3 cheap dividend stocks to buy and hold for at least a decade

The market has been turbulent recently and many stocks have fallen dramatically from their highs. And while growth stocks have generally been the hardest hit, high-quality dividend-paying stocks have not been spared.

However, it does mean there are great opportunities to add rock-solid dividend stocks to your long-term investment portfolio at a discount. Here are three dividend-paying stocks in particular that might be worth taking a closer look at in the current market environment.

Huge value with lots to gain

Bank stocks have taken a hit recently, and Bank of America (BAC 0.72%) was no exception, with stocks down more than 35% from the highs. And to be fair, there are good reasons: in a recession, banks tend to see default rates rise, and the recent drop in consumer confidence could lead to lower short-term loan volumes. term.

However, it’s also important to realize that banks have a lot to gain from a rising rate environment, and with a high level of non-interest bearing deposits (read: free money), Bank of America is in a better position. than most. In fact, Bank of America estimated that a 100 basis point (1%) shift in the yield curve would produce $5.4 billion in additional net interest income per year. In a nutshell, the bad news seems to be factored into the action at this point, but the potential benefits of the current environment seem to be overlooked.

A different technological stock

Digital Real Estate Trust (DLR 1.58%) is a real estate investment trust (REIT) specializing in data center properties. If you’re unfamiliar, think of data centers as the physical “homes” of the Internet. Anytime you access cloud-based software, upload a video to social media, or check your email, all of that data has to physically reside somewhere. Data centers provide a reliable and secure environment for businesses to house servers and other networking equipment.

With a portfolio of over 290 data centers located around the world, Digital Realty is one of the largest real estate owners of any type in the world. And while growth has been extremely impressive so far (total return of 2,220% since IPO in 2004), the volume and sophistication of data circulating around the world continues to grow rapidly, with no signs of slowing down. . In fact, the global rollout of 5G technology and the adoption of things like augmented reality, self-driving vehicles, etc. will only add to it. With the stock around 25% below its recent high and a stable dividend yield of 3.6%, this could be a great opportunity to take a closer look.

Return to growth mode

Be certain, REP properties (REP 3.50%) actually has outperformed the market recently with a drop of “only” 19% from the highs, but the stock still looks very cheap. The experiential real estate company, which owns properties such as cinemas, water parks, golf attractions and ski resorts, has a strong balance sheet and trades for just over 10 times funds operating (FFO) scheduled for 2022.

Moreover, after a few years of judiciously restraining growth, EPR is ready and able to pursue attractive opportunities. The company sees a $100 billion addressable market of investment property in its wheelhouse and ended the first quarter with more than $300 million in cash and a $1 billion untapped line of credit. In fact, EPR just announced its first major acquisition in several years, the $142 million purchase of a resort and water park in Canada. With a solid income stream and a 7% dividend yield paid in monthly installments, this one seems too cheap to pass up.

Only if you measure returns in decades…

I own all three of them in my personal stock portfolio, and to be perfectly clear, I have no idea what they’ll be doing over the next few weeks or months. If interest rates rise faster than expected or if a recession hits the economy harder than experts expect, they could be quite volatile in the short term. However, they are three well-run companies, and I’m confident that investors who buy them now will be satisfied in the long run — in fact, I own all three in my retirement account and does not plan to sell.

About Joan Dow

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