Dividend stocks are a useful source of extra income.
The best dividend stocks, however, also increase payouts over time and can build you a fortune.
The S&P 500 index has some top-notch dividend stocks, some of which are no-brainer buys now.
Dividend stocks are one of the most powerful wealth compounders. The S&P 500 (SNPINDEX: ^GSPC) index offers the perfect example. Over the past 25 years, while the S&P 500 rose by over 300%, its total returns crossed 550% thanks to reinvested dividends.
As you may guess, the S&P 500 comprises some of the best dividend stocks out there, many of which have been multibaggers and have the potential to continue being so. Here are 10 such magnificent S&P 500 dividend stocks -- trading at least 10% below their all-time highs -- to buy now and hold forever.
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Johnson & Johnson (NYSE: JNJ) is a cash-flow machine. It generated $95 billion in free cash flow (FCF) over the past five years and returned 60% of it to shareholders. The stock is also a dividend powerhouse, increasing its dividend for 62 consecutive years. Johnson & Johnson has robust financials, invests heavily in research and development, and has big plans for both its businesses, pharmaceuticals and medical technology, making it a top S&P 500 dividend stock to buy and hold.
ExxonMobil (NYSE: XOM) is one of the world's largest oil and gas companies. In 2024, the oil and gas giant generated $55 billion in cash flow from operations, compared to $30 billion in 2019. ExxonMobil is a dividend behemoth with a 42-year streak of consecutive dividend increases. After its $60 billion acquisition of Pioneer Natural Resources in 2023, ExxonMobil has been targeting higher production at even lower costs and focusing on boosting its cash flows, all of which makes this magnificent S&P 500 dividend stock a buy at every dip.
Procter & Gamble (NYSE: PG) owns over 60 brands, most of which are household names today. Although its organic sales growth has slowed due to higher costs and weak consumer sentiment, it's just a short-term blip. Procter & Gamble is restructuring operations and targeting core earnings per share by mid- to high-single-digit percentages in the long term by exiting low-margin brands and markets. Above all, Procter & Gamble has a strong balance sheet and is a Dividend King, having increased its dividend for 69 consecutive years.
NextEra Energy (NYSE: NEE) operates the largest electric utility in America (Florida Power & Light), which generates steady cash flows. It is also the world's largest producer of wind and solar energy, as well as a key player in battery storage, all of which are growth drivers. NextEra Energy stock has increased its dividend for over 20 years and has generated humongous returns for investors who reinvested the dividends. The global shift to renewables and a massive pipeline make NextEra Energy a no-brainer S&P 500 dividend stock to buy and hold forever.
Chevron (NYSE: CVX) is one of the largest integrated oil companies, operating across the entire value chain, from exploration and production to pipelines, refining, chemicals, and marketing. Chevron has massive oil and gas reserves but is also growing new low-carbon businesses, such as hydrogen and renewable fuels. Chevron has increased its dividend for 38 consecutive years, making it one of the best oil dividend stocks within the S&P 500. Chevron also just won a dispute with ExxonMobil and has acquired Hess in a massive $53 billion deal.
American Water Works (NYSE: AWK) is the largest regulated water and wastewater utility in the U.S., serving over 14 million customers and 18 military bases.
While generating stable cash flows from these regulated and contracted businesses, American Water Works' regular investments in its infrastructure help it secure base rate hike approvals, which continue to drive its earnings, cash flows, and dividends higher. American Water Works is targeting 7% to 9% annual dividend growth for the long term, making it an incredibly safe S&P 500 dividend stock to buy now and hold forever.
Realty Income (NYSE: O), a real estate investment trust (REIT), pays a dividend every month and has increased it for 110 consecutive quarters now. The company owns over 15,000 properties globally and leases them under triple-net leases, where the tenants bear most of the costs. So, Realty Income enjoys high margins, and its diverse portfolio enables the company to navigate economic challenges. Realty Income's commitment to paying a monthly and growing dividend makes it one of the top 10 dividend stocks to double up on now and hold.
