Key Points

• PepsiCo's stock popped after the company reported unexpectedly strong second -quarter 2025 earnings.

• The stock remains mired in a deep downturn.

• One quarter isn't a trend, but this Dividend King has proved it knows how to adapt over the long term.

• 10 stocks we like better than PepsiCo ›

PepsiCo (NASDAQ: PEP) announced second-quarter 2025 earnings that were stronger than Wall Street expected. The stock popped 6% the next day, which is great. But it is a typical short-term, news-driven move that probably shouldn't be too important to long-term investors.

The bigger story here is that the stock remains well off its highs, which makes it a buy if you are worried about a bear market. Here are three reasons why.

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1. PepsiCo is a consumer staples company

PepsiCo makes beverages, salty snacks, and packaged foods. It owns some of the most iconic brands around, including Pepsi, Frito-Lay, and Quaker Oats.

Its size, distribution strength, marketing prowess, and research and development acumen make it a valuable partner to retailers around the world. It is highly unlikely that PepsiCo goes away anytime soon.

Image source: Getty Images.

And there's a key feature here that is important to remember: PepsiCo makes affordable products that are bought regularly and have high brand loyalty among customers. This is the core of why consumer staples companies are resilient to economic downturns and are often sought out by investors as safe havens during bear markets. PepsiCo's business, while it will vary a bit over short periods of time, is really fairly stable, with a slight growth bias over the long term.

If you are worried about a bear market, consumer staples stocks are a great place to go fishing for new investments. Notice that statement is broad and not specific to PepsiCo. Which brings up the next point: its stock price.

PEP data by YCharts.

2. It's already in its own bear market

Without getting too deep into the details, PepsiCo hasn't been firing on all cylinders lately. Some of its peers, notably Coca-Cola (NYSE: KO), have been performing better. Thus, Wall Street has been downbeat on PepsiCo's stock.

Even after the pop following unexpectedly strong second-quarter 2025 earnings, shares remain down more than 20% from their 2023 highs. A bear market is when the broader indexes fall 20% or more, so PepsiCo is kind of in its own private bear market already.

A market-wide downturn could easily lead investors to seek out safe havens, like already downtrodden consumer staples makers. PepsiCo could quickly find itself gaining favor again in that scenario.

And even if that positive shift doesn't happen, given the already deep drawdown, it seems likely that the stock wouldn't suffer as much as the broader market in a downturn.

3. PepsiCo has a proven record of survival

The final reason to consider buying PepsiCo if you are worried about a bear market is its status as a Dividend King. With over five decades of annual dividend increases, the company has proved it knows how to survive bear markets, recessions, and whatever else the world can throw at it. Simply put, you don't create a dividend record like that by accident.

On this front, you might also want to pay attention to the stock's historically high dividend yield of around 4% or so. Basically, you are getting paid very well to own this reliable dividend stock, and that can help you wait out a broader market downturn without losing your cool.

PepsiCo is muddling through again

To reiterate, PepsiCo is not operating at the top of its game right now. That said, it is making moves to get back into form, including cutting costs and acquiring new, more relevant brands, among other things.

It is basically doing the right things from a business perspective. Add that to what is really a pretty reliable business, the deep decline in the stock price, and an attractive dividend yield, and this dividend stalwart looks like a buy even if you aren't worried about a bear market!

Should you invest $1,000 in PepsiCo right now?

Before you buy stock in PepsiCo, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and PepsiCo wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $636,628!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,063,471!*

Now, it’s worth noting Stock Advisor’s total average return is 1,041% — a market-crushing outperformance compared to 183% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of July 21, 2025

Reuben Gregg Brewer has positions in PepsiCo. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Key Points

• Realty Income is a large and high-yield net lease REIT.

• The stock is likely to be a slow and steady tortoise.

• Don't underestimate the power of dividend reliability.

• 10 stocks we like better than Realty Income ›

If you invested $10,000 in Realty Income (NYSE: O) at the turn of the last century, it would be worth around $56,000 today. That is a long way off from $1 million, but don't look at this result in a vacuum. The truth is, Realty Income has outperformed the S&P 500 index (SNPINDEX: ^GSPC) over that span. And even if Realty Income can't repeat that feat, there's still a very good reason to own this high-yield real estate investment trust (REIT). Here's what you need to know.

Times have changed, but history is important

Back at the turn of the century, REITs were still a somewhat obscure asset class. In fact, they remained a niche segment of the financial sector until 2014, when real estate finally got its own sector designation. Ultimately, way back in 2000, REITs weren't well followed and were largely the purview of small, income-oriented investors. A material portion of the growth over the past 25 or so years has come from the inclusion of REITs in the portfolios of larger investors.

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Image source: Getty Images.

But the performance numbers are still interesting to consider. The growth of $10K noted above for Realty Income compares to the same investment increasing to roughly $43,000 for the S&P 500 index. That, however, is a price-only figure. That same amount with dividend reinvestment would have grown to nearly $68,000 in the S&P 500 and, hold your hat, over $230,000 for Realty Income.

O data by YCharts

How is that possible? The answer is that back in the 2000s, Realty Income's yield was quite high. Compounding the dividend via dividend reinvestment supercharged the stock's total returns. The S&P 500's yield wasn't nearly as high. So, Realty Income benefited from both the increase in price that came with the broader acceptance of the REIT asset class and its lofty, and steadily growing, dividend.

What's the future going to look like?

Obviously, the future is unknowable. However, given the past, Realty Income is likely to be a reliable dividend stock. It has increased its dividend annually for 30 consecutive years. If it keeps that up, even though growth is generally fairly modest in any given year, it will be a solid foundation for a broader income portfolio.

But there's another bit to consider here. While Realty Income's dividend yield isn't as high as it was back when REITs were less popular, it is still pretty high at roughly 5.6%. For comparison, the S&P 500's yield is only about 1.2%. Compounding that dividend will still help to supercharge Realty Income's return.

But that's not the only thing worth noting. Realty Income's stock price is down around 30% from the highs it reached prior to the coronavirus pandemic. That suggests that there is some recovery potential here to go along with the lofty dividend. Put the two together, and investors could see pretty attractive and reliable long-term returns over time.

Realty Income is a foundational investment

That said, Realty Income isn't going to excite you. But that's the point of buying this REIT. It is a boring and slow-growth business that will provide you with a lofty yield. You can pair it with lower-yielding but higher-growth investments to create a portfolio that will help turn you into a millionaire. That's the value of a $10,000 or $100,000 investment in Realty Income. It can give you the emotional and financial strength to take on the kind of investment risks that will drive the value of your portfolio into seven figures. And yet, as history shows, this REIT, which has outperformed the S&P 500, is anything but dead money.

Should you invest $1,000 in Realty Income right now?

Before you buy stock in Realty Income, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Realty Income wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $636,628!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,063,471!*

Now, it’s worth noting Stock Advisor’s total average return is 1,041% — a market-crushing outperformance compared to 183% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of July 21, 2025

Reuben Gregg Brewer has positions in Realty Income. The Motley Fool has positions in and recommends Realty Income. The Motley Fool has a disclosure policy.

Key Points

• Banks provide what amounts to a necessity service in today's connected world.

• The Great Recession proved that some banks are more resilient than others.

• If you are looking to maximize your dividend income, this ultra-high-yield bank should be on your short list.

• 10 stocks we like better than Bank Of Nova Scotia ›

Banks aren't supposed to be exciting. They are supposed to provide basic services that help the world function on the financial front. Boring is good, but it often doesn't lead to a stock that has an ultra-high dividend yield. That said, Bank of Nova Scotia (NYSE: BNS) is boring enough to buy but "exciting" enough to have a lofty dividend yield. Here's why you might want to jump on this ultra-high-yield bank if you have $10,000 to invest right now.

What does Bank of Nova Scotia do?

Bank of Nova Scotia, which generally goes by the nickname Scotiabank, isn't particularly different from most other large banks. It provides customers with the basics, like bank accounts, checking accounts, and mortgages. It deals with business customers, too. But on top of that it also adds things like wealth management and investment banking. In this way it not only competes with local banks, but also with giants like Bank of America or Citigroup.

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Image source: Getty Images.

That said, there's a key difference here that is important to keep in mind. Scotiabank hails from Canada. Canadian banking regulations are very stringent, leading the largest of the country's banks, of which Scotiabank is one, to have entrenched industry positions. The heavy regulation has also resulted in Canadian banks having a conservative ethos that permeates all aspects of their businesses. All in, Scotiabank has a very solid business foundation.

The best display of this comes from Scotiabank's dividend. It has paid a dividend continuously since it started paying a dividend in 1833. That said, the dividend hasn't increased every single year (more on this below), but it also didn't get cut during the 2007 to 2009 financial crises. The Great Recession, as that deep recessionary period is known, led both Citigroup and Bank of America to cut their dividends.

So it stands out on the dividend front for its consistency. But it also stands out because of the huge 5.7% dividend yield. For reference, the S&P 500 index (SNPINDEX: ^GSPC) is yielding just 1.2% and the average bank has a yield of 2.5%.

BNS Dividend Yield data by YCharts

Why such a high yield from Scotiabank?

