Key Points

• Healthcare is an important and growing industry with products that are inherently necessary.

• If you are starting early, you can swing for the fences and hope you hit one out of the park, or buy a collection of companies that routinely hit singles and doubles.

• Most investors will be better off finding healthcare stocks that have proven themselves over time, like this trio of high-yielding industry leaders.

• 10 stocks we like better than Medtronic ›

If you are in your 20's you likely have more than four decades ahead of you to invest before hitting retirement. Some might suggest that now is the time to take an aggressive investment stance, but that could entail more risk than you think. Make a big bet on the wrong stock and you could turn thousands of dollars into pennies.

An alternative path that might make more sense is to find a collection of industry leaders in an inherently growth-oriented industry to invest in. The healthcare industry is a great example, since everyone needs medical care and technological advances drive the sector's growth. And, lucky for you, industry leaders Medtronic (NYSE: MDT), Johnson & Johnson (NYSE: JNJ), and Merck (NYSE: MRK) are all attractively priced right now.

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Here's why younger investors might want to buy all three of these healthcare stocks.

Image source: Getty Images.

1. Medtronic is taking care of some normal maintenance

Medtronic is one of the largest medical device makers on the planet. It has industry-leading positions in the cardiovascular, neuroscience, medical surgical, and diabetes niches. The company's growth has stalled out. That has left Wall Street downbeat on the shares, which trade down around 30% from their 2021 highs. The dividend yield is near historical highs at around 3%.

Why buy this down-and-out stock? Because Medtronic has a long history of surviving through the hard times that every company eventually has to face. The proof of this is its 48 consecutive years' worth of annual dividend increases. That's an incredible streak that places the company just two years shy of Dividend King status. More important today, however, is that management is taking the steps necessary to improve profitability. That includes cutting costs, investing in new technologies and products, and refocusing its business around its most profitable operations. The next big move is the spin-off of the company's diabetes business, which is set to take place in early 2026.

If you don't mind collecting a lofty yield from a company that knows how to survive hard times, Medtronic is a great pick if you are 20 or 65. But if you are 20, you can benefit from decades of business growth and use a dividend reinvestment plan to further compound your returns.

2. Johnson & Johnson will survive the talcum powder mess

Next up on this list is Johnson & Johnson, which is a giant in both the pharmaceutical and medical device spaces. Like Medtronic, it is out of favor with investors. The stock's dividend yield is 3% and toward the high side of the historical yield range. The average pharmaceutical stock has a yield of around 1.4% while the average healthcare stock's yield is roughly 1.8%.

The stock price, however, isn't quite as downtrodden as that of Medtronic, with J&J's price down from its all-time high by roughly 5% or so. That said, there is a material overhang here in the form of talcum powder lawsuits that have been filed against J&J. There are billions of dollars at stake, and the company can't fully discuss the issue with shareholders because of the legal nature of the problem. The uncertainty has left J&J shares to languish a bit. But this Dividend King has increased its dividend annually for over six consecutive decades, showing clearly that it knows how to survive hard times.

To be fair, there are also headwinds to deal with in the company's core operations. The list includes patent expirations and the need to keep bringing out new drugs and medical devices. But those are just normal business fluctuations, much like what Medtronic is dealing with. Adding the legal issue probably makes J&J more appropriate for aggressive investors or those who can stick around for a long time. Like investors in their 20's.

3. Merck has a patent cliff coming up

Medtronic is focused on medical devices. Johnson & Johnson's specialties are medical devices and drugs. Merck is just drugs. And while it doesn't have as long a history of annual dividend increases, at just 15 years, Merck's dividend has trended generally higher for decades. It doesn't exactly stand toe to toe with Medtronic and J&J on the dividend front, but it is still a reliable business that has proven it can muddle through hard times.

