Stocks that pay dividends are attractive to many investors, as they typically feature strong financials and provide above-average yields, offering shareholders consistent income. This can help cushion portfolio losses during market downturns and accelerate growth when dividends are reinvested.
However, not every dividend or dividend-paying stock is the same. Two notable options with impressive yields and growth prospects are Realty Income ( O 0.50%) and Ford Motor Company ( F -0.59%).
Diversification sets Realty Income apart
Realty Income is a widely diversified real estate investment trust (REIT) known for its consistent dividend increases and strong growth, making it appealing to investors. Since its public debut in October 1994, the company has bumped up its monthly dividend an astonishing 131 times. Even more impressive, it has raised dividends every quarter for 111 straight quarters, spanning over three decades—currently offering a solid 5.5% yield.
One key strength of Realty Income is its robust financial position, which allows it to spend billions annually on new acquisitions. The company invests in new developments, acquires other REITs, purchases properties through sale-leaseback deals, and has expanded into sectors like data centers and casinos. Realty Income estimates a tremendous $14 trillion investment opportunity in commercial real estate across the U.S. and Europe.
Another major advantage is Realty Income’s well-balanced portfolio, which includes 1,630 clients across 91 industries. Additionally, over 90% of its rental income is protected from e-commerce disruption and is mostly resistant to economic slowdowns, helping it maintain steady returns for investors.
With its solid financial foundation and wide-ranging property portfolio, Realty Income is well-positioned to continue increasing its dividend, helping shareholders build wealth over time.
Ford is driving toward an electric future
Ford, a major global car manufacturer, sells millions of vehicles each year in numerous markets and provides investors with a strong 5.1% dividend yield, plus occasional special dividends for even more income. The company also holds growth potential as the auto industry shifts toward electric vehicles.
Ford F-150 Lightning. Image source: Ford Motor Company.
Ford’s future upside depends in part on making its electric vehicle (EV) division profitable. In 2023 and 2024, the company’s Model-e segment, which handles EVs, posted losses of $4.7 billion and $5.1 billion, respectively. Ford is ramping up its efforts to turn a profit and lower costs on EVs, with $2 billion allocated to upgrade its Louisville Assembly plant and another $3 billion being spent on a new battery facility in Michigan. The company is also revamping its manufacturing process to increase speed and efficiency.
"Ford's plan is extremely ambitious, since it involves both a new manufacturing approach and an all-new vehicle," said Patrick Anderson, founder of Michigan-based Anderson Economic Group, in an interview with CBS MoneyWatch. "If they can successfully launch a production line with 40% fewer workstations and 20% fewer parts, that would truly be a 'Model T moment'."
While this transformation will require significant time and resources, if Ford is able to make its EV segment profitable, it could greatly enhance its earnings, potentially leading to higher dividends in the future.
Takeaways for dividend-focused investors
Not every dividend stock is the same, but both Ford and Realty Income offer generous yields and the possibility for stock price gains due to growth. Realty Income provides stability and growth via diversification and a huge real estate opportunity, while Ford is well-positioned to boost its profits. Both companies represent solid long-term investments for those seeking income.