Scotiabank's yield would suggest that it is a risky bank. And yet its core Canadian operations would suggest the exact opposite. What's going on? As it turns out, like other Canadian banks, Scotiabank has looked to foreign markets for growth. Most of its peers chose to focus on the U.S. market, but Scotiabank sought to differentiate itself by focusing on Central and South America. That didn't work out quite as well as hoped.

It has since shifted gears, getting out of less desirable markets and focusing on becoming a leading Mexico to Canada bank, as it attempts to bulk up its business in the United States. This overhaul resulted in the dividend not being increased in 2024. However, Scotiabank has made quick progress, and it started increasing its dividend again in 2025.

That doesn't mean the transition process is complete, but it does signal that the board and management are confident in the progress the company is making. All in, Scotiabank looks like a fairly low-risk turnaround story that comes with a very attractive dividend yield. While there's more work to be done, you are being paid well to stick around.

A sizable chunk of Scotiabank stock

A $10,000 investment in Scotiabank today will get a dividend investor a bit over 175 shares of the Canadian bank giant. And it will get you access to a well-above-market and well-above-peer dividend yield. But the key is that the yield is supported by a conservatively run bank that is moving its business in a positive direction.

Should you invest $1,000 in Bank Of Nova Scotia right now?

Before you buy stock in Bank Of Nova Scotia, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Bank Of Nova Scotia wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $636,628!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,063,471!*

Now, it’s worth noting Stock Advisor’s total average return is 1,041% — a market-crushing outperformance compared to 183% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of July 21, 2025

Citigroup is an advertising partner of Motley Fool Money. Bank of America is an advertising partner of Motley Fool Money. Reuben Gregg Brewer has positions in Bank Of Nova Scotia. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF. The Motley Fool recommends Bank Of Nova Scotia. The Motley Fool has a disclosure policy.

Key Points

• Nucor is an out-of-favor steelmaking giant.

• High-yield Federal Realty is the only REIT that is a Dividend King.

• Enterprise Products Partners is a high-yield midstream bellwether with a great distribution record.

• 10 stocks we like better than Enterprise Products Partners ›

If you are looking to invest some money today and have a holding period that is 10 years or more, you're going to want to pick from an elite group of companies. You want industry-leading monsters that have something unique about them that will keep them ahead of the pack. Nucor (NYSE: NUE), Federal Realty Investment Trust (NYSE: FRT), and Enterprise Products Partners (NYSE: EPD) all fit the bill. Here's why.

1. Nucor is a giant U.S. steelmaker

Steel is a cyclical industry that is a bit out of favor today. That's left U.S. steelmaking giant Nucor's stock down about 30% from its 2023 highs. Don't let that deep downturn worry you, it is actually pretty normal for a steel company. In fact, the best time to buy a cyclical business can often be when Wall Street has placed it in the dog house.

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What sets Nucor apart from its peers is its status as a Dividend King. Despite the inherent swings in the industry, this company has managed to continue to increase its dividend through thick and thin. Helping that along is a boring and reliable playbook focusing on continually investing in the business. That has notably included both the production of bulk steel and the expansion of the portfolio into higher-margin steel products.

Some investors will buy Nucor to play the steel cycle. But this is the type of company that you might want to buy and sock away for 10 years or more. Although the dividend yield is a bit miserly at 1.7%, this stock is really about getting exposure to a reliable and growing steel business.

Image source: Getty Images.

2. Federal Realty is the only one of its kind

Sticking with the Dividend King theme, real estate investment trust (REIT) Federal Realty has also increased its dividend annually for more than five decades. It is the only REIT to have achieved that feat, making it an industry standout even though it is actually a fairly small business.

Don't let the company's modest portfolio of about 100 properties fool you. It happens to own some of the most desirable strip malls and mixed-use developments in the markets where it operates. It is the focus on quality over quantity that has resulted in Federal Realty's strong track record.

That said, the REIT is a very active portfolio manager. So it is always buying and selling assets, redeveloping new acquisitions to increase the value so they can be sold down the road at a premium price. Federal Realty won't excite you, but you can be sure that the attractive 4.6% dividend yield is backed by an incredibly reliable business.

3. Enterprise Products Partners is an industry leader

Enterprise Products Partners is one of the largest midstream businesses in North America. Its portfolio of pipelines, storage, processing, and transportation assets is vital to the world's energy markets. And it largely charges fees for the use of its assets, which makes the cash flows it generates highly reliable regardless of the price of the commodities moving through its system.

This is the big-picture story that supports the master limited partnership's (MLP's) huge 6.9% yield. The slow and steady growth the business has achieved over time, meanwhile, is what has supported Enterprise's streak of 26 consecutive annual distribution hikes. That's not enough to make it a Dividend King, like Nucor and Federal Realty, but Enterprise hasn't been around for 50 years, either. It has been around for a little over a quarter of a century, having gone public in 1998. Which means the distribution has been increased on the regular from day one.

Three monster options from three different sectors

Nucor, Federal Realty, and Enterprise are vastly different businesses, but each one is a monster in its own way. And each one has an incredible dividend track record. If you are looking for stocks to buy and hold, this trio would be a good place to start today.

Should you invest $1,000 in Enterprise Products Partners right now?

Before you buy stock in Enterprise Products Partners, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Enterprise Products Partners wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $636,628!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,063,471!*

Now, it’s worth noting Stock Advisor’s total average return is 1,041% — a market-crushing outperformance compared to 183% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of July 21, 2025

Reuben Gregg Brewer has positions in Federal Realty Investment Trust and Nucor. The Motley Fool recommends Enterprise Products Partners. The Motley Fool has a disclosure policy.

Key Points

• Walgreens is an iconic brand in the pharmacy space, but it has fallen on hard times.

• The retailer has agreed to be taken private as it looks to turn its business around.

• There's a potential post-takeover boost for shareholders, but the outcome is far from certain.

• 10 stocks we like better than Walgreens Boots Alliance ›

Walgreens Boots Alliance's (NASDAQ: WBA) stores dot the U.S. landscape, given that it is one of the largest pharmacy retailers in the country. But as an investment, well, it hasn't performed very well for a little while. And now it is heading into private hands. Here are three things you need to know before you buy Walgreens stock today.

1. Walgreens has been struggling

The most important thing to keep in mind when you look at Walgreens today is -- unfortunately-- its weak business performance. It really isn't unique to Walgreens; the entire pharmacy retail space has been kind of tough. However, Walgreens compounded the problem by making big investments that didn't pan out as well as hoped.

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Image source: Getty Images.

For example, it got into the pharmacy benefit management business only to realize that it wasn't going to be the growth engine management had hoped. It exited the space and pivoted into the emerging medical clinic niche. That, too, hasn't gone according to plan. Add in a bloated retail store base and the company is in need of a major overhaul.

It has been working toward that goal, but big revamps can be hard to do for public companies. For example, the decision to cut Walgreens' dividend to preserve cash was not well received by investors even though it will be helpful to the turnaround. Which brings the story to point number 2.

2. Walgreens is being taken private

Sometimes it helps for a company to be in private hands during a turnaround effort. That allows management to make bigger and bolder moves because it doesn't have to worry about appeasing Wall Street. To that end, Walgreens has agreed to be bought by Sycamore Partners. The deal is expected to close in the second half of 2025, with Walgreens shareholders getting $11.45 per share in cash.

That's all that investors here can expect to receive if they buy Walgreens. That's the guaranteed upside limit. Right now the stock is trading at a few cents above the takeout figure (more on this in a second). There's two big takeaways. First, Walgreens is not a long term investment because it is exiting the public market. Second, the guaranteed return here is basically zero (or worse) at this point. Sure, Walgreens is an iconic business, but it probably isn't the best investment choice for most.

3. There's a possible boost for investors

The wrinkle in this story is that Walgreens is actively looking to sell its medical clinic business. That sale will likely occur after it is taken private. And, as a sweetener for the deal, Sycamore Partners is giving shareholders a chit that entitles them to a portion of the proceeds from the sale of the clinic business. It could be worth as much as $3 per share. That could mean an additional 25% or so upside after the company goes private.

The problem with this is that there's no time frame for the clinic business sale. And there's no guarantee on the price, either. So investors could get $3 per share, or they could get nothing. They could get money the day after the Walgreens takeover closes, or they could never get any money. This is, at best, a special situation that only more aggressive investors will want to bother with. It seems likely that the clinic business has some value, but it is hard to assess what that value is or assign a time frame to the final payment, if there is one.

The Walgreens stock story is just about over, for now

Walgreens' run as a public company is about to end and, when that happens, the story here is largely over for investors. Yes, there's the potential sale of the clinic business, but the outcome there is so uncertain that the chance to benefit will only appeal to more aggressive investors. Over the long term, it is likely that Walgreens eventually finds its way back into the public markets. Hopefully, at that point, it will have revamped the business and again be working from a position of strength.

Should you invest $1,000 in Walgreens Boots Alliance right now?

Before you buy stock in Walgreens Boots Alliance, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Walgreens Boots Alliance wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $636,628!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,063,471!*

Now, it’s worth noting Stock Advisor’s total average return is 1,041% — a market-crushing outperformance compared to 183% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of July 21, 2025

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Key Points

• The energy sector is going through a transition that will likely take decades.

