2 Magnificent S&P 500 Dividend Stocks Flat and Down 10% to Buy and Hold Forever

It's been quite a year for the S&P 500. The index has gained 21% since January.

While the strong gain gets a lot of attention, not every stock has performed well. PepsiCo (NASDAQ: PEP) has been flat and Alexandria Real Estate Equities' (NYSE: ARE) shares have dropped 10%. While that may give some investors pause, the declines give long-term investors, particularly dividend-seeking ones, a buying opportunity.

These three have strong businesses, and investors receive dividends while waiting for the stock prices to rebound. Let's dig deeper to find out why you should consider adding them to your long-term stock holdings.

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1. PepsiCo

PepisiCo produces beverages, snacks, and convenience foods under brands like Pepsi, Gatorade, Doritos, Quaker Chewy, and Rice-A-Roni. These remain popular with consumers and retailers stocking their shelves.

Recent revenue growth has slowed, however. In the third quarter (ended Sept. 7), adjusted revenue, which removes items like foreign currency exchange translations, grew 1.3%. That was due to price increases, which added 3 percentage points while volume subtracted 2. And investors have reacted with the share price badly lagging the overall market.

However, that's likely not due to consumers specifically turning away from PepsiCo's products. This is evidenced by other consumer product companies, such as McDonald's, also reporting weaker results due to stretched consumers. As inflationary pressures have eased, they should go back to their normal purchasing behavior, which will benefit PepsiCo.

In the meantime, management has kept a careful eye on expenses. Its adjusted earnings per share increased 5% in the third quarter.

Patient investors can enjoy receiving dividends while waiting for top-line growth to accelerate. In a positive sign, the board of directors raised the quarterly payment by 7% earlier this year. Impressively, that makes 52 straight years with an increase, making the stock a Dividend King.

Paying $5.42 annually, the stock has a 3.2% dividend yield. That's much higher than the S&P 500's 1.3%.

2. Alexandria Real Estate Equities

Alexandria Real Estate Equities is a real estate investment trust (REIT) that owns office properties. Investors certainly aren't happy with this year's performance, as its share price has experienced a double-digit percentage drop. While the office sector has had challenges, including pressure from the popular work-from-home movement that sprung up following the onset of COVID-19, Alexandria is in a unique position because its tenants should offer stable rent payments and cash flow.

It rents to life sciences companies in major research centers like New York, Boston, San Francisco, Seattle, and the Research Triangle in North Carolina. The renters include multinational pharmaceutical companies, life science product and service providers, and public biotechnology companies. Fortunately, they typically require in-person work and collaboration to maximize effectiveness. After all, scientists need to use expensive lab equipment that's difficult to transport.

That can be seen by looking at its occupancy rate. Its properties had a 94.6% occupancy rate in the second quarter. Alexandria's second-quarter adjusted funds from operations (FFO), a key cash flow metric for REITs, was $2.36 a share in the latest quarter, up 5.4% from a year ago. Management expects adjusted FFO per share of $9.41 to $9.53 for the year, an increase from $8.97 in 2023.

Alexandria has increased dividends for a number of years. Most recently, it raised the quarterly payout from $1.27 to $1.30 starting in July. The stock has a 4.5% dividend yield, which compares favorably to other REITs. The FTSE Nareit All Equity Index had a 3.6% yield at the end of September.

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Lawrence Rothman, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alexandria Real Estate Equities. The Motley Fool has a disclosure policy.