3 Beaten-Down Stocks Built for Long-Term Passive Income
The article discusses three beaten-down stocks that are built for long-term passive income: Stanley Black & Decker, McCormick, and Realty Income. These stocks have impressive dividend yields and track records, making them attractive options for dividend investors.
Intelligence analysis by Llama
The article highlights three underappreciated dividend stocks that are poised for long-term growth: Stanley Black & Decker, McCormick, and Realty Income. These stocks offer attractive yields and have a strong track record of dividend payments.
Imagine you have a big box of tools that you use to build things. Stanley Black & Decker is like that box, but instead of tools, it makes tools. It's a company that has been around for a long time and has a good track record of paying out dividends to its investors. Another company, McCormick, makes spices and flavors, and it's also been around for a long time and has a good track record of paying out dividends. Realty Income is a company that owns a lot of buildings and collects rent from the people who use them. It's like a big landlord, but instead of collecting rent from people, it collects rent from companies. All three of these companies are good options for people who want to invest in dividend stocks.
Analysis
A $60B Vote of Confidence
The article discusses three beaten-down stocks that are built for long-term passive income: Stanley Black & Decker, McCormick, and Realty Income. These stocks have impressive dividend yields and track records, making them attractive options for dividend investors. Stanley Black & Decker is a Dividend King that has rewarded investors with reliable passive income for over 50 years. The company has been working to change its narrative, selling assets, slimming down, and recentering on its core tool operations. Net debt to adjusted EBITDA has fallen from 5.9x at the end of 2023 to 3.4x at the end of 2025, and 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.
Why Cursor?
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 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 consummated, McCormick could be a good dividend stock for your portfolio.
The Road Ahead
Realty Income is the net lease giant with a dividend yield of 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.
Key points
- Stanley Black & Decker is a Dividend King with a 50-year track record of paying out dividends.
- McCormick has a 38-year track record of increasing its dividend annually.
- Realty Income has a 31-year track record of increasing its dividend annually.
- Stanley Black & Decker's adjusted gross margin continues to improve, nearing its target range of 35% to 37%.
- McCormick's planned acquisition of Unilever's food business could lead to significant growth for the company.
- Realty Income's stock still hasn't recovered from the COVID pandemic sell-off.
If the acquisition of Unilever's food business by McCormick is successful, it could lead to significant growth for the company. Additionally, if Realty Income is able to continue its track record of increasing dividends, it could provide a reliable source of income for investors. Stanley Black & Decker's efforts to improve its profitability and reduce debt could also lead to increased dividend payments in the future.
If the acquisition of Unilever's food business by McCormick is unsuccessful, it could lead to significant losses for the company. Additionally, if Realty Income is unable to continue its track record of increasing dividends, it could lead to a decrease in the value of the company's stock. Stanley Black & Decker's efforts to improve its profitability and reduce debt may not be successful, leading to decreased dividend payments in the future.