• TotalEnergies is using its oil profits to fund its clean energy investments.

• Enbridge is focused on providing both carbon-based and clean energy.

• 10 stocks we like better than Enbridge ›

There are short-term gyrations that will always be present in the energy sector, given the volatile nature of oil and natural gas prices. And then there are longer-term trends that can be seen as a headwind or an opportunity.

I prefer to see the silver lining on the clean energy cloud by owning high-yield energy stocks TotalEnergies (NYSE: TTE) and Enbridge (NYSE: ENB). Here's why you might want to buy them, too.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

TotalEnergies is an integrated giant

TotalEnergies competes with energy giants ExxonMobil, Chevron, Shell, and BP. They all have the same basic business model, which entails owning assets across the energy value chain, from production (upstream) to transportation (midstream) and on to chemicals and refining (downstream). This diversification helps to soften the peaks and valleys that come from volatile energy prices.

Image source: Getty Images.

The big point of differentiation between TotalEnergies and its closest peers is that the French energy giant has made a strong commitment to investing in electricity and clean energy. Exxon and Chevron have basically chosen to stick with their core. Shell and BP both announced plans to invest in clean energy, but have since walked those plans back. TotalEnergies, if anything, has increased the pace of its investment. And, notably, it maintained its dividend when it announced its clean energy push while Shell and BP both cut their dividends when they made the same announcements.

This is still only a relatively small part of TotalEnergies' business, at roughly 10% of adjusted operating income from the company's business segments in 2024. That was up 17% from 2023 and the only segment that saw an increase, highlighting the diversification value this business offers.

That said, this is not a short-term play. TotalEnergies is looking at the long-term shifts in the industry and preparing now for a future that includes dramatically more electricity. Just as one example, the U.S. is expected to see electricity increase from 21% of end energy use in 2020 to 32% by 2050. That's a huge change and one that is likely to be seen the world over. Add in TotalEnergies' lofty 6.3% dividend yield and I'm a happy shareholder. (U.S. investors have to pay French taxes on the dividend, but can claim some of that back come tax time.)

Enbridge's fee-based business has a clean energy twist

TotalEnergies provides me with direct exposure to oil and natural gas. Canadian midstream giant Enbridge is more about a boring and consistent energy-adjacent dividend. The lofty 6% or so dividend yield is backed by the company's portfolio of fee-generating energy infrastructure assets. The largest contributions come from Enbridge's oil and natural gas pipelines, which is perfectly fine by me. These carbon fuels will likely be needed for decades to come.

That said, Enbridge has been increasingly investing in clean energy and regulated natural gas utilities. Together these businesses represent about a quarter of the company's earnings before interest, taxes, depreciation, and amortization (EBITDA). But they keep the company moving in the same direction as the world around it on the energy front.

The most notable thing here, however, is that Enbridge's natural gas utility and clean energy businesses are also consistent producers of cash flow. Regulation is the reason for that within the natural gas utility operation while long-term supply contracts are the core support in the clean energy segment. And so, Enbridge is changing with the world while continuing to hue to its own focus on generating reliable cash flows.

I'm letting others do the work for me

I don't really know which clean energy technology is going to be the big winner. Nor do I know the time frame for the energy transition. So I've chosen to invest in two "old" energy stalwarts that provide me with generous dividends and that are preparing today for a future that will include more clean energy. That way I can just collect the dividends while I leave the hard work of figuring out the clean energy transition up to TotalEnergies and Enbridge.

Should you invest $1,000 in Enbridge right now?

Before you buy stock in Enbridge, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Enbridge wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $636,774!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,064,942!*

Now, it’s worth noting Stock Advisor’s total average return is 1,040% — a market-crushing outperformance compared to 182% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of July 21, 2025

Reuben Gregg Brewer has positions in Enbridge and TotalEnergies. The Motley Fool has positions in and recommends Chevron and Enbridge. The Motley Fool recommends BP. The Motley Fool has a disclosure policy.

Key Points

• Vanguard just released its "How America Saves 2025" report.

• It offers a comprehensive look at defined contribution plans administered by Vanguard, with a focus on what participants are actually doing with their money.

• If you want to know how your savings match up to your peers, this is the place to look.

• The $23,760 Social Security bonus most retirees completely overlook ›

Personal finance can be both simple and complex, with one of the biggest hurdles being on the emotional side of things. "Am I saving enough?" is one question many people end up asking themselves.

Vanguard just released its "How America Saves 2025" report, and it can help you answer that question. As one of the country's largest asset management companies, Vanguard has shared data based on the many defined contribution plans that it administers. The data offers a unique snapshot of the savings habits of many Americans, by age, income, industry, and more.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

There are several types of defined contribution plans captured in the report, but the 401(k) is by far the most common and makes up the bulk of the included data. Read on to understand how your 401(k) stacks up against your peers.

Image source: Getty Images.

How much money are Americans putting away?

One of the key statistics Vanguard provides in the report is the average plan participation rate by age. In 2024, across the 4.8 million accounts included in the report, those in the youngest age group -- 25 and below -- had the lowest participation rate and the lowest average account balances. However, the average participation rate rises very quickly with age before peaking and then dropping off as people enter retirement.

Data source: Vanguard.

This should come as no surprise as young workers are just beginning their careers. In fact, only 31% of those making $15,000 or less were enrolled in plans. But a full 95% of participants making $150,000 or more were enrolled.

At the low end of the income spectrum, automatic enrollment played a huge role in participation rate. Voluntary enrollment was just 14% for those making $15,000 or less a year, while plans with automatic enrollment increased that figure to 77%. This trend remained in place through all of the age brackets, though higher earners were far more likely to voluntarily enroll than those with lower wages.

And all of this has a big impact on the amount that participants save. Younger workers generally had smaller balances than older workers. This dynamic did not change until retirement age (65 and older) as plan participants begin withdrawing from their accounts.

The average or the median?

Before digging into actual account balances across age groups, it's important to understand the difference between average and median figures.

An average takes all of the numbers in a group, adds them up, and divides the sum by the count of numbers in the group. However, this calculation can be skewed by extreme outliers. For example, if you have a stadium full of people with a net worth between $50,000 and $100,000 but drop Bill Gates into the crowd, the average would skyrocket well above $100,000 because of Gates' massive wealth.

This is where a median can be helpful. It represents the middle value of all the numbers in question (after sorting from smallest to largest). In other words, the median is the value below which and above which half of the numbers in a group lie.

With that context, here are the balances for the defined contribution plans in the Vanguard report:

Data source: Vanguard.

You can see the big difference between average and median values across every age bracket. You can also see how balances tend to increase with age.

If you don't match up, take a deep breath

Some savers will see this data and pat themselves on the back for matching or beating the numbers in the table. Others may feel a pang of concern because they're behind for their age. For those in the latter, don't let that fact get you down. Saving and investing is a journey; give yourself a little leeway.

For starters, these are defined contribution plans, which may not reflect all of someone's savings, which may include other types of accounts like an IRA or high-yield savings account.

Image source: Getty Images.

Meanwhile, the report noted the average contribution rate (the percentage of one's salary going to a 401(k) or similar plan) was 7.7%, with a median contribution rate of 6.8%. This is not a situation where workers are commonly maxing out their yearly contributions. In fact, just 14% of participants hit the limit last year ($23,000 for those under the age of 50, or $30,500 for those above 50).

A couple of tricks for increasing your contribution may help. A simple one is to increase your contribution rate whenever you get a raise. That way you don't feel the sting of putting more money away. Another more aggressive approach is to increase your contribution rate by 1% on a regular basis, say once a quarter. That's not a huge change, and you should be able to adjust gradually to the lower take-home pay.

And, of course, if you aren't contributing at all, then you should simply start doing so, even if it's just 1% of your salary. It's always a good idea to contribute enough to get your employer match (the vast majority of plans in the report offered one). That's effectively a guaranteed return on your investment.

A valuable yardstick, now do something with the data

At the end of the day, "How America Saves 2025" is just providing you with data. The report is not necessarily representative of all retirement accounts, just those administered by Vanguard.

The real question is what you do with the data. If you're doing well on the savings front, congratulations and keep at it. If you're currently falling short of where you want to be, don't be discouraged. The data here can provide you with a goal and the motivation to get there.

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Key Points

• Pfizer stands as one of the largest pharmaceutical companies in the world.

• Although it has an attractive 7.1% yield, it has a big blemish in its dividend past.

• Investors looking at drug stocks would be better off with this lower-yielding competitor.

• 10 stocks we like better than Pfizer ›

One of the big reasons to like Pfizer (NYSE: PFE) today is its huge 7.1% dividend yield. To put that yield into context, the S&P 500 index is yielding roughly 1.3% and the average healthcare stock a bit over 1.7%. Pfizer competitor Merck (NYSE: MRK) is yielding a little more than 4%, yet dividend investors will probably be better off with Merck. Here's why.

Pfizer and Merck have similar business models

While Pfizer's dividend yield is clearly much higher than Merck's, both have relatively attractive yields today. And you could easily make the argument that the two pharmaceutical companies basically do the same thing. Thus, you might as well buy the higher-yielding stock here. That isn't an unreasonable position to take.