Oneok (NYSE: OKE) is one of the largest energy infrastructure companies in the U.S., with a network of pipelines spanning 60,000 miles. Three big acquisitions over the past couple of years or so, including that of Magellan Midstream Partners, combined with organic expansions, should help Oneok steadily grow earnings and meet its goal of increasing the annual dividend by 3% to 4%. When coupled with a 5% yield, Oneok makes for an appealing S&P 500 dividend stock to buy and hold.
Nucor (NYSE: NUE) is America's largest and most diversified steel company. It is also vertically integrated, meaning it sources the bulk of its raw material in-house. That's a huge competitive advantage to have in a commodity business and one of the key factors behind Nucor's strong financials and dividend growth. Nucor aims to return at least 40% of its earnings to shareholders, has increased its dividend for 52 straight years, and is primed to benefit from President Donald Trump's steep tariffs on steel imports.
With revenue of $33.5 billion for the fiscal year that ended April 25, 2025, Medtronic (NYSE: MDT) is the world's largest medical device manufacturer. It offers a wide range of products across cardiovascular, neuroscience, medical-surgical, and diabetes care and uses artificial intelligence and robotics technologies to build better products. Medtronic plans to divest its diabetes business into a separate company to unlock more value for shareholders. Meanwhile, it is only two dividend raises away from becoming a Dividend King, making this S&P 500 dividend stock a solid buy.
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 $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!*
Now, it’s worth noting Stock Advisor’s total average return is 1,048% — 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.
*Stock Advisor returns as of July 15, 2025
Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chevron, NextEra Energy, and Realty Income. The Motley Fool recommends Johnson & Johnson, Medtronic, and Oneok 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.
The TSLY ETF is a YieldMax product that uses options strategies to generate income from Tesla stock.
As of the latest information, the ETF yields more than 100%.
There’s a lot more to consider than just the yield before you decide to invest.
Many ETFs have come onto the market recently that use various options strategies to boost income. For example, some ETFs use covered call strategies to produce yields of 10% or more for investors from relatively low-paying portfolios of stocks.
YieldMax ETFs take this idea to the next level, using aggressive strategies to, as the name suggests, maximize yield. It's not uncommon for YieldMax ETFs to have dividend yields of 30%, 40%, or much higher in some cases.
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One extreme example is the YieldMax Tesla Option Income Strategy ETF (NYSEMKT: TSLY), which uses call option strategies on Tesla (NASDAQ: TSLA) stock to produce a high level of monthly income. In fact, based on the past 12 months of dividends, the ETF has a dividend yield of about 127%.
Of course, if something sounds too good to be true, that's usually the case. If there was an ETF that produced a sustainable three-digit yield and was likely to do so for the foreseeable future, we'd all be scrambling to buy shares. But in this case, there are quite a few caveats and important things to know before you consider investing.
Image source: Getty Images.
It might surprise you to learn that the majority of the YieldMax Tesla Option Income Strategy ETF's assets are in U.S. Treasuries. It uses these as collateral to buy and sell options on the stock, which are typically near the current share price. For example, the largest non-Treasury position in the portfolio is July 2025 call options with a $340 strike price. Some of the positions are long, some are short (meaning the ETF sold options), and there are some put options in the portfolio as well.
The general goal with the options positions is to create the highest stream of income relative to the risk level as possible.
There are two big risk factors to consider. First, and less significant, is the inconsistency of the monthly dividend payments you'll get. Over the past 12 months, the distributions from this ETF have been as high as $1.29 or as low as $0.40.
The bigger issue is that the stock price itself has a downward bias over time. In short, if the price of Tesla stock goes up, the ETF's options strategies severely limit the upside potential. On the other hand, if the stock falls, it can result in large losses. In fact, since the YieldMax Tesla Option Income Strategy ETF was formed in late 2022, Tesla stock has risen by 92%. Shares of this ETF have fallen by 78%, and there's even been a reverse split along the way.
