When profitable companies offer high dividend yields, investing in them tends to pay off handouts over the long term. If you have a few hundred dollars on hand that don't need to be used to pay down debt or cover daily living expenses, there are now a few financially sound companies that are offering attractive dividend yields that are worth considering investing in.

The dividend yields of Realty Income (O-1.03%), Target (TGT 2.58%) and Philip Morris International (PM-0.84%) are well above the S&P 500 average of 1.24%.

A permanent dividend stock ready for 2025

Jennifer Saibil (Real Estate Income)

Realty Income is one of the best dividend stocks to own at any time, but 2025 could be crucial for the entire real estate sector, and the real estate Income business could be stronger than ever.

Realty Income is a real estate investment trust (REIT). Under this structure, companies distribute at least 90% of their earnings to shareholders in the form of dividends, which is the main reason REits are excellent dividend stocks. Typically, such companies own properties and rent them out, often on long-term leases, with tenants from specific industries.

Realty Income operates as a retail REIT, primarily leasing properties to large retail chains like Walmart and Home Depot.

As the property is primarily leased to quality tenants selling necessities, Realty Income has shown outstanding resilience over the past five years, performing solidly both during the pandemic and the recent housing downturn. Its occupancy rate is 98.7 percent and almost never falls below that level.

Realty Income has become one of the largest real estate investment trusts in the world with more than 15,000 properties and has grown by acquiring new properties and consolidating smaller real estate investment trusts (REits). With solid cash flow, it has been able to continue to expand and maintain its current scale of operations, while it has set several expansion targets to support future dividend payments.

There are numerous reasons why Realty Income is one of the best REits, not the least of which is its solid business foundation. Good dividend stocks tend to come from mature and stable businesses, and Realty Income has that. A long track record of growth, reliable dividend payments and high yields are also attractive.

Realty Income has paid dividends for 654 consecutive months and has raised dividends for 109 consecutive quarters. It is one of the few companies that pays a monthly dividend, an added feature that makes it even more attractive. At its current share price, Realty Income's dividend yield of 5.9% is significantly higher than the S&P 500 average and also outperforms many other real estate investment trusts (REits)

Typically, when the dividend yield of a REIT is too high, it is often taken as a red flag indicating potential risk. However, Realty Income's share price fell due to consumer pessimism about the real estate sector, and the company has managed this turbulent period quite well. Although the yield is usually higher, its dividend yield is above average due to the market's short-term uncertainty concerns. This is not just a "buy the dips" opportunity, it is a great opportunity to buy quality, all-weather stocks. No matter how the market changes, Realty Income continues to pay high dividends and pays them out on time every month.

Target has been paying dividends for more than 50 years

John Ballard (Target)

Last year, caution in consumer spending weighed on many retailers, including Target. Cautious shoppers and other cost pressures from the port strike have negatively impacted Target's business and stock price performance.

However, for long-term investors who focus on dividends, this is instead a great buying opportunity. Target has consistently paid dividends since 1967, which demonstrates the robustness and long-term competitiveness of its retail business.

The stock currently offers an attractive 3.24% forward dividend yield at $138 per share, while the company pays out only 47% of its earnings as dividends. This shows that Target has the ability to maintain and grow its dividend in the coming years. Consumer confidence is likely to pick up as the economy recovers, and in Target's favor, traffic to its stores remains on an upward trend. However, despite the increase in footfall, a 2% decline in average fares dragged down same-store sales, which grew just 0.3% year-over-year last quarter. Management noted weaker performance in the apparel and home categories, but expects these areas to provide new growth opportunities when the economy picks up.

In the long run, Target should benefit from exclusive product collaborations with partners and drive sales growth through its Target Circle 360 program. The program helped boost same-day delivery by nearly 20 percent last quarter.

Overall, Target, with its steady dividend payout, growing earnings, and history of providing value to consumers, is poised to continue to deliver growing passive income to shareholders and remain a solid investment choice over the long term.

This dividend stock is hot

Jeremy Bowman (Philip Morris)

If you have less than $200 invested in the stock market and are looking for a dividend stock to buy, then Philip Morris is undoubtedly a very good choice.

The Tobacco stock has managed to outperform top competitors such as Altria and British American Tobacco by successfully transforming and launching next-generation products such as iQOS heated non-burn tobacco sticks and Zyn nicotine packs. These new products were acquired by Philip Morris following its acquisition of Swedish Match in 2022. In fact, next-generation products now account for nearly 40 percent of the company's total revenue.

Benefiting from strong growth in these categories and solid performance in its traditional cigarette business, Philip Morris shares are up 28 percent in 2024. The company supplies well-known brands such as Marlboro to international markets and is poised for further growth in 2025.

Philip Morris recently acquired the distribution rights to iQOS from Altria Group and has launched the product in the US market. At the same time, the company also invested in new manufacturing capacity for Zyn nicotine bags in the United States,demonstrating its confidence in the continued growth of this market segment. In the third quarter, the company reported 17% organic growth in smokeless products. Organic revenue growth of 11.6% to $9.9 billion; The company also announced its highest fuel market share since it was spun off from Altria Group in 2008. Organic operating income rose 14 percent to $3.7 billion, and the company raised its full-year earnings per share forecast.

Like other international stocks, Philip Morris shares fell after the election as investors worried that a strong dollar could weigh on the company's results. However, this reaction seems overly pessimistic, as Philip Morris is barely affected by tariffs and operates in an industry that is less sensitive to economic downturns.

After the pullback, the stock now offers a dividend yield of 4.5% and a P/E of 19, which is a reasonable valuation. With strong momentum in products like iQOS and Zyn, the stock looks like a strong buying opportunity in 2025, especially for those looking for steady dividend income.

Which Stock Should You Buy in Your Next Trade?

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