It is facing a hard time right now. First, there's a rather negative view of healthcare companies in the market related to political and social issues involving the current administration. Given the importance of healthcare in general, and drugs in particular, this will likely pass. The second problem for Merck is that its growth is heavily influenced by one oncology drug -- Keytruda. In a few years, however, this drug will lose patent protections and Merck will need to have other drugs lined up to make up for the revenue that generic drugs tend to steal away. Merck's pipeline looks a bit weak, so investors are worried it won't be ready for the approaching patent cliff.

That's not unreasonable, but Merck has world-class R&D teams, and it is large enough to buy smaller competitors with attractive products (if it needs to). It is highly likely that it figures out how to deal with the patent issue, like it has many times before. Still, investors are downbeat at the moment, and the stock is off its 2024 highs by nearly 40% and the dividend yield is a historically high 4% or so. If you have the benefit of time, you can buy now and comfortably wait for better days.

The key to the healthcare story

There are two broad ways to play the healthcare sector. You can swing for the fences and buy small upstarts with novel products, hoping that the companies you pick are the ones that end up winning in the market. Or you can buy industry leaders that have proven time and again that they have the wherewithal to survive and thrive over the long term, often buying up the upstarts to benefit from their novel products.

Most investors will be better off focusing on the industry leaders. And, often, the best time to buy industry leaders is when investors are downbeat on their prospects. Which is exactly the case today with industry giants Medtronic, Johnson & Johnson, and Merck. If you buy in while you are in your 20s and hold until you retire (hopefully reinvesting dividends all along the way), history suggests you will end up a very happy shareholder.

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

Before you buy stock in Medtronic, 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 Medtronic 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 $653,427!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,119,863!*

Now, it’s worth noting Stock Advisor’s total average return is 1,060% — 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 August 11, 2025

Reuben Gregg Brewer has positions in Medtronic. The Motley Fool has positions in and recommends Merck. The Motley Fool recommends Johnson & Johnson and Medtronic and recommends the following options: long January 2026 $75 calls on Medtronic and short January 2026 $85 calls on Medtronic. The Motley Fool has a disclosure policy.

Key Points

• Fastenal sells the fasteners used to hold industrial products together.

• The company makes extensive use of technology to ensure that its customers have the bits and pieces they need in a timely fashion.

• Although Fastenal's business model could be considered "boring", the stock has been a growth machine for decades.

• 10 stocks we like better than Fastenal ›

Over roughly the last 30 years, Fastenal's (NASDAQ: FAST) share price has risen by a massive 7,300%. For comparison, the S&P 500 index (SNPINDEX: ^GSPC) rose "only" 1,300% or so over the same span. What's interesting here is that Fastenal's business is, at its core, not very exciting. And yet this "boring" company has managed to be a huge growth machine. But is it worth buying after its latest stock split?

Some of the best investments can be "boring"

Wall Street loves things that involve technology, healthcare, and anything modern and complex. That's fine, but sometimes "boring" businesses can be even more interesting and Fastenal is a great example. This industrial company makes fasteners and other hardware items that get used by manufacturers to hold their products together. It's a nuts and bolts company, which is both a pun and an apt description of the business.

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Image source: Getty Images.

So why has Fastenal managed to capture the attention of Wall Street? The answer is consistent and rapid growth on both the top- and bottom-lines of the income statement. The shares have advanced so rapidly that Fastenal has had nine stock splits since 1988. That 1988 date is interesting because the stock only came public in 1987, highlighting that it has been a growth story since day one.

The most recent stock split happened in May of 2025. So the question for investors is whether or not Fastenal is still worth buying after the latest split and while the stock price is near all-time highs.

The keys to Fastenal's success

For starters, Fastenal is a much larger company today than when it first came public. That may seem like an obvious statement, but with a market cap of around $54 billion it requires a lot more to move the needle on the revenue and earnings fronts than it did some 30 years ago. So even if Fastenal remains a fast growing business it probably won't be able to put up the same kind of growth numbers in the future as it has in the past.

That said, a big part of Fastenal's growth has long been bolt-on acquisitions. This isn't likely to change in the future. And while it needs either larger or more deals to support growth today, it has the size to take on larger and more frequent deals. It also has the institutional knowledge accrued over decades to both identify good acquisition candidates and integrate them quickly. So there's no reason to believe that this facet of Fastenal's business approach is going to stop being effective.