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Image source: Getty Images.

Essentially, these two industry giants make drugs. They make different drugs, of course, but both are focused on conducting research intended to create new blockbuster drugs that they can sell exclusively until the patents run out. Both have massive and well-funded research and development teams. Both have global distribution systems and strong marketing groups. And both have the scale to buy smaller competitors with promising drugs, if they need to.

In the short term, there will be differences between the two with regard to the drugs they have. So at times Pfizer will be better positioned than Merck, and vice versa. Given their vastly different yields, it is pretty clear that Wall Street believes Merck is better positioned right now.

The problem with Pfizer is the dividend, not the yield

Right now, Pfizer has a streak of 15 consecutive dividend increases. Merck's streak is also 15 years long. The issue is what happened roughly 15 years ago. As the chart below shows, Pfizer cut its dividend and Merck did not.

PFE Dividend data by YCharts

That was a long time ago, of course, and the business environment was much different. The cut came in the middle of the Great Recession, when there were very real concerns that global financial systems would collapse. Notably, Pfizer cut the dividend at the same time it made a large acquisition.

And yet Merck didn't cut its dividend; it has also made large acquisitions in the past, including its own sizable merger in 2009. To be fair, Merck's dividend was static for a long period of time, but going without a dividend increase is much more attractive for an income investor than suffering through a dividend cut.

Why investors buy Pfizer and Merck

If you are like me, you are not a healthcare specialist. Buying small drugmakers with novel products that are still in the testing phase is likely a non-starter. I just don't know enough to understand what is going on at such companies. And I certainly don't know how to analyze the likelihood that a new drug will get approved.

Pfizer and Merck both have portfolios of already approved drugs. So there's a core business supporting their research efforts. On that front, they have both proven over time that they can successfully perform the R&D needed to find new drugs. And if their drug pipeline is soft, they have proven that they will go out and buy smaller companies to bolster it. In essence, Pfizer and Merck let you own a pharmaceutical company without having to spend a huge amount of time and effort trying to dig deeply into the drug business.

But if you are trusting a company in this way, which is perfectly fine to do, you need to make sure you can trust it in other ways, too. If you are a dividend investor, Pfizer's dividend cut during the deep 2007 to 2009 recession just doesn't provide the same level of trust that Merck's steadily, though not annually, growing dividend does. Most investors will probably be better off erring on the side of caution here and buying Merck over Pfizer.

Should you invest $1,000 in Pfizer right now?

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*Stock Advisor returns as of July 15, 2025

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Merck and Pfizer. The Motley Fool has a disclosure policy.

Key Points

• Tesla helped to create the EV market, upending business as usual for the auto sector.

• Lucid is attempting to follow Tesla's lead, using EVs as a wedge to break into the auto industry.

• Lucid has a long way to go before it is anywhere near the company Tesla is today.

• These 10 stocks could mint the next wave of millionaires ›

Tesla (NASDAQ: TSLA) and its high-profile CEO Elon Musk can be polarizing. However, the automaker has achieved things that seemed impossible. It not only broke into the highly mature auto industry, it also helped to create the electric vehicle (EV) market. Could buying EV upstart Lucid (NASDAQ: LCID) set investors up for a similar success story?

Tesla: There are good things and bad here

Tesla was once a tiny upstart, attempting to build a business around a technology that was well understood but that hadn't gained any traction with consumers. To make matters worse, to achieve success, it had to compete against mature and well-entrenched auto industry giants.

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Image source: Tesla.

To the company's credit, it pulled it off and, along the way, basically created the electric vehicle market. Now every major automaker is offering EVs and there are numerous upstarts in the U.S. and abroad trying to ride on Musk's and Tesla's coattails. The end goal for all is to build a sustainably profitable EV business, which is where Tesla sits today.

That said, Tesla has exposure to other businesses. Selling cars is the big story, but the business also has a battery storage division, and it's working on autonomous driving technology and robots. There's a lot going on "under the hood." That's part of why Tesla's valuation seems stretched, with a price-to-earnings ratio of 182x. Investors are pricing a lot of good news into the stock. Investors who care about valuation probably won't be interested.

Lucid is trying to break into the auto industry, too

If you missed out on the huge price gains that investors in Tesla have achieved, there are other EV makers that are in an earlier stage of development. One is Lucid, which only sold around 3,100 cars in the first quarter of 2025. That's a rounding error for Tesla and the major automakers. However, that number was up around 50% year over year. Essentially, Lucid is making progress as it looks to grow.

Moreover, Lucid's high-end cars have been well received, earning industry accolades. So this isn't a fly-by-night business that's clinging to life, even though the stock has fallen more than 90% from its highs. At those highs, Wall Street was clearly overly enamored with EV upstarts. Now investors could be overly pessimistic, ignoring the incremental successes that Lucid is steadily achieving.

That said, not all investors have turned away from Lucid. In Q1, it was able to extend the maturity on a convertible note from 2026 to 2030. That's a big statement of confidence, and it gives the upstart EV maker more leeway to keep expanding and improving its business. It improved its gross margin in Q1 as it increased its volumes. To be fair, it is just losing less on every car that it sells than it did a year ago. But that's the path that a new manufacturing business has to go down, given the large up-front costs involved in starting from scratch.

Both stocks are high-risk, but Lucid's future is better defined

Lucid is still losing money and will likely continue to do so for years to come. So valuation metrics aren't meaningful for the upstart. However, the road it needs to traverse has been laid down by Tesla, so it is pretty clear what steps Lucid needs to take from here. There are very big risks involved, and risk-averse investors shouldn't buy it. But if you're looking at Tesla, you might want to consider Lucid instead.

Tesla makes great cars, but the business is clearly more mature than Lucid's. The other businesses hidden within Tesla present an opportunity, but they could flame out, too. So the huge valuation being afforded Tesla may not be worth the risk. Add in the CEO's volatile public image, and uncertainty increases materially.

Overall, if you were thinking about taking a risk on Tesla, it might be better to take a risk on Lucid. It has, for the most part, successfully achieved the key goals it has laid out as it looks to become the next Tesla.

Don’t miss this second chance at a potentially lucrative opportunity

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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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Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.

Key Points

• The energy sector is volatile, but some companies are built to survive that volatility.

• Chevron has a lofty yield and a long history of returning value to investors via dividend hikes.

• TotalEnergies has a lofty yield and a business that is changing with the world around it.

• 10 stocks we like better than Chevron ›

Chevron (NYSE: CVX) is offering investors a 4.7% dividend yield today. TotalEnergies' (NYSE: TTE) yield is even higher at 6.3%. That compares to an energy industry average of just 3.5%. But lofty yields are just one reason to like Chevron and TotalEnergies. Here are a few more that may prompt you to buy one or both of these energy industry giants right now.

Chevron and TotalEnergies are integrated

The one thing every investor needs to understand about the energy sector right up front is that it is inherently volatile. Oil and natural gas are commodities, and their prices swing widely and quickly. That's why I prefer to invest in the energy sector via integrated energy stocks. Most conservative investors, and likely most income investors, should probably follow my lead.

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Image source: Getty Images.

Chevron and TotalEnergies basically have exposure to the entire value chain, from production to transportation, chemicals, and refining. Each segment of the industry operates a little differently, with the diversification across the sector helping to soften the fluctuations in energy prices. To be fair, commodity prices are still the driving force behind Chevron's and TotalEnergies' businesses and stock prices. But integrated energy companies tend to weather the swings better than pure-play drillers and chemical and refining companies.

Chevron has a great dividend record and a solid foundation

That said, Chevron and TotalEnergies are not interchangeable. For example, Chevron has increased its dividend annually for 38 consecutive years. TotalEnergies hasn't managed anything near that level of dividend consistency (more on TotalEnergies' dividend below). Part of the reason for Chevron's dividend success is its focus on operating with a strong balance sheet.

At the end of the first quarter of 2025, Chevron's debt-to-equity ratio was roughly 0.2 times. That's low for any company and is second-best among its closest peers. That gives management the leeway to take on debt during industry weak patches so it can continue to support its business and pay its dividend. When oil prices recover, as they always have historically, leverage is reduced in preparation for the next downturn.

For more conservative dividend investors, Chevron is a solid choice in the energy sector. There will be ups and downs, but the dividend is highly reliable.

TotalEnergies is focused on change

That said, I own TotalEnergies. There are a couple of caveats here, though. First, U.S. investors must pay French taxes on the dividends collected, which reduces the actual income stream they'll receive. Second, TotalEnergies has a history of investing more aggressively. That includes investments in politically volatile countries and, right now, in the development of clean energy. Chevron has largely stuck to its energy core.

The clean energy investments being made are why I've chosen to own TotalEnergies. Essentially, the French energy giant is using its carbon fuel profits to invest in the energy transition that is shifting the world more and more toward electricity. This is going to be a decades-long shift, and an all-of-the-above approach is likely to be the final solution on the energy front. However, I like that TotalEnergies is working on an all-of-the-above strategy right now.

What really sets TotalEnergies apart, however, is that it has made this transition without cutting its dividend (it has actually been increasing it annually of late). European peers BP and Shell announced similar plans and used the business shift to justify dividend cuts. Then, they both walked back their clean energy plans. TotalEnergies has, if anything, sped up its investments in the space.

