Key Points

• 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.

• 10 stocks we like better than Medtronic ›

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.

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 »

Johnson & Johnson: down 11.5%, yield 3.4%

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: down 11.6%, yield 3.7%

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: down 14%, yield 2.7%

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: down 19%, yield 3.3%

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.

NEE data by YCharts.

Chevron: down 19%, yield 4.8%

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: down 24%, yield 2.4%

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.

AWK data by YCharts.

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: down 29%, yield 5.6%

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: down 29%, yield 5%

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: down 30%, yield 1.7%

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.

NUE data by YCharts.

Medtronic: down 33%, yield 3.3%

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.

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 $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

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.

Dividend investors are always on the hunt for the best combination of yield and company quality. Right now, you can get above-average yields from industry-leading companies in the real estate investment trust (REIT) sector. Giant high-yield landlords Realty Income (NYSE: O) and Simon Property Group (NYSE: SPG) are two companies that you might want to buy today.

Why buy real estate investment trusts?

Real estate investment trusts were specifically designed to generate tax-advantaged income for investors. Property owning REITs like Realty Income and Simon are fairly simple businesses to understand, since they do exactly what you would do if you owned a rental property. The difference is that they do it at a much larger scale, which is the whole point. REITs allow small investors access to institutional-level properties.

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 »

The tax-advantaged part of the equation comes about because REITs avoid paying corporate-level taxes if they distribute at least 90% of taxable earnings out as dividends. Uncle Sam isn't just giving away free money, though; shareholders have to treat the dividend income as they would regular earned income. But there's a workaround. If you buy a REIT in a Roth IRA, which is funded with after-tax money, you won't have to pay taxes on the REIT dividends you collect.

For investors who are retired, buying REITs in a Roth is a great way to boost income while still minimizing the taxes you have to pay. There are a lot of REIT options, but most investors will be better off sticking with the biggest and best companies, like Realty Income and Simon Property Group.

Realty Income is the net lease giant

The average REIT is currently yielding around 4.1%, which is more than twice the yield on offer from the S&P 500 index (SNPINDEX: ^GSPC). Realty Income's dividend yield is even higher at roughly 5.7%. This isn't some fly-by-night operation, either. Realty Income is the largest net lease REIT, with a portfolio of over 15,600 properties.

Although it is heavily focused on single-tenant retail properties, it also invests in industrial assets and is increasingly diversifying into other areas. For example, it has invested in casinos in recent years and has a partnership working to build data centers. Loans are a new platform, and Realty Income is also attempting to set up an asset management business to service institutional investors (which will generate fees to support shareholders' dividends). On top of all of this, the REIT is geographically diversified across the United States and Europe.

Realty Income won't wow you with growth; it is simply too large for that. But if you want to own the biggest and best competitors, this is going to be the high-yield net lease landlord for you.

Simon Property Group is the mall king

Simon Property Group's dividend yield is around 4.9% today, also well above the REIT average and the yield on offer from the S&P 500 index. The company's focus is on owning malls, which are retail properties but have a very different dynamic from the types of properties Realty Income owns. A mall is like an ecosystem, with each tenant impacting the way the ecosystem operates.

As the largest mall REIT, Simon Property Group owns a massive collection of traditional enclosed malls and outlet centers. Its portfolio spans the globe, though its foreign investments are largely outlet centers. Over the years, the REIT has increasingly focused its portfolio on the best malls, known as A malls. These tend to be modern, well-located properties that are capable of charging the highest rents because they draw the largest crowds. Simon is a very important partner to retailers.

SPG Dividend Per Share (Annual) data by YCharts

There is a caveat with Simon. It passes a huge amount of income on to investors, but during some recent economic recessions, it has cut its dividend. After the cut, however, the dividend has quickly started to grow again toward the precut level. In the case of the deep Great Recession, meanwhile, the dividend has now grown well beyond the precut level. Simon is a stock that you'll want to hold for the long term, perhaps even buying more shares when other investors are selling.

Realty Income and Simon are the kinds of giants you own forever

Like any business, Realty Income and Simon Property Group will see their fortunes wax and wane over time. But their size and long histories of success make them strong, high-yield landlords to look at today. While they are attractive REIT investment choices most of the time, their higher-than-average yields could make each a nice addition to your stock portfolio right now.

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 $635,275!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $826,385!*

Now, it’s worth noting Stock Advisor’s total average return is 967% — a market-crushing outperformance compared to 171% 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 May 12, 2025

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

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