The next big part of Fastenal's story is technology. Not so much in the products it supplies to its customers, but in how it supplies them. It has evolved into a logistics powerhouse, making sure that its customers have the parts they need when they need them and how they need them. There's a lot going on with the logistics piece, but being so much larger today gives the company the wherewithal to invest in technology that smaller peers can't. And the technology behind Fastenal's business means that new acquisitions can quickly and easily be brought up to speed once they are in the fold. Again, there's no reason to believe that Fastenal's business approach to technology is going to change.

The one problem that investors have to come to grips with is valuation. The company's price-to-sales and price-to-earnings ratios are both well above their five-year averages. And the stock is near its all-time highs. Clearly, Wall Street is very aware of how attractive a business Fastenal has been. But here's the interesting thing, the stock has a habit of going through material weak patches. Twenty five percent, or higher, drawdowns are fairly common for the stock. If you are patient, you can keep this growth machine on your wish list and wait to buy it during one of the fairly normal share price pullbacks.

Is Fastenal worth buying right now?

With such an impressive and consistent history of growth, it is hard to suggest that buying Fastenal today would be a mistake. However, it is still an expensive stock. You'll need to go in thinking in decades and not days if you buy it at current valuations. Most investors will probably be happier if they wait for a drawdown before buying. But if that's the path you take, make sure you plan ahead to buy this stock because buying during a drawdown will mean stepping in while everyone else is selling. That can be difficult if you don't set your mind to it ahead of time.

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

Before you buy stock in Fastenal, 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 Fastenal 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 $653,427!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,119,863!*

Now, it’s worth noting Stock Advisor’s total average return is 1,060% — 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 August 11, 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 coronavirus pandemic wasn't a major blow to this company's business, but that didn't matter to investors.

• When interest rates started to rise following the pandemic, it was realistic to question the company's growth potential.

• A high yield and slow and steady growth is still the name of the game here, but investors don't seem to care since the shares remain 25% below their pre-pandemic highs.

• 10 stocks we like better than Realty Income ›

The S&P 500 (SNPINDEX: ^GSPC) nosedived in March 2020 as the coronavirus pandemic spooked investors, creating major uncertainty about the economy. But as the world learned to live with COVID-19, the index eventually recovered and went on to hit numerous new highs in the following years. But not all S&P 500 stocks fully recovered. Realty Income (NYSE: O), for example, still trades down around 25% from its pre-pandemic highs. That suggests an opportunity for income investors who buy stocks with a target holding period of forever.

What does Realty Income do?

Realty Income is a net lease real estate investment trust (REIT) with a heavy focus on single-tenant retail properties. A net lease requires the tenant to pay most of the property-level expenses for the asset they occupy. While any single property is high risk, given there's only one tenant, that risk falls if the net-lease REIT has a large portfolio to spread it across. Realty Income's portfolio includes more than 15,600 properties. It is the largest competitor in its space.

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Image source: Getty Images.

Moreover, while Realty Income's focus is on retail assets (around 75% of rents), it also invests in industrial properties and a collection of "other" assets such as vineyards and casinos. So there is diversification in the mix, with a business that spans across North America and Europe.

Given the heavy exposure to retail, it is understandable that investors were worried about Realty Income during the pandemic. Social distancing and the government shutdown of non-essential businesses were scary and could have been devastating to Realty Income's tenants. Luckily, the uncertainty didn't last, and the REIT's occupancy levels didn't fall below 97.9% in 2020. That's a great number anytime, but occupancy has since improved from there. And investors don't seem to care because the stock remains well off its pre-pandemic highs.

The big problem is interest rates

The reason that investors are so downbeat on Realty Income's stock is likely interest rates. The Federal Reserve increased interest rates coming out of the pandemic to tamp down on a burst of inflation. The problem with this is that REITs grow by making acquisitions. Because REITs have to pay out 90% of their taxable earnings as dividends to remain REITs, they have little internal capital to use for growth. Therefore, they need to tap the capital markets for cash. Higher interest rates make that more difficult.