Of course, even with a modestly declining share price, an ETF like this can still be a winner. In other words, if the ETF declines by say, 30%, but pays a 100%-plus yield, it's still a great investment. But that hasn't been the case. In fact, including dividends, this ETF has generated a 26% total return for investors since its 2022 inception. That's 52 percentage points worse than if you had simply bought Tesla stock and held on to it.
In a nutshell, YieldMax ETFs produce the best total returns compared with simply buying the underlying stock in times when the stock is mostly flat for an extended period, without any massive price swings. And if you look at virtually any chart of Tesla's historic stock performance, you'll see that doesn't really describe its typical price action.
The bottom line is that if you think Tesla stock is going to be stuck in a narrow price range for a while, the YieldMax Tesla Option Income Strategy ETF could be a good way to play it. Just be aware that this and other YieldMax ETFs aren't magical income instruments and are more likely than not to produce underperforming total returns over time.
Before you buy stock in Tidal Trust II - YieldMax Tsla Option Income Strategy ETF, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Tidal Trust II - YieldMax Tsla Option Income Strategy ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $692,914!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $963,866!*
Now, it’s worth noting Stock Advisor’s total average return is 1,050% — 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.
*Stock Advisor returns as of June 30, 2025
Matt Frankel 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.
The investing community is beginning to take notice of Nebius Group (NASDAQ: NBIS). I say that largely based on the almost 150% surge in its share price since mid-April. There's a reason behind that, though. Nebius has been executing on its plan to grow its revenues to a level that would justify a valuation well above its current one.
The company, which went public in May 2011 under the name Yandex, was originally a Russian search engine company. The stock peaked in late 2021. It now trades as Amsterdam-based Nebius Group more than 40% off that previous high.
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Nebius sprouted as the cloud computing arm of Russian e-services giant Yandex. It was formed after Yandex restructured and divested all of its Russian assets in July 2024. It resumed trading on the Nasdaq Stock Exchange under the Nebius name in late October 2024.
Image source: Getty Images.
The stock remains far below its Yandex-era highs since the post-transition business has yet to fully demonstrate its potential for growing revenue. But Nebius management is giving investors a good idea of how to value that expected growth. If its assessment proves accurate, Nebius stock would be a good buy at recent prices.
Nebius' core business is cloud infrastructure. It's one of a growing number of hyperscalers supplying the computing power needed in the age of artificial intelligence (AI).
Hyperscalers like Nebius have the massive amounts of data center infrastructure that it takes to supply cloud computing services on a global level. It competes with leading players like Amazon Web Services (AWS), Microsoft Azure, and Alphabet's Google Cloud.
While its cloud infrastructure and services segment is Nebius' core business, the company has four business segments, all in specific areas of the AI ecosystem:
Nebius (cloud infrastructure): The core business, providing infrastructure from a network of data centers for AI workloads, including large-scale GPU clusters, cloud platforms, and developer tools.
Toloka: A data partner with a network of human specialists to test and evaluate large language models (LLMs) in generative AI development.
TripleTen: A technology platform focused on reskilling individuals for tech careers, leveraging AI-driven educational tools.
Avride: Developing autonomous driving technology for self-driving cars and delivery robots, targeting sectors like ride-hailing, logistics, e-commerce, and food delivery.
Nebius' work in the AI ecosystem has attracted the attention of AI leader Nvidia. The chipmaker participated in a $700 million private funding round for Nebius late last year. Nvidia also owns more than 1 million shares of Nebius stock.
Nebius is leading the way in providing computing capacity from Nvidia's GB200 Blackwell Superchips to European customers. The GB200 is a key component in the architecture of Nvidia CPU and GPU liquid-cooled server racks, including networking links for AI model inference.
Nebius' partnership with Nvidia gives the cloud services company the ability to scale at a rate that management says will result in an annualized revenue run rate of between $750 million and $1 billion by the end of 2025. It also expects to reach positive adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) this year.
