3 Great S&P 500 Dividend Stocks Down 43%, 20%, and 53% to Buy and Hold Forever

Like bargains? Need dividends? No problem. Some of the S&P500‘s shares currently meet both expectations, and several of them boast the hallmarks of a true “forever” holding company. Here’s a look at three of these best bets right now.

Pfizer

That cannot be denied Pfizer (PFE -0.66%) is not quite the pharmaceutical powerhouse it used to be. The loss of patent protection on its blood thinner Lipitor in 2011 was a blow from which it has never fully recovered, but it would also be naive to believe that the company’s research and development (R&D) and acquisitions are now as strong are as in the past. The pharmaceutical sector also appears to have become even more competitive.

That’s why, after a burst of bullish brilliance during and because of the COVID-19 pandemic (Pfizer’s Paxlovid was an approved treatment), this stock has fallen 53% from its late 2021 peak.

The long-awaited winds of change are finally blowing, even if it feels more disruptive than helpful. Activist investor Starboard Value is, as it were, shaking up the chains Call Pfizer for its failures on the drug development and acquisition front. Starboard specifically points out that its $43 billion acquisition of oncology company Seagen in 2023 has not yet delivered meaningful upside given its high cost, adding that Pfizer has failed to sell the 15 drugs it listed in 2019 touting potential blockbusters into big money makers.

In CEO Albert Bourla’s defense, the coronavirus contagion has slowed R&D for most pharmaceutical companies, if only by complicating the logistics of drug trials. Nevertheless, Starboard makes some valid points.

But what does this mean for current and future shareholders? While it is usually better for an organization to recognize its own weaknesses and make much-needed changes, Starboard Value’s involvement should still be the driving force behind this overdue overhaul.

Nothing about this drama changes Pfizer’s dividend. Not only has the country been paying an hourly wage quarterly for years, but it has also increased its net annual payment for fifteen years in a row. This streak isn’t really in danger either.

Newcomers will buy into the shares, while the forward-looking dividend yield is 5.8%.

Real estate income

Chances are you’ve never heard of it Real estate income (O -3.16%). Don’t be fooled by the lack of fame. This $55 billion component of the S&P 500 will survive and thrive.

Realty Income is a landlord. It is structured as a real estate investment trust, or REIT. REITs are investments that trade like stocks but pass through the majority of the rental profits generated by that REIT’s underlying real estate portfolio. It’s an easy way for investors to get involved in the property rental industry, without the usual hassle of buying, selling, finding tenants and carrying out maintenance on a property.

There are all kinds of real estate investment trusts, ranging from office buildings to apartment complexes to hotels. Even by REIT standards, however, Realty Income is a bit unusual. Her specialty is retail space.

This may raise red flags. Physical retail is largely defensive and is struggling with the rise of online shopping. Don’t be too hasty, though. Realty Income’s tenant list includes Walmart, FedExAnd Dollar generaljust to name a few. These are big companies with staying power, beyond their vested interest in staying put once they establish their physical roots.

At least that’s what this REIT’s numbers say. Even as the COVID-19 pandemic has hammered retailers en masse in 2020, Realty Income’s occupancy rate for the year remained at 97.9%.

Those aren’t the only numbers that make a strong bullish case for owning this dividend payer that currently yields (on a forward-looking basis) just under 5%. Not only has Realty Income paid a dividend every month – yes, a monthly dividend — for the past 54 years, it has also increased its payouts every quarter for the past 27 years.

Franklin Resources

Last but not least, add Franklin Resources (BEN 0.69%) to your list of S&P 500 dividend stocks to buy. It’s down 43% from its 2021 post-pandemic peak, and a whopping 65% lower than the record highs seen at the end of 2013. That weakness has pumped the forward-looking dividend yield to a healthy 6%.

Investors may be more familiar with the outfit than they realize. This is the company behind Franklin Templeton investment fundsalthough it operates several other profit centers in addition to the Templeton brand. Technology solutions, alternative lending and real estate are all in the wheelhouse.

Anyone who has kept an eye on this company probably knows that it hasn’t always been a great performer. While he was certainly respected within the investment management industry, Franklin struggled to hold on to investors’ money in 2015 and 2016. You may recall that the market had been rising for a while at that point and investors were looking for performance above and beyond what this investment manager had to offer. .

However, a lot has changed since then. Through a few strategic acquisitions, such as the technology company volScout, which traded in options last year, this investment fund giant can now offer more that investors – both individual and institutional – demand.

It’s not exactly easy to see the positive side. The 2022 bear market that followed the end of the pandemic has made it difficult to determine exactly how much business this company should do and how much profit it should generate. It’s only clear that profit margins still appear to be tight at this point.

Yet asset management dividends have grown every year for the past 44 years. Since the majority of income is not determined by the performance of the funds, but by fees based on a percentage of returns assets it managesthe cash flow required to maintain these payments is actually quite safe.