It isn't an unreasonable fear to think that Realty Income's growth will be slow. But Realty Income is so large that slow and steady growth is actually the norm here, anyway. Moreover, its size and financial strength (it has an investment-grade rated balance sheet) actually give it advantageous access to capital markets. So, compared to competitors, it still has attractive access to growth capital. In other words, the fears are legit, but likely overblown.

But the big story is actually the dividend, which has been increased annually for 30 years. Simply put, the company has lived through different rate environments before and survived just fine. There's no reason to believe it won't muddle through today's higher rates (though historically speaking, the rates aren't outlandishly high) without skipping a beat on the dividend.

Buy now to collect an attractive yield

Sure, dividend growth is likely to slow somewhat in the near term, as Realty Income's interest costs rise. But eventually, property markets will adjust to make acquisitions more profitable, or rates will fall. And then Realty Income's financial performance will improve. In the meantime, investors can collect a fat 5.6% dividend yield backed by a still-growing dividend. In other words, for income lovers, Realty Income's laggard stock price is an S&P 500 index investment opportunity.

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 $653,427!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,119,863!*

Now, it’s worth noting Stock Advisor’s total average return is 1,060% — 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 August 11, 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

• NextEra Energy operates in a state with a growing population and it is tapped into the growing clean energy sector.

• Enterprise Products Partners moves oil and gas, so demand for energy is more important than energy prices.

• Black Hills is a high-yield Dividend King, proving that it knows how to deal with troubling economic times while still rewarding investors well.

• 10 stocks we like better than NextEra Energy ›

A recession is a terrible thing, but also a thing that is quite normal in the business cycle. These economic downturns help to burn off the excesses that often arise during periods of rapid economic growth.

Still, investors worried about a recession today might wonder where they can invest to protect themselves from such an economic downturn. That's hard to do, but you might want to consider these three companies: NextEra Energy (NYSE: NEE), Enterprise Products Partners (NYSE: EPD), and Black Hills (NYSE: BKH).

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Here's a look at each one.

Image source: Getty Images.

1. NextEra Energy has growth opportunities

The foundation underpinning NextEra Energy's business is the regulated utility operations it runs in the state of Florida. The Sunshine State has long seen its population grow as people look for better weather and low taxes (Florida does not impose a state income tax). Retirees are a major source of new residents, which is also a positive given the aging of the very large baby boom generation.

In other words, the company's regulated electricity operations are boring, but tilted toward growth. None of these facts is likely to change in a recession.

Atop this foundation NextEra Energy has built one of the world's largest wind and solar power companies. This taps into the growth opportunity from the shift from dirtier energy sources to cleaner ones. Again, that shift, which will require decades of capital investment, isn't likely to end if there's a recession. If you buy NextEra you can collect a reliable and likely recession resilient 3.1% dividend yield.

2. Enterprise Products Partners is a toll taker

Another interesting option is North American midstream giant Enterprise Products Partners. This master limited partnership (MLP) is tied at the hip to dirty energy sources like oil and natural gas. While commodity prices for these fuels can be massively volatile, that won't have a huge impact on Enterprise's business. It owns energy infrastructure, like pipelines, that move oil and natural gas. The company charges fees for the use of its assets, so the price of the commodities it moves really aren't that important to its top- and bottom-lines.

Even when commodity prices sink, which isn't an unreasonable expectation during a recession, demand for energy tends to remain high. And that means the volume of energy passing through Enterprise's pipes is likely to remain strong. The revenue from this toll-taker model has supported 26 consecutive annual distribution increases, which is a testament to the resilience of the business. Now add in a lofty 7% distribution yield and you can see why buying today might make sense even if you are worried about a recession.