In other words, TotalEnergies is executing well in a changing world, which is exactly why I want to own it for the long term.

Energy prices have been weak

The interesting thing about both Chevron and TotalEnergies is that oil prices have been relatively weak of late. And that has put downward pressure on each company's shares, lifting their yields to fairly attractive levels. For more conservative dividend investors, Chevron is probably the better choice. But for investors like me who are willing to take on a little more risk to gain exposure to clean energy, TotalEnergies could be a good call right now, too.

Should you invest $1,000 in Chevron right now?

Before you buy stock in Chevron, consider this:

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*Stock Advisor returns as of July 7, 2025

Reuben Gregg Brewer has positions in TotalEnergies. The Motley Fool has positions in and recommends Chevron. The Motley Fool recommends BP. The Motley Fool has a disclosure policy.

Key Points

• Warren Buffett tends to buy well-run companies and hold them for the long term.

• Even well-run companies fall out of favor on Wall Street.

• With a 4.7% yield, this high-yield stock is built to survive whatever comes its way.

Warren Buffett has built an incredible track record running Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B). And he did it using simple-to-understand logic: Buy well-run companies when they look attractively priced and then hold for the long term (so you can benefit from the growth of the business over time). But even well-run companies fall out of favor, and that's why this Buffett stock, with a lofty 4.7% dividend yield, is worth buying in July.

Two oil picks with different industry approaches

Energy stocks are currently suffering through a period of volatility thanks to geopolitical tensions. That's not unusual at all. The energy market is known for being volatile, and so are most stocks in the energy sector. Buffett has two energy investments, Occidental Petroleum (NYSE: OXY) and Chevron (NYSE: CVX). They have materially different industry positions.

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Image source: Getty Images.

Oxy, as it is more commonly known, is focused on growing its business as quickly as practicable so it can better compete with established industry giants like, well, Chevron. Chevron, an industry giant, is focused on slow growth and -- here's the key for investors -- surviving through the inherent ups and downs of the energy sector. The second bit is why Chevron is so attractive as July gets underway.

There are three parts to Chevron's story. The one that will likely be most interesting to investors is its reliable dividend. The integrated energy giant has increased its dividend year in and year out for 38 consecutive years. That's an incredible streak given the price swings that have occurred in oil over that span. The company is, clearly, focused on rewarding investors for sticking around.

The interesting part is that this reliable dividend stock's dividend yield gets attractive during the tough times. Right now is a tough time thanks to both industry issues and some company-specific problems. History suggests Chevron will muddle through and continue to pay its dividend. In the meantime, investors can collect a hefty 4.7% dividend yield.

What backs Chevron's lofty yield?

A big yield that gets reliably paid is nice, but it doesn't fully explain why Buffett has Chevron in Berkshire Hathaway's portfolio. Which is where the next two parts of the Chevron story come in.

First, Chevron is an integrated energy giant. That means that it has exposure to the entire energy value chain, from producing oil and natural gas, to transporting the commodities, to processing them into other products. Each segment works a little differently through the energy cycle. Having exposure to all of them helps to smooth out performance over time. On top of that diversification, Chevron also has a global portfolio. So it can shift its investments to where they will have the best opportunity for success.

CVX Debt to Equity Ratio data by YCharts

That's a solid start, but there's another important factor. Chevron also has one of the strongest balance sheets in the energy patch, with a debt-to-equity ratio of just 0.2 times. That gives management the leeway to add debt during industry downturns so it can continue to support the business and dividend through hard times. When commodity prices recover, as they always have historically, it pays down its debt in preparation for the next downturn.

Buy Chevron when others are selling the stock

Chevron's stock is down around 20% from its 2022 highs, when oil prices were much higher. Long-term dividend investors shouldn't get too hung up on the downturn or the reasons why. Chevron is built to survive whatever comes its way. It probably makes more sense to just follow Buffett's "simple" approach and buy this well-run company while it is attractively priced and then hold it for the long term.

Should you invest $1,000 in Chevron right now?

Before you buy stock in Chevron, consider this:

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Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $699,558!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $976,677!*

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*Stock Advisor returns as of June 30, 2025

Reuben Gregg Brewer has positions in TotalEnergies. The Motley Fool has positions in and recommends Berkshire Hathaway and Chevron. The Motley Fool recommends BP and Occidental Petroleum. The Motley Fool has a disclosure policy.

Key Points

• Berkshire Hathaway is one of the best-known companies on Wall Street.

• The sprawling conglomerate has long been led by investment icon Warren Buffett.

• It's about to undergo an important change, and it won't be a good fit for every investor.

If you spend any time around Wall Street, from just reading market news to actually working in finance, you know the names Warren Buffett and Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B), which is the company he runs.

Despite the stock's incredible track record, however, there are reasons it may not be the smartest investment you can make. But there are also reasons it could be a great choice. Here's what you need to know.

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Why you should avoid Berkshire Hathaway

The first big reason that an investor might not want to buy Berkshire Hathaway is that it doesn't pay a dividend. And it doesn't appear likely that it will anytime soon. So, if your goal is to generate income from your portfolio to pay for living expenses in retirement, you will not want to buy Berkshire Hathaway stock.

Image source: The Motley Fool.

The second reason to avoid Berkshire Hathaway is its complexity. The large insurance operations within the company's portfolio of businesses typically lead it to fall into the finance sector. But the truth is, it is a widely diversified conglomerate. It owns over 180 companies outright and has a portfolio of publicly traded stocks, too. It has exposure to industries as varied as retail, railroads, and manufacturing and a whole lot more in between. If you like to keep your investments simple, this will not be the best option for you.

In that vein, Berkshire Hathaway is kind of like a mutual fund, given that you are, effectively, allowing Warren Buffett and his team to invest on your behalf. To be fair, the company's stock has vastly outperformed the S&P 500 index over time. So, trusting Buffett has worked out very well for investors. But if you like to directly handle all your investment decisions, owning Berkshire Hathaway probably won't be a great call.

BRK.A data by YCharts.

Letting the Oracle of Omaha do it for you

That said, as the chart above highlights, owning Berkshire Hathaway stock has been a big win for investors over time. So, trusting Warren Buffett and his long-term investment approach has worked out well. From a simplistic level, all he's doing is buying well-run companies when they appear attractively valued and then holding for the long term to benefit from the companies' growth over time. Only, if it were really that simple, every investor would have an incredible performance record. And that's just not the case.

Investors who are willing to let an expert handle their hard-earned savings could do much worse than buying Berkshire Hathaway. That said, while the S&P 500 index has been heading higher lately, Berkshire Hathaway stock has been falling. At least part of the reason is that Buffett has announced his intention to step down as CEO. Long-term employee Greg Abel is replacing him at the end of 2025.

This change must be carefully thought through because a new CEO can lead to significant shifts in the way a business is operated. But that's unlikely to happen at Berkshire Hathaway. First off, Buffett is stepping down as CEO, but he will remain chairman of the board, which means he will remain Greg Abel's boss. It is unlikely that Buffett will allow Abel to fail miserably without stepping in to help.

And then there's the not-so-subtle fact that Abel was, effectively, trained by Buffett. Just like Buffett was trained by famed value investor Benjamin Graham. Charlie Munger, Buffett's former partner, provided some educational input, too. Abel has a very impressive educational background as an investor. While he will most certainly do things differently, it seems likely that he won't abandon Buffett's basic approach to chart an entirely new course.

Berkshire is a smart pick for the right investor

Berkshire Hathaway won't be the smartest investment choice for all investors, despite its strong historical stock performance. But if you don't mind entrusting someone else to handle your savings and believe that Abel will carry on the Buffett approach, it could still be a very attractive investment choice for your portfolio.

The one remaining caveat is that Berkshire Hathaway is so large today that future growth may be less impressive than past growth. But with over $345 billion in cash on the balance sheet, a bear market could present a huge investment opportunity that gives Abel the option to boost growth beyond what seems probable with the market trading near all-time highs today.

Should you invest $1,000 in Berkshire Hathaway right now?

Before you buy stock in Berkshire Hathaway, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Berkshire Hathaway wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $699,558!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $976,677!*

Now, it’s worth noting Stock Advisor’s total average return is 1,060% — a market-crushing outperformance compared to 180% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 30, 2025

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.

Key Points

• Dividends can help investors identify attractive investment candidates in more ways than one.

• Prologis is a giant, growing industrial REIT with an attractive 3.8% yield.

• Agree Realty is a fast-growing net lease REIT with a 4.2% yield.

There are different ways to use dividends when it comes to selecting investments. Often, dividend investors focus all their attention on the highest-yielding stocks. But you can also buy stocks with a history of attractive dividend growth. And right now, you can purchase these two dividend growers with well-above-market yields of as much as 4.2%. Here's what you need to know.

1. Prologis is a giant industrial REIT that's still growing quickly

With a nearly $100 billion market cap, Prologis (NYSE: PLD) is one of the largest real estate investment trusts (REITs) you can buy. It is also quite easily the largest REIT focused on industrial properties. It owns a global portfolio of assets, so it is also fairly well diversified, geographically speaking.