The upper end of that revenue run rate would give Nebius a price-to-sales (P/S) ratio of about 12.5, even after the stock's recent surge. That appears to be a reasonable valuation for such a fast-growing tech company. By comparison, fellow cloud AI infrastructure provider CoreWeave sports a P/S ratio of about 15 based on this year's revenue guidance.
Nebius may now be showing up on some tech investors' radars, but it still isn't being valued as richly as it could be. If Nebius does achieve the sales growth management says it's on track to reach this year, the stock could have more room to run over both the short and long term.
Before you buy stock in Nebius Group, 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 Nebius Group wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $713,547!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $966,931!*
Now, it’s worth noting Stock Advisor’s total average return is 1,062% — a market-crushing outperformance compared to 177% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
*Stock Advisor returns as of June 23, 2025
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Howard Smith has positions in Alphabet, Amazon, Microsoft, Nebius Group, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, and Nvidia. The Motley Fool recommends Nasdaq and Nebius Group and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
Dividend investors loathe payout cuts, but sometimes they are necessary for a corporation facing significant headwinds to get back on track. Take Medical Properties Trust (NYSE: MPW), a healthcare-focused real estate investment trust (REIT). The company has struggled over the past two years due to tenant-related issues. It had to cut its dividends twice as a result. However, MPT has made significant strides in the right direction, and the company may soon resume raising its dividends. Here's the rundown.
The REIT business seems somewhat stable. These companies operate real estate properties that they rent out to businesses, collecting regular and consistent rental income. Easy enough. REITs in the healthcare sector can appear even more reliable, as medical care remains in high demand regardless of economic conditions. However, even health-focused businesses can encounter issues and go bankrupt. That's what happened to two of MPT's former tenants, including one that was, at some point, its largest. The company's financial results took a significant hit. It hasn't recovered yet. MPT's revenue is still moving in the wrong direction.
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But the comeback has already begun. MPT found multiple new tenants to occupy most of the facilities formerly rented out by its then-largest client that went bankrupt. Among other things, that means the company's portfolio is now more diversified. One or two tenants going out of business is unlikely to affect MPT as much as it did last time. The new contracts it signed with its new renters have an average lease of 18 years. Regular rental income for almost two decades provides MPT with some security, provided, of course, these new tenants don't go out of business, too. While that could certainly happen, these moves make the company far more stable than it was when its troubles first started.
MPT's quarterly dividend per share went from $0.29 to $0.15 to $0.08 in less than two years. Not only was it dealing with rapidly declining revenue, but it also had pressing financial obligations that needed to be addressed.
MPT has worked to solve both problems. The company's new tenants aren't paying the full rental amount due -- at least not yet. They began doing so only in the first quarter, and they are currently paying only a fraction of it.
They will gradually increase rent payments to 100% of the due amount by the fourth quarter of 2026. By the time MPT starts collecting the full amount, its revenue should move in the right direction since it expects about $160 million in rental revenue from these facilities.
In the first quarter, the company's revenue declined by 17.5% year over year to $223.8 million; $160 million represents more than half of its first-quarter revenue. Even assuming the $223.8 million included 50% of the full rental income it will receive from these new tenants by the fourth quarter of 2026 (it doesn't, the payments will reach 50% by the end of this year), it would still mean that MPT would be adding $80 million in revenue by the end of next year.
Adding that to its first-quarter revenue would have led to year-over-year top-line growth of 12% compared to the first quarter of 2024. Decent revenue growth awaits MPT, and that will allow it to improve its bottom-line numbers as well. Further, the company has improved its balance sheet. MPT sold some facilities to raise money and pay down debt, amounting to $2.2 billion between early 2023 and the end of 2024.
It's harder for a company to raise dividends when it has to worry about upcoming obligations. However, the recent moves MPT made, which also included refinancing existing debt, have granted it far more financial flexibility. The stage is set for MPT to start growing its dividend again. Don't expect a massive hike, but with a stable payout program that could start growing again next year and a 7.3% forward yield, the company is far more attractive as an income stock than it was just two years ago. Yet, the stock is still down by 51% over this period.