3. Black Hills' dividend has stood the test of time

Black Hills is a relatively small regulated natural gas and electric utility. To put some numbers on that, Black Hills' market cap is around $4 billion versus roughly $145 billion for NextEra Energy. And Black Hills' business is, well, fairly boring, as it reliably delivers power to roughly 1.35 million customers in Arkansas, Colorado, Iowa, Kansas, Montana, Nebraska, South Dakota, and Wyoming. The big draw here is the stock's attractive 4.5% dividend yield.

That yield is extra attractive when you look at the dividend track record. Black Hills is one of a small number of Dividend King utilities, with more than five decades worth of dividend increases behind it. NextEra's streak is "only" around three decades long.

As noted with Enterprise, recessions don't change the ever increasing need for power in the world. So Black Hills' business is likely to be resilient to economic pullbacks. The long-term growth of its dividend is proof of that and highlights why conservative dividend investors might like to buy this high yielder today.

Three energy options likely to survive a recession

Recessions are terrible things to live through, but history suggests the world will, indeed, live through the next economic downturn. If you want to invest in the energy sector in a way that will help your investments live through a recession in relative stride, focusing on strong dividend payers like NextEra Energy, Enterprise, and Black Hills is a good start. NextEra will likely interest growth investors, Enterprise is a good oil and gas related pick, and Black Hills is appropriate for conservative income lovers.

Should you invest $1,000 in NextEra Energy right now?

Before you buy stock in NextEra Energy, 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 NextEra Energy 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 $653,427!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,119,863!*

Now, it’s worth noting Stock Advisor’s total average return is 1,060% — 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 August 11, 2025

Reuben Gregg Brewer has positions in Black Hills. The Motley Fool has positions in and recommends NextEra Energy. The Motley Fool recommends Enterprise Products Partners. The Motley Fool has a disclosure policy.

Key Points

• Annaly Capital Management is a mortgage REIT.

• The stock has an astonishingly large 13%+ yield.

• Annaly Capital is not a particularly attractive income stock, but it could still help some investors build seven-figure portfolios.

• 10 stocks we like better than Annaly Capital Management ›

The S&P 500 index is currently offering a slim little 1.2% yield. The average real estate investment trust (REIT) is yielding around 3.9%. Annaly Capital Management (NYSE: NLY), a mortgage REIT, is offering an over 13% dividend yield today! While you shouldn't buy Annaly Capital if you are looking for a reliable income stream, it can still be a key part of a millionaire-maker portfolio. Here's what you need to know.

Annaly Capital is not a reliable income investment

Annaly Capital will probably pop up on most dividend screens given the huge yield it offers. But yield alone is not a good reason to buy this stock, particularly if you need the income your portfolio generates to pay for living expenses. A simple graph can illustrate the issue.

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NLY data by YCharts.

Notice the volatility of the dividend and how the stock price tends to track along with the dividend, up and down. Although the dividend was just increased, the longer trend here is downward. So, dividend investors who bought a decade ago because of a lofty dividend yield have ended up with less income and less capital. Not ideal for a dividend-focused investor.

The problem is with the fact that Annaly is a mortgage real estate investment trust (REIT). This is a fairly complex niche of the broader REIT sector. Annaly basically buys mortgages that have been pooled into bond-like securities. Mortgages get repaid over time, with a portion of the payment covering interest expenses and a portion reducing the principal of the mortgage. So the huge yield here effectively results in the shrinking of the REIT's portfolio over time, thanks to the principal repayments. On top of that, you can add the impact of interest rates, housing market dynamics, and even mortgage repayment trends.

Image source: Getty Images.

Annaly is not a bad investment

Here's the thing -- Annaly Capital actually does a fairly good job of achieving its goal. That goal, however, is generating an attractive total return. It is not focused on income, even though the dividend plays an important part in the story. The key is that in order to fully benefit from this REIT's approach, you have to reinvest the dividend, not spend it.

NLY Total Return Level data by YCharts.

As the chart above shows, Annaly's total return is roughly similar to that of the S&P 500 index over time. However, the chart highlights that the return profile has been different. That makes Annaly a very attractive option for investors looking to create a diversified asset allocation portfolio.