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Image source: Getty Images.

The one thing Prologis focuses on is owning warehouses in the most important transportation hubs. That's a problem right now due to concerns about tariffs. However, given the interconnectedness of global trade, it seems likely that the world will adjust to any tariff changes. And assuming that is the outcome, Prologis will again be viewed as a well-positioned REIT.

But not even the tariff upheaval has really changed Prologis' trajectory. In the first quarter of 2025, it increased rents on renewing leases by a huge 32% on a cash basis. The average annualized dividend growth rate during the past decade was an attractive 11%, and the current 3.8% yield is near the high end of the REIT's 10-year yield range. As if that weren't enough, the company has raised the dividend every year for more than a decade. If you like owning the biggest and the best when they go on sale, fast-growing Prologis could be the dividend stock for your portfolio.

Agree Realty is small but growing quickly

Agree Realty (NYSE: ADC) is a net lease REIT, which means its tenants are responsible for most property-level operating expenses. It is not the largest player in the sector. That would be $50 billion market cap Realty Income (NYSE: O). But Realty Income is at a point where growth is modest. Agree Realty, given its smaller $8 billion market cap, is still capable of growing quickly.

Agree is focused on single-tenant retail properties in the U. S. These assets are fairly easy to buy, sell, and release as needed. And with a portfolio of more than 2,400 properties across all 50 U.S. states, it offers ample diversification within the niche it serves. It also has plenty of opportunities for growth, despite its focus on just one property type, as net lease retail is a huge sector. The dividend yield today is about 4.2%, which is about middle of the road for the REIT.

What you are really buying is the dividend growth rate, which has stood at more than 5% for the past decade. By comparison, Realty Income's dividend growth rate over that span was roughly half that rate. If you are a growth and income investor, Agree stands out from the net lease pack today.

Go for dividend growth with these two REITs

You can find higher-yielding REITs pretty easily. But finding REITs that offer a combination of yield and attractive dividend growth prospects is a bit harder. However, that's exactly what you will get with industrial property-focused Prologis and retail-focused Agree Realty. This pair of high-yielders won't be right for every dividend investor, but for some, they will offer the perfect mix of income and income growth to make them attractive buys in July.

Should you invest $1,000 in Prologis right now?

Before you buy stock in Prologis, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Prologis wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $699,558!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $976,677!*

Now, it’s worth noting Stock Advisor’s total average return is 1,060% — a market-crushing outperformance compared to 180% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

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Reuben Gregg Brewer has positions in Realty Income. The Motley Fool has positions in and recommends Prologis and Realty Income. The Motley Fool recommends the following options: long January 2026 $90 calls on Prologis. The Motley Fool has a disclosure policy.

Key Points

• W.P. Carey offers a lofty 5.8% dividend yield.

• The real estate investment trust cut its dividend in 2023.

• Investors may not appreciate the growth potential for this industrial focused net lease REIT.

The S&P 500 index (SNPINDEX: ^GSPC) is offering a tiny 1.3% or so yield and it is trading near all-time highs. That's not a great backdrop for dividend investors trying to find high-yield stocks. But if you take your time and do your research, you can still find attractive income opportunities. W.P. Carey (NYSE: WPC) and its 5.8% yield could be just what you are looking for, if you don't mind buying when other investors are selling.

What is a net lease REIT?

W.P. Carey is a net lease real estate investment trust (REIT). That means it generally owns single-tenant properties for which the tenant is responsible for most property-level expenses. W.P. Carey competes with large peers like Realty Income (NYSE: O) and NNN REIT (NYSE: NNN). Realty Income is the largest player in this segment, with a market cap of about $50 billion. W.P. Carey is No. 2 at $13 billion, with NNN REIT coming in at about $8 billion.

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Image source: Getty Images.

Net lease REITs tend to be fairly boring and reliable income stocks. The big driver of the business is sale/leaseback deals that are more of a financing transaction for the seller. Which is why all three of these stocks are out of favor right now because higher interest rates crimp the profitability of net lease REITs and their ability to ink new deals. W.P. Carey's stock has performed the worst, down about 30% from its highs in 2019.

Some of that underperformance can be attributed to one simple fact. NNN REIT has increased its dividend annually for 36 years. Realty Income has increased its dividend annually for 30 years. W.P. Carey cut its dividend in 2023. But don't skip W.P. Carey for this reason because it has a lot to offer.

NNN data by YCharts

What's different about W.P. Carey?

The first issue to address is the dividend cut, though "dividend reset" is probably a better characterization of the event. In 2023 W.P. Carey made the decision to exit the troubled office sector and sell its office holdings. That move necessitated lowering the dividend because of the size of the office property segment in its portfolio. It is now focused on industrial, warehouse, and retail properties, all of which are more lucrative property segments. The company started increasing the dividend again the quarter after the cut and has been increased each quarter since, which is the same pattern as before the reduction.

The portfolio is in much better shape today than it was before the office exit. And the industrial and warehouse focus sets W.P. Carey apart from Realty Income and NNN, which both focus heavily on retail. Pairing W.P. Carey with one of these two net lease REIT peers could actually make a nice combination that covers a lot of ground.

But the big story is that W.P. Carey's office exit left it with cash to invest in new properties. It has been putting that money to work and that will likely boost growth during the next couple of years. Notably, net lease giant Realty Income's last dividend hike amounted to a year-over-year increase of 0.2%. W.P. Carey's last increase was over 3% year over year.

That's a trend that is likely to continue during the near term as new acquisitions start to generate cash flow. But there's more to the story, because W.P. Carey tends to build inflation-linked rent escalators into its leases. That further supports growth and sets the company apart from its peers, which aren't as aggressive on this point.

Don't discount W.P. Carey because of the cut

When investors look at the net lease REIT sector they often default to Realty Income or NNN REIT. That's not a bad thing, but don't overlook the opportunity W.P. Carey presents. Up until the dividend reset, the company had raised its payout for 24 consecutive years. And given W.P. Carey's relatively strong dividend growth, it could be well worth stepping aboard even for conservative investors once they understand the backstory.

Most important, however, is the differentiated property focus offered by W.P. Carey, given its emphasis on industrial and warehouse assets. If you are looking at Realty Income or NNN REIT, you might actually want to buy them and add W.P. Carey, too, to more fully round out your net lease exposure.

Should you invest $1,000 in W.P. Carey right now?

Before you buy stock in W.P. Carey, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and W.P. Carey wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $699,558!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $976,677!*

Now, it’s worth noting Stock Advisor’s total average return is 1,060% — a market-crushing outperformance compared to 180% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 30, 2025

Reuben Gregg Brewer has positions in Realty Income and W.P. Carey. The Motley Fool has positions in and recommends Realty Income. The Motley Fool has a disclosure policy.

I own a couple dozen stocks. I like each and every one of them, given that I chose them out of the thousands of potential stocks available on Wall Street. Picking just one would be difficult. Yet, given my dividend focus, I would lean toward Realty Income (NYSE: O) today. The reason is partly because of its well-above-market 5.6% dividend yield, but there's much more to like beyond that simple fact. Here's what you need to know.

What does Realty Income do?

Realty Income is a net lease real estate investment trust (REIT). It owns single-tenant properties where the tenant is responsible for most property-level operating costs. The purpose of this leasing approach is pretty simple. The tenant effectively retains operating control of the asset, and Realty Income avoids the cost and effort of taking care of the property.

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Image source: Getty Images.

In fact, sale leaseback transactions are used in the net lease world. This means that the seller instantly becomes the lessee, usually with a long-term lease that includes regular rent bumps. It is really a financing transaction for the seller, which raises capital from the sale but still retains that all-important operational control of a vital asset. Realty Income is supplying the capital and getting a reliable tenant with a vested interest in the property. It's pretty close to a win/win transaction.

Realty Income is one of the largest and most diversified net lease REITs you can buy. Its market cap is more than three times the size of its next closest peer's. It owns over 15,600 properties. It has exposure to retail and industrial assets, and its portfolio includes properties in both North America and Europe.

To be fair, Realty Income's size is also a problem to consider. The REIT simply can't grow quickly because it is already so large. So slow and steady is the name of the game. The average annualized dividend growth rate over the past 30 years was roughly 4.1% a year. Thirty years, by the way, is the length of Realty Income's dividend streak. So it is a reliable, though slow-growing, dividend stock.

Realty Income is a foundational investment with an attractive yield

Buying just one stock really isn't a reasonable expectation, but that doesn't mean you shouldn't own some companies that are foundational investments. For those with an income bias like me, Realty Income offers just such a foundation. It's a risk/reward trade-off, for sure, but one that comes with a very attractive 5.6% dividend yield.

Putting that yield into perspective will help explain why now is a good time to buy Realty Income. For starters, the S&P 500 is only offering a yield of roughly 1.2%. The average REIT is yielding 4%. Realty Income's average yield over the past decade is a little under 4.5%. In fact, the REIT's current yield is near the high end of the yield range over the past decade.

O data by YCharts.

Realty Income isn't going to excite you. But it should continue to provide you with a healthy income stream (paid monthly) for years to come. That income stream is highly likely to keep growing, albeit slowly, over time, and that can create a strong foundation for your broader dividend portfolio. It allows you to reach out a little bit and buy stocks with lower yields but higher dividend growth rates, like Hormel Foods, Hershey, or even fellow net lease REIT Agree Realty.