In my view, it's still time to buy the stock. MPT's shares should move in the right direction as its comeback continues.
Before you buy stock in Medical Properties Trust, 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 Medical Properties Trust 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 $676,023!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $883,692!*
Now, it’s worth noting Stock Advisor’s total average return is 793% — a market-crushing outperformance compared to 173% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
*Stock Advisor returns as of June 23, 2025
Prosper Junior Bakiny 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.
Warren Buffett once said his favorite holding period for the right stock was "forever." However, it can be tough to find the right stock to simply buy, hold, and forget, as geopolitical conflicts, tariffs, trade wars, and other macro headwinds rattle the markets.
If you're worried about those unpredictable challenges, you should buy an evergreen dividend stock with a proven track record of rewarding its long-term investors. One of those stocks is Realty Income (NYSE: O) -- and I'll give you 10 simple reasons to buy and hold it forever.
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Image source: Getty Images.
Realty Income is one of the world's largest real estate investment trusts (REITs). REITs buy a lot of properties, rent them out, and split the rental income with their investors. REITs must pay out at least 90% of their taxable income as dividends to maintain a favorable tax rate, so they'll generate steady income as long as their properties are occupied.
REITs provide single, double, and triple net leases. In a single net lease, the tenant pays the property taxes while the REIT pays the insurance and maintenance costs. In a double net lease, the tenant pays the property taxes and insurance, while the REIT pays the maintenance costs.
But in a triple net lease, the tenant pays all the taxes, insurance premiums, and maintenance costs, while the REIT pays practically nothing. Realty Income, along with most major REITs, use triple net leases to reduce their expenses and maximize their profits.
Realty Income owns more than 15,600 properties in all 50 U.S. states, the U.K., and six countries in Europe. Its clients are diversified across 91 different industries, but it focuses heavily on recession-resistant businesses like convenience stores and discount retailers.
Realty's top tenants include 7-Eleven, Dollar General, Walgreens, and Dollar Tree, but none of those tenants account for more than 3.4% of its annualized rent. Some of those tenants have struggled with store closures in recent years, but many of its stronger tenants are picking up the slack.
Realty Income currently has an occupancy rate of 98.5% across its properties, and that metric has never dropped below 96% since its IPO in 1994. Its ability to maintain those high occupancy rates through the Great Recession, the COVID-19 pandemic, and the borderline recession of 2022 indicate it's built to withstand tough economic downturns.
As of its latest quarter, Realty had a weighted average remaining lease term (WALT) of 9.1 years. Those long-term leases should help to further insulate it from the near-term challenges.
Realty Income pays its dividends monthly, which sets it apart from many other companies, which only pay quarterly dividends. That makes it a solid choice for retirees, who likely favor predictable cash payments every month, as well as long-term investors, who can continue reinvesting those dividends to compound their total returns.
Realty Income has raised its dividend 130 times since its public debut. It's also raised that payout for 110 consecutive quarters. That represents a total 258% increase and a compound annual dividend growth rate of 4.2% for its dividend since 1994.
Realty currently pays a forward dividend yield of 5.65%, compared to the 10-year Treasury's current yield of 4.38%. If interest rates continue to decline, more income-oriented investors will likely pivot from T-bills toward Realty Income and other reliable REITs.
REITs often struggle when interest rates rise, since it becomes more expensive to take out loans to buy additional properties. Elevated interest rates can also disrupt the growth of its tenants, which can lead to business closures and higher vacancy rates. So as interest rates continue to decline, Realty Income's profits should rise.
Realty Income and its REIT peers usually gauge their profitability with their adjusted funds from operations (AFFO). Realty's AFFO per share rose at a steady CAGR of 5% from 2014 to 2024, and it expects that figure to rise 1%-2% to $4.22-$4.28 per share in 2025. That will easily cover its forward annual dividend rate of $3.23 per share.
