Key Points
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Stanley Black & Decker is a Dividend King that has materially transformed its business for the better.
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McCormick is a leader in spices and flavorings, and it is working on a transformative acquisition.
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Realty Income is a giant (and boring) net lease REIT with an over 5% yield.
- 10 stocks we like better than Realty Income ›
Wall Street is so focused on technology stocks and artificial intelligence right now that it is ignoring great businesses with impressive dividends. And some of those businesses also have great dividend track records. If you are a dividend investor, these three beaten-down stocks could be just what you are looking for to power your income portfolio.
Stanley Black & Decker (NYSE: SWK) is a Dividend King that has rewarded investors with reliable passive income for over 50 years. McCormick (NYSE: MKC) is one of the world’s leading spice producers, with a 38-year streak of annual dividend hikes. And Realty Income (NYSE: O) is a net-lease juggernaut with a dividend streak that’s up to 31 years. Here’s a closer look at each one.
Stanley Black & Decker is turning things around
Stanley Black & Decker’s dividend yield is around 3.7%, which is more than three times the roughly 1.1% yield of the S&P 500 index (SNPINDEX: ^GSPC). As noted, the industrial company is a Dividend King. It primarily makes tools, which are essential for building anything. It also makes fasteners.
The company went through a period in which it made a series of rapid, large acquisitions. That left it bloated, heavily leveraged, and with a poorly focused portfolio. Management has been working to change the narrative, selling assets, slimming down, and recentering on its core tool operations. Notably, net debt to adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) has fallen from 5.9x at the end of 2023 to 3.4x at the end of 2025. The goal is to reach 2.5x by the end of 2026. Leverage is no longer the issue it once was.
On the profitability front, the company’s adjusted gross margin continues to improve, nearing the company’s target range of 35% to 37%. Adjusted earnings per share guidance for 2026 of between $4.90 and $5.70 will more than cover the $3.32 in dividends per share the company will pay for the year. It looks like the company is back on track, but Wall Street remains downbeat, creating an opportunity for long-term dividend investors.
McCormick is working on a transformational acquisition
McCormick’s dividend yield is also around 3.7%. That’s historically high for this well-respected consumer staples company. The dividend has been increased annually for 38 years. The company is one of the largest spice producers in the world and has been expanding in the flavors space, as well.
Right now, investors are worried about the company’s planned acquisition of Unilever‘s (NYSE: UL) food business, which consists of Hellmann’s mayonnaise and Knorr. Both fit well with McCormick’s business, but the deal will roughly double its size. There are material execution risks to consider. However, McCormick has some experience with acquisitions, and Unilever’s food business is well run. Unilever is also taking a stake in McCormick, so it has a vested interest in ensuring the deal works out well.
If you don’t mind collecting an attractive yield while you wait for this deal to be consummate, McCormick could be a good dividend stock for your portfolio.
Realty Income is the net lease giant
Realty Income’s dividend yield is 5.1%, backed by a monthly pay dividend that has been increased annually for 31 years. The company is a slow-and-steady dividend tortoise that can provide a reliable, high-yield foundation for any dividend portfolio. Even the most conservative dividend investors will appreciate this real estate investment trust (REIT).
Realty Income owns a portfolio of over 15,500 properties. Most of its assets are single-tenant net-lease properties. This means its tenants have to pay for most property-level costs, materially reducing the REIT’s costs and risk. The portfolio is focused on retail assets, but it also owns industrial properties and other, more unique assets, like casinos and data centers. About 80% of its rents come from North America, with the rest derived from Europe. Diversification and safety are key themes, noting that even during the Great Recession, occupancy didn’t fall below 96%.
Realty Income’s stock still hasn’t recovered from the COVID pandemic sell-off. You shouldn’t expect massive growth from Realty Income, but it is a reliable dividend payer that still looks underappreciated by Wall Street.
Three solid options for your income portfolio
Wall Street is focused on tech stocks and artificial intelligence today. It is overlooking boring old businesses like Stanley Black & Decker, McCormick, and Realty Income. That’s a dividend opportunity for investors who think long term and don’t mind venturing into areas other investors ignore.
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Reuben Gregg Brewer has positions in McCormick, Realty Income, Stanley Black & Decker, and Unilever. The Motley Fool has positions in and recommends Realty Income. The Motley Fool recommends McCormick and Unilever. The Motley Fool has a disclosure policy.