Add this one to your portfolio and don't look back

I wouldn't really recommend buying just one stock, because diversification is important. Still, Realty Income is a very well-run business offering a high yield that is backed by a reliably growing dividend. It has all the hallmarks of a one-and-done type stock for income-oriented investors. If you are looking for a foundational dividend stock, Realty Income should be on your short list today.

Should you invest $1,000 in Realty Income right now?

Before you buy stock in Realty Income, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Realty Income wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $713,547!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $966,931!*

Now, it’s worth noting Stock Advisor’s total average return is 1,062% — a market-crushing outperformance compared to 177% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 23, 2025

Reuben Gregg Brewer has positions in Hershey, Hormel Foods, and Realty Income. The Motley Fool has positions in and recommends Hershey and Realty Income. The Motley Fool has a disclosure policy.

Brookfield Asset Management (NYSE: BAM) is an attractive dividend growth stock. You could also look at it as a desirable growth and income stock. The two stats backing that up are the above-market 3.1% yield and the huge 15% annual dividend growth rate that management is projecting out to the end of of the decade. What does that mean for investors? And what happens after 2030?

What does Brookfield Asset Management do?

Before looking at the dividend growth opportunity with Brookfield Asset Management, it is important to understand what the company does. It is a large Canadian asset manager with a historical focus on infrastructure. It has long invested on a global scale, as well, so it has a very broad investment universe. In recent years it has expanded the universe, too, adding a bond specialist to the mix and broadening its efforts in private equity.

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Brookfield Asset Management operates across five different platforms: renewable power, infrastructure, real estate, credit, and private equity. It believes it is positioned to benefit in all of these business lines from key long-term trends, including the shift toward clean energy, the world becoming increasingly digital, and de-globalization. The goal is to increase the fee-bearing assets it manages from $550 billion to $1.1 trillion by the end of the decade.

As an asset manager, Brookfield Asset Management charges fees for managing other people's money. So growing fee-bearing assets will lead to higher revenues and earnings. If it hits its current targets, the company believes it can grow the dividend 15% a year through the end of 2030.

What will Brookfield Asset Management look like in 2030?

Assuming Brookfield Asset Management can live up to its dividend growth goal, which is not unreasonable, the dividend will grow from about $0.44 per share per quarter to $0.88. If the stock price remains the same in 2030 as it is today, the dividend yield would increase from 3.1% to 6.3%. If, as is more likely, the stock price increases as the dividend grows, the stock will rise from around $56 per share to $112 if the yield remains at the 3.1% level. But, in the price increase example, the yield on purchase price for an investor buying today would still be 6.3%!

That's great and should interest dividend growth as well as growth and income investors. But what happens over the five years after that? If the company can keep growing the dividend by 15%, which would be a very tall order, the dividend in 2035 would be $1.77 per share per quarter. That would suggest a yield on purchase price of 12.6% and a stock price of $224 per share if the market continued to afford the stock a 3.1% yield. Wow!

However, 15% dividend growth for a decade is a pretty aggressive expectation. What if the dividend growth is just half that rate after the first five years, slowing to 7.5% a year between 2031 and 2035? In that case the dividend will grow to $1.26 per share per quarter and the yield on purchase price would fall to "only" 9%. If the stock is still yielding 3.1% in 2035, the stock price based on the higher dividend would be around $160 per share. So it is still a very attractive outcome even if Brookfield Asset Management's growth slows materially in the back half of this 10-year outlook.

A lot depends on Brookfield Asset Management's execution

These are just estimates played out using a spreadsheet. Real life is always more complicated. Brookfield Asset Management's future is highly dependent on its ability to execute and, frankly, the ups and downs of Wall Street. However, if Brookfield Asset Management can live up to its lofty goals over the next five years, it is a very attractive dividend growth/growth and income stock today. And if it can do half as well over the five years after 2030 it will still be an attractive investment over that 10-year horizon.

Should you invest $1,000 in Brookfield Asset Management right now?

Before you buy stock in Brookfield Asset Management, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Brookfield Asset Management wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $713,547!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $966,931!*

Now, it’s worth noting Stock Advisor’s total average return is 1,062% — a market-crushing outperformance compared to 177% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 23, 2025

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool recommends Brookfield Asset Management. The Motley Fool has a disclosure policy.

Oil and natural gas prices can move in unexpected ways and do so in a dramatic and rapid fashion. The geopolitical conflicts playing out today are yet another evidence point that energy investors need to be prepared to deal with often headline-grabbing and perhaps shocking volatility.

If you are looking for a high-yield energy stock today, you'll be better off sticking with a reliable giant like Chevron (NYSE: CVX) or attempting to sidestep energy prices with an investment in a midstream giant like Enterprise Products Partners (NYSE: EPD). Here's what you need to know.

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1. Chevron gives you direct exposure to energy

If what you are really looking for is some exposure to oil and natural gas, then Chevron and its roughly 4.7% dividend yield could be for you. A $1,000 investment will net you around six or seven shares today. The big story here, however, is the impressive history of dividend growth, with dividend increases in each of the last 38 years.

Image source: Getty Images.

Oil and natural gas prices have gone through many dramatic swings over that span, and still, Chevron has remained committed to supporting its dividend. It is built to survive such energy market swings. For starters, its business is diversified across the energy sector and geographically. Having exposure to the upstream (energy production), the midstream (pipelines), and the downstream (chemicals and refining) helps to soften the peaks and valleys since each segment operates a little differently through the energy cycle. Having exposure to various global energy markets on the supply and demand side allows Chevron to focus its investments in the areas with the highest returns.

Then there's the energy giant's balance sheet, which is rock solid. With a debt-to-equity ratio of around 0.2x, it has notably less leverage than most of its closest peers. This gives management the leeway to take on debt during industry weak spots so it can continue to support its business and dividend. When oil prices recover, as they always have historically, Chevron simply reduces its leverage to prepare for the next industry downturn.

Playing it as safe as possible with high-yield Chevron is a good call for dividend investors that want more direct oil exposure.

2. Enterprise Products Partners shifts the energy playbook

But you don't have to have direct exposure to oil prices if you want to invest in dividend-paying energy stocks. That's because the midstream segment is the one part of the energy industry that works a little differently. Businesses like Enterprise Products Partners own the energy infrastructure, like pipelines, that move oil, natural gas, and the products into which they get turned around the world.

What sets the midstream apart from the upstream and the downstream is that the midstream largely charges fees for the use of energy infrastructure assets. In other words, businesses like Enterprise Products Partners are just toll-takers. The volume of products moving through its portfolio of assets is more important than the price of those products. And since energy is so vital to modern life, demand for energy tends to be high regardless of the price of oil. The reliable cash flow Enterprise generates is what supports the master limited partnership's (MLP's) lofty 6.8% distribution yield.

A $1,000 investment in Enterprise will leave you owning around 31 shares of the MLP. But, like Chevron, a key part of the story here is the distribution history. Enterprise has increased its disbursement every year for 26 consecutive years. And, like Chevron, Enterprise is financially strong (it has an investment-grade-rated balance sheet) and conservatively run. The distribution yield will make up the vast majority of your total return here, but if you are trying to maximize the income your portfolio generates, that probably won't bother you.

Two solid energy options for volatile times

Given the current volatility in the energy sector, Chevron and Enterprise are good options for investors right now. But they are usually good options in the energy sector because they are built to deal with the industry's volatility while rewarding investors for sticking around with dividends. If you have $1,000 and you want to add an energy stock, one of these two will be a good dividend-focused pick for your portfolio.

Should you invest $1,000 in Chevron right now?

Before you buy stock in Chevron, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Chevron wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $713,547!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $966,931!*

Now, it’s worth noting Stock Advisor’s total average return is 1,062% — a market-crushing outperformance compared to 177% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 23, 2025

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chevron. The Motley Fool recommends Enterprise Products Partners. The Motley Fool has a disclosure policy.

Cameco (NYSE: CCJ) has gone through some very trying times in the past, largely due to its reliance on the price of a commodity when it comes to revenue and earnings. But the uranium that Cameco mines could be in for a big step change in price. Here are three reasons to buy this nuclear power industry supplier like there's no tomorrow.

1. Cameco is a picks-and-shovels nuclear play

Cameco mines for uranium, which is the primary fuel for nuclear power plants. It is also a minority owner in Westinghouse, a service provider to the nuclear power industry. Basically, it is a way to invest in nuclear power without having to buy it directly. If demand for nuclear power grows, Cameco should benefit right along with that growth.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Image source: Getty Images.

There is a risk here, however, because nuclear power has a history of large and very public disasters. Nuclear meltdowns, perhaps not shockingly, have led to a pullback in demand for nuclear power.

Right now, however, nuclear power is experiencing a bit of a renaissance. Notably, it doesn't produce greenhouse gasses, making it a clean energy source. And since nuclear power provides always-on (or base load) electricity, it can be paired with intermittent power sources like solar and wind to create a more reliable power grid.