Essentially, adding Annaly to an asset allocation portfolio can provide investors with returns that aren't directly tied to the general performance of the stock market. Or, to put it a different way, when stocks zig, Annaly could be zagging. The end result is a better total return for the overall portfolio. But if you spend the income this REIT throws off, you won't be able to fully benefit from this fact.

Is Annaly a millionaire-maker stock?

Annaly Capital probably isn't a millionaire-maker stock all on its own. But as a part of a larger asset allocation portfolio, this total return-focused mREIT could help you build a seven-figure nest egg. The other big takeaway here, however, is that Annaly is far more complex than a property-owning REIT, and most income-focused investors should probably avoid it despite the huge dividend yield it offers.

Should you invest $1,000 in Annaly Capital Management right now?

Before you buy stock in Annaly Capital 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 Annaly Capital 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 $636,563!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,108,033!*

Now, it’s worth noting Stock Advisor’s total average return is 1,047% — a market-crushing outperformance compared to 181% 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 August 4, 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

• Realty Income is the largest net lease REIT.

• It has a strong financial position and diversified business.

• The REIT has a long and impressive track record of reliably paying and growing its monthly-pay dividend.

• 10 stocks we like better than Realty Income ›

A strong business foundation is the cornerstone of a company's operations, but also of your portfolio. Investors looking to set themselves up with a lifetime of high-quality income will want to start with great businesses that also happen to have high yields.

That is exactly what Realty Income (NYSE: O) and its lofty 5.6% yield offer today. Here's what you need to know.

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Start with Realty Income's dividend

The S&P 500 index (SNPINDEX: ^GSPC) has a miserly dividend yield of 1.2% today. The average real estate investment trust's (REIT's) yield is 3.9%. Realty Income's average yield over the past decade was roughly 4.5%. The net lease REIT's yield today is around 5.6%.

Image source: Getty Images.

Let's break that down. Realty Income has a high yield on an absolute level. But the yield is also attractive relative to the broader market, REITs in general, and Realty Income's own yield history. If you are looking for a high-yield stock, now is a good time to be considering Realty Income for your portfolio.

But a high yield isn't going to set you up for life if it isn't reliable. So it's good news that Realty Income has increased its dividend annually for three decades. Within that streak, the dividend has been increased every quarter for 110 quarters (roughly 27 years). As if that wasn't enough, the dividend is paid monthly, so it is pretty close to a paycheck replacement. That should particularly interest investors who are entering retirement.

What about Realty Income's business?

If you're ready to buy Realty Income, don't. You still haven't heard about its business, which is the foundation that supports the dividend. As noted, it's a net lease REIT, which means that its tenants pay most of the costs associated with the single-tenant properties they occupy. Although any one property is high-risk, over a large portfolio, the risk is fairly low. Realty Income is the largest net lease REIT you can buy, with more than 15,600 properties.

The portfolio is highly concentrated in the retail sector (roughly 75% of rents), where properties tend to be very similar and, thus, are easy to buy, sell, and release as needed. The rest of the portfolio is split between industrial assets and unique investments in areas like agriculture, casinos, loans, and data centers.

On top of the property segment diversification, Realty Income also layers in geographic diversification. It invests in both North America and Europe, a region where the use of net leases is still fairly new. The company is also starting to offer management services to institutional investors.

Overall, Realty Income has a lot of levers to pull as it seeks to continue growing its business and dividend. But it also has a rock solid financial foundation, with an investment-grade rated balance sheet. Moreover, its industry-leading $50 billion market cap means that it can more easily tap the capital markets than smaller peers. Thus, it also tends to have advantaged access to capital, which allows it to compete aggressively for properties.

If there is one negative to consider with Realty Income, it's that the REIT's size limits its ability to grow. Basically, it takes a lot of investment to move the needle on the top and bottom lines. So slow and steady is likely to be the name of the game here, including when it comes to dividend growth. However, given the high yield, that's probably not the end of the world.