At $57, Realty Income trades at just 13 times this year's AFFO. Back when it closed at its all-time high of $64.19 on Aug. 15, 2022, it was trading at 16 times its AFFO for 2022. That low valuation should limit its downside potential in this wobbly market -- so I think it's a great time to load up on some shares and hold them forever.
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 $676,023!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $883,692!*
Now, it’s worth noting Stock Advisor’s total average return is 793% — a market-crushing outperformance compared to 173% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
*Stock Advisor returns as of June 23, 2025
Leo Sun has positions in Realty Income. The Motley Fool has positions in and recommends Realty Income. The Motley Fool has a disclosure policy.
Kings don't always receive royal treatment. Dividend Kings certainly don't. Target (NYSE: TGT) provides a great example.
Shares of the giant retailer have plunged close to 40% below the high set in October 2024. Some investors have run for the hills. However, there's a case to be made for not overthinking the difficulties that Target faces and just buying the beaten-down stock.
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Target hasn't hit the bullseye very much lately. The company's first-quarter sales slipped nearly 3% year over. Its earnings were well below expectations. Executives said during the Q1 earnings call that they weren't satisfied with the performance four times. Even worse, Target slashed its full-year earnings guidance and expects sales to decline by a low single-digit percentage.
What's going on? Some of the problems are largely outside of Target's control. For example, inflation has put pressure on discretionary spending. Consumer confidence declined for five consecutive months this year.
President Trump's tariffs create more issues for the entire retail sector. Target is no exception. Many of the products the company sells are imported. While Target has significantly decreased its reliance on products made in China, the level is still around 30%.
Target is responsible for one major headache, though. Management announced earlier this year a rollback of several diversity, equity, and inclusion (DEI) initiatives and a new "Belonging at the Bullseye" strategy for "creating a sense of belonging for our team, guests and communities." This decision sparked a major backlash, including a consumer boycott. Target CEO Brian Cornell briefly acknowledged the pushback in the Q1 earnings call, saying that one of the headwinds the company faces was "the reaction to the updates we shared on belonging in January."
However, there is some better news for the beaten-down retailer. For one thing, management isn't trying to sweep the company's problems under the rug. Target established an "acceleration office" led by COO Michael Fiddelke. The purpose of this group will be to facilitate faster decision-making and execution of strategic initiatives to return to growth.
Much of what made Target one of the most successful retailers in the world for years remains in place. Many of the brands offered in its stores remain popular with customers. Target's partnership with Kate Spade was a big hit.
Image source: Target.
The company continues to make solid progress on reducing inventory shrinkage and improving productivity. These efforts should help offset some of the pressures on profits.
Target appears to have a good strategy for dealing with tariffs. It's negotiating with vendors, trying to source from different countries with lower tariff rates where possible, adjusting order pricing, and (as a last resort) increasing prices. Chief commercial officer Rick Gomez thinks that these efforts should "offset the vast majority of the incremental tariff exposure" the company will face.
Then there's the dividend. Target recently announced its 54th consecutive year of dividend increases. Its forward dividend yield stands at 4.67%. Despite the retailer's challenges, it remains in a strong position to continue its impressive streak of dividend hikes with a low payout ratio of 49%.
It's easy to overthink Target's problems and overlook its strong points. After all, this is a company that's on track to generate revenue of close to $105 billion this year and deliver solid profits. Target is also, as we've seen, a highly reliable source of dividend income.
We shouldn't leave out the stock's valuation, either. Target's shares trade at only 12.8 times forward earnings.
I expect it will take a while for Target's turnaround to play out. However, I suspect that investors who buy now will enjoy attractive total returns over the long term.
Before you buy stock in Target, 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 Target 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 $659,171!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $891,722!*
Now, it’s worth noting Stock Advisor’s total average return is 995% — a market-crushing outperformance compared to 172% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
*Stock Advisor returns as of June 9, 2025
Keith Speights has positions in Target. The Motley Fool has positions in and recommends Target. The Motley Fool has a disclosure policy.