All in all, Cameco's role in supporting nuclear power plants with fuel and services makes it a great way to play the nuclear power renaissance that is taking place today. And that's buttressed by the fact that its operations are largely in developed and politically stable markets, which customers appreciate just as much as investors should.

2. Demand for energy is growing

But the shift toward clean energy isn't the whole story. Demand for electricity is set to see a step change over the next 20 years or so. Between 2000 and 2020, U.S. electricity demand increased by a total of 9%. Between 2020 and 2040, demand is expected to grow by 55%. There are multiple drivers of that surge, notably including artificial intelligence (AI), data centers, and electric vehicles (EVs). Electricity use is expected to increase from 21% of final energy use to 32% by 2050.

Meanwhile, there are new nuclear plant designs and options coming to market that should make nuclear power more attractive. Safety is likely to improve, costs are likely to drop, and speed to market is likely to increase. All these factors will help to make nuclear a key part of the electric transition that is happening, which will likely mean more demand for uranium to fuel nuclear power plants.

3. Supply doesn't look like it will meet demand

So, Cameco supplies an industry that appears to be seeing increased demand. Those are two good reasons to buy the stock. But there's one more reason to consider: the difference between supply and demand. Starting in 2030, Cameco expects demand to start outstripping supply, leading to a supply gap.

That will likely result in more investment in uranium mining, of course. But the gap grows rapidly due to the lull in mine development that happened following the Fukushima nuclear plant meltdown in 2011. Building mines is time consuming, expensive, and difficult, so it seems unlikely that the supply gap will have an easy solution. And that means uranium prices are likely to remain strong, if not rise, over time as demand for the nuclear fuel grows.

A lot of reasons to like Cameco, but there's one big risk to keep in mind

There are multiple reasons to like Cameco as an investment. But it is really appropriate only for more aggressive investors. That's because of the significant risk hinted at above: nuclear meltdowns. If there's another event of this nature, the view of nuclear power could quickly sour and send uranium prices -- and Cameco's stock -- crashing. If you can't stomach that risk, then the three reasons to buy Cameco outlined above probably won't be enough to entice you to buy this stock today, tomorrow, or any day.

Should you invest $1,000 in Cameco right now?

Before you buy stock in Cameco, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Cameco wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $713,547!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $966,931!*

Now, it’s worth noting Stock Advisor’s total average return is 1,062% — a market-crushing outperformance compared to 177% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 23, 2025

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool recommends Cameco. The Motley Fool has a disclosure policy.

For most investors, simple is good. The Schwab US Dividend Equity ETF (NYSEMKT: SCHD) is a simple way to invest in reliable, high-quality dividend stocks. After all, if you have a life to live, you probably don't want to spend all your free time poring over stocks.

A roughly 4% yield and a unique stock selection process seal the deal when it comes to this smart investment choice. Here's what you need to know today.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

What has the Schwab US Dividend Equity ETF done?

Before getting into the Schwab US Dividend Equity ETF's investment approach, it's important to get a good feel for what it has achieved. Many dividend investors are looking to create a reliable income stream to live on in retirement.

So the goal is to own investments that produce reliable and hopefully growing dividends. Of course, a secondary hope is that the investment's value will rise as well, producing some capital appreciation.

SCHD data by YCharts.

The chart above shows that dividend investors have gotten exactly what they wanted from this exchange-traded fund (ETF). The current dividend yield of roughly 4% is in line with a "rule of thumb" retirement withdrawal rate that has led many dividend investors to focus on creating a 4% yield from their portfolios.

So, with that 4% yield, investors won't feel the need to touch the principal invested in the Schwab US Dividend Equity ETF. That can help with a feeling of financial security, or provide confidence that there will be money left to hand on to loved ones someday.

All that comes from one simple investment with a tiny expense ratio of 0.06%. To be fair, the Schwab US Dividend Equity ETF has not performed as well as an S&P 500 index ETF on a total return basis. But that's not the goal of the ETF. The goal is to provide a reliable income stream with some capital appreciation, and it does that very well.

Image source: Getty Images.

Don't buy the Schwab US Dividend Equity ETF until you read this

You shouldn't buy any pooled investment just because of a few performance statistics. Just as with any other ETF or mutual fund, you are giving your hard-earned money to the Schwab US Dividend Equity ETF to manage on your behalf. You need to make sure you understand what is being done with that cash.

In reality, the Schwab US Dividend Equity ETF is just tracking the Dow Jones U.S. Dividend 100 Index. What you really need to know is what that index does, which is actually fairly complex. First, it pulls out all the companies that have increased their dividends for at least 10 consecutive years. Then real estate investment trusts (REITs) are eliminated from consideration. This forms the starting pool from which the index is created.

But the 100 stocks that make it into the index haven't been selected yet. The next step is to create a composite score for all of the stocks that pass the first round of screening. The score looks at cash flow to total debt, return on equity, dividend yield, and the company's five-year dividend growth rate. The 100 stocks with the highest composite scores are included in the index and are market-cap weighted.

SCHD Dividend Yield data by YCharts.

There's a lot going on there, but the point is that the Schwab US Dividend Equity ETF is focused on owning well-run and financially strong businesses that have attractive yields and strong histories of dividend growth. That's likely the same type of stock a dividend investor is trying to find.

Buying the Schwab US Dividend Equity ETF gets you an entire portfolio of such investments with just one buying decision. That's simple, and it allows you to spend your time doing other things, like spending time with family or playing golf.

Smart investors look for simple solutions that work

The Schwab US Dividend Equity ETF isn't going to give you everything an investor dreams of, but no investment can do so. What it will do is provide you with an attractive income stream and, if history is any guide, slow and steady growth of capital over time. If that's your goal, it would be a smart choice to invest in the Schwab US Dividend Equity ETF today.

Should you invest $1,000 in Schwab U.S. Dividend Equity ETF right now?

Before you buy stock in Schwab U.S. Dividend Equity ETF, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Schwab U.S. Dividend Equity ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $713,547!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $966,931!*

Now, it’s worth noting Stock Advisor’s total average return is 1,062% — a market-crushing outperformance compared to 177% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 23, 2025

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

One of the best ways to ensure an investment can reward you well for the rest of your life is to buy reliable, high-yield stocks. On that front, Enterprise Products Partners (NYSE: EPD) stands out. A well-above-market distribution yield of 6.8% is one reason for that, but so is the strength of the midstream master limited partnership's (MLP's) business and its impressive distribution history. Here's what you need to know before buying.

What does Enterprise Products Partners do?

Enterprise Products Partners owns energy infrastructure, including pipelines, storage, processing, and transportation assets. It operates in what is generally referred to as the "midstream" segment of the overall energy sector. This is very important if you are looking to set yourself up with a reliable income stream for the rest of your life.

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The "upstream" is where oil and natural gas are produced. The "downstream" is where these commodities are processed. Financial results in both the upstream and the downstream are heavily influenced by often volatile commodity prices. The midstream, which basically connects the upstream to the downstream (and the rest of the world), isn't. Midstream businesses generally charge fees for the use of their energy assets. So, demand for energy, which tends to be fairly robust through the economic cycle, is more important to financial results.

Basically, Enterprise Products Partners' core business is designed to produce reliable cash flows. And those cash flows support the MLP's lofty 6.8% distribution yield. That yield is likely to make up the lion's share of an investor's return over time, but that probably won't be a problem for income-oriented investors.

How reliable is Enterprise Products Partners?

Enterprise Products Partners' business is designed to generate reliable cash flows, but what does history say about its ability to set you up with a lifetime of reliable distributions? Well, a lot.

For starters, Enterprise has increased its distribution annually for 26 consecutive years. That notably includes increases during the coronavirus pandemic and the oil downturn in 2016, both times when it would have been easy to justify a distribution cut. In fact, peers did cut their distributions in both of those periods, including Energy Transfer (NYSE: ET) in 2020 and Kinder Morgan (NYSE: KMI) in 2016.

EPD Dividend data by YCharts

If you are looking for a reliable income investment, Enterprise Products Partners stands out. But there's more to like here than just the distribution streak. For example, Enterprise Products Partners has an investment-grade-rated balance sheet. The distribution is covered 1.7x by the MLP's distributable cash flow. Essentially, there is a lot of room for adversity before a distribution cut would likely be on the table.

The distribution seems highly likely to keep growing, as well. The first reason is inherent to the midstream business. Increasing the fees charged along with inflation is the industry norm. Meanwhile, Enterprise has a long history of growing through capital investment projects, with a $7.6 billion capital plan currently in the works. On top of those two growth levers, Enterprise happens to be large enough to act as an industry consolidator. So, the occasional acquisition is a further growth driver to keep in mind, though acquisitions are impossible to predict.

Enterprise offers a compelling story for income investors

The one caveat here is that the world is increasingly using cleaner energy sources. However, the transition is likely to take decades, and it is far more likely that an all-of-the-above strategy (that includes carbon fuels) will be the final outcome. Don't count Enterprise out because it deals with carbon energy. All in, if you are looking for an investment that can set you up with a lifetime of income, Enterprise Products Partners and its lofty 6.8% distribution yield should be on your shortlist today.

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Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Kinder Morgan. The Motley Fool recommends Enterprise Products Partners. The Motley Fool has a disclosure policy.