Realty Income is a foundational investment

Basically, if you add Realty Income to your portfolio, you have a reliable high-yield stock on which you can layer lower-yielding, but faster-growing, investments. Indeed, companies with rapid dividend growth rates often have modest yields. Realty Income paired with a dividend growth stock can leave you with a healthy income stream today (from Realty Income) and inflation protection (from the faster-growing dividend stocks). That can set you up for a very happy dividend-filled life.

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 $636,563!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,108,033!*

Now, it’s worth noting Stock Advisor’s total average return is 1,047% — a market-crushing outperformance compared to 181% 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 Realty Income. The Motley Fool has a disclosure policy.

Key Points

• Collecting monthly dividends is like replacing a paycheck.

• Net lease giant Realty Income is a slow and steady tortoise with a lofty 5.6% yield.

• Agree Realty is a growth-focused net lease REIT with a 4.2% yield.

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

Your investment needs change when you switch from building your wealth to trying to live off of your savings. Suddenly, income is a much more important factor in the investing equation.

Monthly dividend payers like Realty Income (NYSE: O) and Agree Realty (NYSE: ADC) not only provide income, but the frequency of the dividend is almost like replacing a paycheck. Here's a look at each of these high yielders and why you might want to buy them.

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 »

Image source: Getty Images.

What is a net lease REIT?

Realty Income and Agree are both net lease real estate investment trusts (REITs). A net lease requires the tenant to pay most property-level expenses for the property they occupy. This gives the tenant effective control of the property and leaves the landlord free to just collect rent checks.

That's a bit of a simplification, but the key here is that net lease properties are often created when a company sells a property and then instantly leases it back in what is known as a sale/leaseback transaction.

Why do that? Because a sale/leaseback net lease deal is usually a financing transaction for the seller. It allows them to raise cash for other purposes, like growing their business.

REITs like Realty Income and Agree benefit because they usually get reliable tenants, long lease terms, and built-in rent escalators. It's pretty close to a win/win deal. You can add an extra win here, too, because shareholders of these two REITs have gotten reliable dividends out of the equation.

What's the difference between Realty Income and Agree?

The core focus on both Realty Income and Agree is net lease retail properties. In this way, they are competitors. However, Realty Income is a far larger business, with more than 15,600 properties compared to Agree's roughly 2,500 assets. There are some important differences that flow from the size discrepancy here.

Realty Income is so large that it has had to diversify its portfolio. The first notable issue is that industrial and "other" assets make up around 25% of rents. But it has also reached across the pond, expanding its geographic reach to Europe.

The goal is to have as many levers for growth as possible. It simply takes more transaction volume to grow a huge portfolio. In fact, Realty Income has even branched out into some nontraditional net lease areas, like data centers, debt, and investment management.

Realty Income is a slow and steady tortoise, but the company is working hard to make sure that it can continue to grow its dividend in the future as in the past. At this point, Realty Income's dividend has been increased every year for 30 years, a streak that includes 110 quarterly increases. The yield is a very attractive 5.6%.

Agree Realty is much smaller, and its focus is much smaller, too. It basically only invests in retail properties in the United States. That's not a bad thing. The U.S. net lease retail property market is quite large, and there's plenty of room for Agree to keep expanding its portfolio. And given its small size, it doesn't take nearly as much to grow the business as it would take to grow Realty Income.

With a larger growth opportunity ahead of it, Agree Realty tends to trade at a premium to Realty Income. Notably, Agree's dividend yield is 4.2%. However, over the past decade, Agree's average annualized dividend growth rate was around 5%, compared to roughly 3.5% for Realty Income.

That may not sound like a large difference, but it adds up over time. Agree is a good choice for those who favor income growth over income now.

Perhaps buy them both?

If you are looking to replace a paycheck with a monthly pay stock, both Realty Income and Agree will fit that bill. Add in attractive and well-above-market dividend yields, and the story gets even better.

That said, the best choice here may not be picking one or the other. It could be buying them both, so you can find a balance between maximizing the income you generate with protecting your income stream from the ravages of inflation.

