Stability and income are two things that often go overlooked by investors, so it may be time to focus on some income stocks. Time and again, statistics show that those investors who choose stability outperform those who seek higher returns in the long run.
Few things better represent stability than the ability of a company to pay dividends quarter after quarter and year after year consistently. Further, dividends provide cash, which income seekers appreciate.
That cash is useful as a tool for reinvestment or simply as a means by which to pay for goods that have risen in price. Whatever the case, these stable stocks provide cash and income to be used as an investor sees fit.
Income Stocks: Realty Income (O)
Realty Income (NYSE:O) remains one of the best stock choices that produce cash for income seekers. The company pays a monthly dividend, which is pretty unusual given that quarterly dividends are the norm.
Currently, that results in a monthly dividend of 25.65 cents. Given the monthly distribution, it can lead to higher returns due to the more significant number of reinvestment periods. Realty Income’s business model is relatively straightforward, and its simplicity is its beauty. The company uses long-term net lease agreements with which it secures its tenants.
Net lease agreements shift the responsibility for expenses like taxes, maintenance, and insurance onto the tenant, which leads to apparent benefits for Realty Income.
Realty Income focuses on long-term agreements with highly creditworthy tenants, stabilizing its business model. Further, the company is geographically diversified, with properties across the United States and Europe. It has paid dividends uninterrupted and unreduced since 1994, making it a dividend aristocrat. O stock appears to have momentum in its favor and has trended upward since the beginning of November.
McDonald’s (NYSE:MCD) and many other consumer discretionary stocks have benefited tremendously over the past year. Inflation may be high, but consumers continue to pay prices, whether it be for snacks or fast food.
That truth is reflected in McDonald’s most recent earnings report. It showed that overall global comp sales increased by 8.8%, with U.S. sales up 8.1% and international markets even stronger.
McDonald’s shares may not produce an extraordinary amount of income with a dividend that yields 2.3%. However, the company is so strong that it shouldn’t be overlooked. The reason to believe that McDonald’s will continue to grow isn’t simply that revenues were strong in the most recent quarter. McDonald’s intends to increase its store count by 10,000 by 2027. If it succeeds, it will represent the fastest period of growth in the company’s history.
Meanwhile, the company recently began testing its CosMc’s restaurants. The model can potentially add high-margin sales to its top line.
NextEra Energy (NEE)
I remain a big fan of NextEra Energy (NYSE:NEE) stock overall. It’s arguably the best balanced investment for those looking to safely capture the potential of green energy. The company comprises the largest utility company globally and the largest wind and solar company globally.
So, NextEra Energy is afforded stability through its Florida-based utility firm, which provides electricity in the state while also being heavily invested in wind and solar energy.
The company also pays a dividend yielding just over 3%, Which isn’t low at all relative to some utility firms. Its shares continue to rebound after a weak fourth quarter, which saw utility firms struggle as bond yields swelled to historical highs. That made utility companies and stocks relatively unattractive by comparison. Their steady dividends were no longer enough to attract investor capital, and share prices fell as a result. Today, though, bond yields have fallen, and there’s a strong case to be made that utility stocks like NEE will rebound strongly in 2024.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.