3 Dividend Stocks to Double Up on Right Now

Bargain hunting isn't easy in a stock market that has ripped higher for the past two years. However, it's not impossible if you're willing to be a little creative. There is always a deal somewhere; blue chip stocks with temporary bumps and bruises can be great places for long-term investors looking for a deal.

Using this lens, fabulous dividend stocks like Realty Income (NYSE: O), Hershey (NYSE: HSY), and UnitedHealth Group (NYSE: UNH) stand out as compelling buys worth leaning into today. Here is what makes these stocks worthy of your investment dollars right now.

1. A REIT to own as rates fall

Realty Income is a real estate investment trust (REIT), a company that acquires and leases out real estate. Over the past few years, high interest rates have hurt Realty Income and other REITs (and their stock prices) because they frequently borrow to fund new property deals that grow their business. Now that the Fed has issued its first rate cut, Realty Income is poised to enjoy a more friendly operating environment where debt is cheaper.

As REITs go, Realty Income is one of the best. It runs a portfolio of 15,540 properties rented out to single-tenant businesses, such as grocery, dollar, and convenience stores, restaurants, and other places consumers routinely spend money. Realty Income distributes most of its profits to shareholders by design, making it an excellent dividend stock.

The company has raised its dividend yearly since its initial public offering, a streak of 31 consecutive years. Realty Income still yields 5.2% at its current price, an attractive number for most income-focused investors. The company grows at a low-single-digit rate, which should continue funding increases. The stock is still down almost 25% from its all-time high, but that gap may close if rates continue dropping. Consider buying the stock before that happens.

2. An excellent business working through adversity

Some business models are sweeter than others, and the confectionary industry has traditionally been quite lucrative. Hershey is a dominant player in the U.S. market, where brands like Hershey's, Reese's, Jolly Rancher, Almond Joy, and a variety of others have made Hershey a market-beating stock over its lifetime. Additionally, the company has expanded into the snack segment with Pirate's Booty, Skinny Pop, and Dot's Pretzels.

However, Hershey has grappled with catastrophic farming conditions for cocoa, a key ingredient for many of its products. The soaring price of cocoa has pressured Hershey's business, and earnings growth estimates have taken a big hit and weighed on the stock price. Shares have declined to the point that Hershey's dividend yields nearly 3%, which has only happened a few times since the 1980s.

The stock could be a great buy if you think Hershey will adapt to these challenges. The stock has averaged a price-to-earnings (P/E) ratio of almost 28 over the past decade but trades at a P/E of just 19 today. Hershey is remarkably profitable, generating a stellar 21% return on invested capital over these past three years, even with the company's issues. Hershey will likely shine again once the cocoa issues are behind it, making this a broken stock but not a broken business.

3. Industry turbulence shouldn't keep you away from this healthcare juggernaut

Healthcare is a multitrillion-dollar industry in the U.S., and UnitedHealth Group has its fingerprints everywhere. The company operates two massive business units. UnitedHealth provides health insurance benefits through government and enterprise programs to over 148 million people. The Optum segment houses three businesses: patient care services, provider technology services, and pharmacy supply chains. The company generates over $389 billion in annual revenue.

UnitedHealth Group is down after the company's initial guidance for next year disappointed investors. It's not a big dip, not even 10% off its high. Yet, the stock is pretty attractive here. Shares trade at a forward P/E ratio of 20, and analysts anticipate the company growing earnings by an average of more than 12% annually over the next three to five years.

That's a PEG ratio of just over 1.6, a solid deal for a blue chip company that has raised its dividend by an average of 16% over the past five years. Investors get a starting yield of 1.5% today, so don't hesitate to jump on this dominant healthcare stock and watch your income snowball over the coming decade and beyond.

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:

• Amazon: if you invested $1,000 when we doubled down in 2010, you’d have $20,993!*
• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $42,736!*
• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $407,720!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of October 28, 2024

Justin Pope has positions in Hershey. The Motley Fool has positions in and recommends Hershey and Realty Income. The Motley Fool recommends UnitedHealth Group. The Motley Fool has a disclosure policy.