It didn't seem that far ago in the past that the idea of artificial intelligence (AI) seemed like the stuff of science fiction. Nowadays, however, it seems that everywhere we look, AI has a presence. From customer service chatbots to self-driving cars, AI in a wide variety of places that transcend the generative AI applications like ChatGPT that people are turning to daily -- and maybe even hourly.
Recognizing how rapidly AI is escalating, growth investors are looking for ways to prosper from the trend. Fortunately for them, they needn't fret about identifying individual AI companies -- the exchange-traded fund Invesco QQQ ETF (NASDAQ: QQQ) provides a convenient one-stop shopping exchange-traded fund opportunity for those looking to invest $1,000 and hold on for the long term.
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Although you couldn't tell by the name of the fund, the Invesco QQQ ETF still offers considerable AI exposure, although it's not explicitly stated in the same way as other AI-focused ETFs like the Roundhill Generative AI and Technology ETF or the Global X Robotics and Artificial Intelligence ETF.
Providing exposure to the market's leading tech stocks, the Invesco QQQ ETF has the stated goal of tracking the Nasdaq-100, an index that tracks the performance of the top 100 nonfinancial stocks listed on the Nasdaq Stock Market.
In addition to all the "Magnificent Seven" stocks, the 10 largest positions in the Invesco QQQ ETF include semiconductor stalwart Broadcom, streaming leader Netflix, and leading wholesale retailer Costco Wholesale.
| Company | Allocation (Percentage of the Invesco QQQ) |
|---|---|
| Microsoft | 8.79% |
| Nvidia | 8.62% |
| Apple | 7.34% |
| Amazon | 5.59% |
| Broadcom | 4.80% |
| Meta Platforms | 3.72% |
| Netflix | 3.17% |
| Tesla | 2.94% |
| Costco Wholesale | 2.69% |
| Alphabet (class A shares) | 2.54% |
Data source: Invesco QQQ ETF Prospectus Data.
Despite the fact that there are 100 stocks held in the Invesco QQQ ETF, it's the top 10 positions that do the heavy lifting, representing 50% of the fund's weighting.
Besides companies providing innovative AI tools like Apple and Microsoft, investors have the opportunity to prosper from AI's use in autonomous vehicles with Tesla, as well as semiconductor stocks Nvidia and Broadcom that provide AI computing capabilities.
While the popularity of some technologies -- like 3D printing -- turn out to not provide investors with the lucrative returns that they had seemed to initially offer, the omnipresence of AI in so many facets of society suggest that it's here to stay and become even more deeply embedded in our daily lives in the coming years. While it does, the Invesco QQQ ETF will continue to provide investors with the opportunity to benefit.
Naturally, tech advancements will continue, and the Invesco QQQ ETF will continue to serve as an ideal way for investors to have exposure to the companies at the vanguard of innovation, since the ETF is rebalanced quarterly and reconstituted annually.
Many experts, for example, suspect that quantum computing will be the next tech revolution. If they're correct, companies that are quantum computing industry leaders and are already held in the Invesco QQQ ETF -- like Nvidia, Microsoft, and Alphabet -- will provide exposure for investors.
Since its inception in March 1999, the Invesco QQQ ETF delivered a convincingly strong performance, soaring at a clip that exceeds those of both the S&P 500 and Nasdaq Composite. From the early days of the internet through the development of the smartphone industry up to the boom in AI stocks, the Invesco QQQ ETF provided investors with a convenient way to prosper from the recent technological achievements.
As it has over the past 25 years, the ETF is bound to experience some bumps in the road, as it's subject to the whims of the market. But for investors who take the long view -- our favorite type of investors -- the volatility the ETF experiences shouldn't impede it from enjoying future success and contributing greatly to growing investors' personal wealth.
As if the allure of the fund isn't bright enough, those who fret that a high-quality ETF such as this comes with exorbitant management costs needn't worry. The Invesco QQQ ETF has a low total expense ratio of 0.2%, or $20 annually for each $10,000 invested.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Scott Levine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Costco Wholesale, Meta Platforms, Microsoft, Netflix, Nvidia, and Tesla. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
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