growth has slowed. On top of that, the salty snack category, where PepsiCo is the top competitor, is weak today. As if those two facts weren't enough, food companies are under pressure from a push toward healthier foods and lifestyles. PepsiCo currently has a historically high yield of around 3.8%.
PepsiCo is a Dividend King, which means it has increased its dividend annually for at least five decades. It has survived hard times before while continuing to reward investors well. In fact, it is already taking steps to get its business back on solid ground, buying up-and-coming brands Siete (a completed deal) and Poppi (a still pending deal). Siete adds in-demand Mexican American fare, while Poppi is a health-conscious beverage option. It may take a little while for PepsiCo to turn things around, but with the foundation for future growth already being laid down, it is highly likely that this globally diversified consumer staples giant will survive and thrive over the long term.
Don't focus on the market, focus on the companies
It's hard to buy stocks when Wall Street looks like it's going haywire. Geopolitical upheavals don't make things any easier. But W.P. Carey, Chevron, and PepsiCo all appear attractively priced today. More importantly, they are all well-run companies that have survived hard times before. If you have some money to put to work and plan to hold for a decade or more, history suggests buying one, or all, of these dividend stocks will work out well.
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Reuben Gregg Brewer has positions in PepsiCo and W.P. Carey. The Motley Fool has positions in and recommends Chevron. The Motley Fool has a disclosure policy.