Where to invest $1,000 right now

When our analyst team has a stock tip, it can pay to listen. After all, Stock Advisor’s total average return is 1,026%* — a market-crushing outperformance compared to 180% for the S&P 500.

They just revealed what they believe are the 10 best stocks for investors to buy right now, available when you join Stock Advisor.

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*Stock Advisor returns as of August 4, 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

• Realty Income is a giant real estate investment trust and a bellwether in the net lease sector.

• The REIT is so large relative to its peers that it is likely to be a laggard on the growth front.

• However, it is working to ensure that it remains a reliable foundation for dividend portfolios.

• 10 stocks we like better than Realty Income ›

Realty Income (NYSE: O) is offering investors a 5.6% dividend yield today. That's well above both the market's 1.2% yield and the average real estate investment trust's (REIT's) yield of roughly 3.9%.

If you're a long-term dividend investor, it probably makes sense to consider adding Realty Income to your portfolio, since it has increased its dividend annually for three decades and counting. But make sure you understand these three things before you buy it.

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1. Realty Income is a giant

With a market capitalization of roughly $50 billion, Realty Income is multiple times larger than its next closest peers in the net lease niche of the REIT sector. This is both good and bad.

Image source: Getty Images.

On the negative side, Realty Income is so large that it takes a huge amount of new property acquisitions to move the needle on the top and bottom lines. This means that relatively slow growth is likely to be the norm here in the future. But being so large isn't all bad.

On the positive side, Realty Income has the wherewithal to take on deals that its peers couldn't manage. It likely sees all of the material deals that are in the market (allowing it to cherry-pick to some degree), it can act as an industry consolidator, and its size gives it easier access to Wall Street. So while slow growth is probably going to be the norm, steady growth is also highly likely, with contractual rent bumps in its leases augmented by its ability to keep buying new properties.

2. Realty Income is looking to increase its growth opportunities

Realty Income isn't ignoring the size limitations it faces. In fact, it is embracing its scale. For example, a few years ago it began expanding into Europe, a market that is still only just starting to use the net lease approach. That materially expands the opportunity set the company has as it looks to buy new properties.

Realty Income has also been working to increase the number of property markets in which it competes. Historically, retail and industrial has been the core here. But management has been venturing into new spaces, like casinos and data centers, as it looks to find new levers for growth.

More recently, Realty Income has started to make loans and to offer asset management services to institutional investors. Overall, this giant REIT is using its scale to reach out into new areas that will, hopefully, help to sustain its growth over the long term.

3. Realty Income knows what it is

The last issue that really matters here is that Realty Income isn't trying to be something it's not. Management understands that it is a giant company and that investors buy it because of its large and reliable dividend. In fact, the company trademarked the nickname, "The Monthly Dividend Company" to highlight the commitment it has to being a reliable dividend stock.

O data by YCharts.

This is so important because it means that the board and the CEO aren't building castles in the sand that will get washed away when the tide comes in. They are building a REIT that can keep paying dividends reliably through thick and thin. That means that long-term investors can use Realty Income as a foundational investment atop which they can comfortably buy more aggressive dividend stocks.

What really matters with Realty Income is both obvious and subtle

Every company has nuances to consider, and that's true of Realty Income, too. The two most obvious stories are the company's vast size and what it is doing with the scale it has achieved. In the background, however, is perhaps the most notable issue. Realty Income knows what its shareholders expect, and it's working every day to meet those expectations by providing investors with a reliable and growing dividend.

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 $625,254!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,090,257!*

Now, it’s worth noting Stock Advisor’s total average return is 1,036% — a market-crushing outperformance compared to 181% 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 29, 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

• 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?

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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 $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!*

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*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.

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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:

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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 $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!*

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*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.

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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?

Before you buy stock in Pfizer, 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 $652,133!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,056,790!*

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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

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $414,949!*
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*Stock Advisor returns as of July 7, 2025

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:

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 $687,764!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $980,723!*

Now, it’s worth noting Stock Advisor’s total average return is 1,048% — a market-crushing outperformance compared to 179% 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 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:

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 $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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*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.

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 »

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.