3 Dividend Stocks to Invest in During Market Volatility

During periods of market uncertainty, there are often great opportunities to find solid investments. As the stock market shows signs of volatility, particularly with the S&P 500 down about 10% from its peak and the Nasdaq Composite down roughly 14%, it's crucial to keep a close eye on blue-chip stocks that can provide both stability and income through dividends.

Many investors recall Warren Buffett's wisdom: be cautious when others are greedy and optimistic when others are fearful. This advice is particularly relevant now as prices for quality stocks become more attractive.

Realty Income: A Reliable Dividend Player

Realty Income (O 1.49%) is a Real Estate Investment Trust (REIT) known for its strong track record of paying dividends. The company acquires properties and leases them to customer-facing businesses like retailers and grocery stores. To maintain its status as a REIT, Realty Income must distribute at least 90% of its taxable income to shareholders, which leads to its impressive dividend yield of 5.6%. Notably, it has increased its dividend for 32 consecutive years, showcasing the strength and reliability of its management.

Although the stock has faced challenges recently, having declined 25% from its previous highs due to higher borrowing costs, Realty Income continues to grow. Notably, its funds from operations have risen nearly 12% over the last three years. Currently, the stock trades at just over 13 times its operating cash flow, suggesting it is at the lower end of its historical valuations. With potential reductions in interest rates on the horizon, Realty Income presents a compelling opportunity for income-focused investors.

Canadian National Railway: Navigating Tariff Challenges

Canadian National Railway (CNI 1.86%) has recently faced significant selling pressure, down nearly 30% from its peak. As one of North America’s major freight railroads, it serves a critical role in transporting goods including petroleum, chemicals, and grains across an extensive rail network that covers 18,800 miles.

The decline is partly attributed to ongoing tariff issues between the U.S. and Canada, which have created short-term uncertainties for the company. However, Canadian National Railway boasts a solid track record, having raised its dividend for 29 consecutive years. At a dividend yield of 2.55%—the highest it has reached since the financial crisis of 2008—now might be an opportune moment to buy into this resilient company. Analysts project long-term earnings growth of around 9.6% annually, with a healthy payout ratio of just 44% of estimated earnings for 2025.

Carlisle Companies: Positioned for Future Growth

Carlisle Companies (CSL 2.90%) may not be a household name, but it has a significant footprint in the construction materials sector. Specializing in waterproofing solutions for commercial buildings, Carlisle has flourished alongside the commercial construction market in the U.S.

The recent fears of an economic slowdown have led to a dip in its stock price, but the long-term outlook remains positive. Carlisle has a history of resilience, with 48 consecutive years of dividend increases despite various economic downturns. Analysts predict that the company’s earnings could grow by 15% annually over the next three to five years, potentially increasing its earnings per share from around $20 in 2024 to over $40 by 2030. The stock currently trades at 15 times its 2025 earnings estimates, representing a strong investment opportunity.

In summary, the current market volatility creates an excellent backdrop for investors to consider solid dividend-paying stocks such as Realty Income, Canadian National Railway, and Carlisle Companies, which all have strong dividend histories and promising futures.

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