The S&P 500 dipped last week after the Federal Reserve said it’s planning to slow the pace of its interest rate cuts in 2025. However, the index is still up 24% as we head toward the end of the year.
If you invest in the stock market, you know that its course can change from day to day. In general, it’s all a non-linear path up. But there will always be corrections and crashes, and they won’t always be expected. In the case of a Federal Reserve meeting when investors wait for the results and know they can go either way, a post-meeting rise would be in the “expected” box. But black swan events happen, and you can’t predict them.
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That’s why when you set up a stock portfolio, it’s important to have some stocks that should hold their value even in a downturn. Dividend payers are typically solid, established companies, and their stocks provide passive income. These features make them excellent stocks to have when there’s uncertainty, and since there could always be uncertainty, you should always have a few of them in your portfolio.
A sum of $200 may not seem like a lot of money to invest, but if you have it available, Agree Realty (NYSE: ADC), Ally Financial (NYSE: ALLY), and Prudential Financial (NYSE: PRU) are three excellent dividend stocks that each offer something a little different.
Agree Realy is a real estate investment trust (REIT) focused on retail. REITs are generally great dividend stocks because they must distribute at least 90% of their taxable earnings each year via dividends. Agree is a good choice because it has a high yield, it works with reliable tenants, and it pays its dividends monthly.
Another attribute that makes Agree look compelling is that it’s still small. Plenty of investors appreciate the opportunity to get in on early-stage growth stocks, and while Agree isn’t a growth stock, it’s an early-stage company with a long pathway toward growth. It owns 2,270 properties, and it works with high-quality tenants like Walmart and Tractor Supply.
Agree shares many similarities with super-REIT Realty Income, but it’s differentiating itself with its focus on omnichannel-first retailers. It’s identifying shopping trends and gearing its tenant list to match these trends and position itself for a strong future.
At the current share price, Agree’s dividend yields 4.3%, or more than three times the S&P 500’s average of 1.3%. It’s an excellent REIT with robust long-term opportunities.
Ally isn’t one of the biggest banks in the U.S., but it is the biggest online-only bank, and it has gained some attention from retail investors because it’s a Warren Buffett stock. Since Buffett usually knows what he’s doing, people pay attention to the companies he includes in Berkshire Hathaway‘s portfolio.
As a mid-size but fast-growing bank, Ally has a lot going for it. It has been under some pressure due to higher interest rates and worse-than-expected default rates, but it’s attracting customers fairly rapidly. This influx will fuel future growth, especially as interest rates begin to come down and the economic landscape becomes more favorable.
Aside from its consumer-centric banking platform, it also has the largest prime auto lending business in the country. It was once the financing arm of General Motors before the automaker spun it off, but auto loans remain a core element of the business. So while it’s only a few years old as a digital bank, it has more than a century of financial experience under its belt, making it a reliable young stock.
At the current share price, Ally’s dividend yields 3.4%, and Ally stock trades at the dirt cheap valuation of only 8 times forward earnings. That looks like a bargain for a high-yielding stock with a bright future.
Prudential offers retirement and insurance products and strategies for groups and individuals. As of the end of the third quarter, it had $1.4 trillion in assets under management in its wealth management business, which was a 14% increase year over year.
The company leverages its strengths in its three segments — wealth management, U.S., and international — to hedge its financial products in all areas. In today’s economy, that means using high interest rates to reward customers, but making even more money through its own sophisticated investing strategies.
The result is a vibrant and growing financial services giant that’s rock solid, and that is committed to passing on its earnings to shareholders via dividends. It has more than doubled its dividends over the past 10 years, and it yields 4.4% at the current share price.
Prudential stock is a pure dividend play. If you’re looking for a stock that can be an anchor in your portfolio and provide a high-yielding passive income stream, it’s a strong contender.
Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.
On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:
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Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.
*Stock Advisor returns as of December 23, 2024
Ally is an advertising partner of Motley Fool Money. Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Realty Income, Tractor Supply, and Walmart. The Motley Fool recommends General Motors and recommends the following options: long January 2025 $25 calls on General Motors. The Motley Fool has a disclosure policy.
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