Although 2026 has been a good year for the S&P 500 and the stock market as a whole, now may be a time for investors to consider looking at safe investment options in order to reduce risk. Valuations have become exceedingly high for many stocks, and pivoting into income investments can help boost returns and offer a bit more long-term safety.
There are many dividend stocks that can be excellent buys right now. The ones that I think are the best ones to buy this month are Pfizer (NYSE:PFE), ExxonMobil (NYSE:XOM), and Realty Income (NYSE:O).
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same “Total Conviction” signal is flashing for a company 1/100th the size of Nvidia. Continue »
Image source: Getty Images.
Pfizer
Healthcare stock Pfizer tops this list, simply because I think it’s overdue for a rally. It has tremendous value and also offers a mouthwatering dividend that yields 6.3%, which the company is able to support thanks to strong free cash flow.
The market has been discounting the stock due to the long-term uncertainty around its future growth. Pfizer’s guidance for the year calls for revenue to be within a range of $60.5 billion and $62.5 billion, which implies a slight decline from a year ago when its top line totaled $62.6 billion. There are also concerns about some of its key drugs losing patent protection in the near future, which is a common issue for healthcare companies at one point or another.
However, I think the market has overreacted to the risk. Pfizer has been investing in growing its pipeline. The roof hasn’t caved in on the healthcare stock, but many investors appear overly hesitant nonetheless, with the stock down 35% in the past five years. It’s trading at just 10 times its expected future earnings, making it a dirt cheap stock to buy that also offers a great yield.
ExxonMobil
Unlike Pfizer, shares of ExxonMobil have been soaring this year. They’re up around 37% due to rising oil prices. I like Exxon’s stock as a hedge against inflation and market uncertainty. Oil prices may remain elevated for the foreseeable future, as I’m skeptical of the war in Iran ending anytime soon.
At 2.5%, Exxon’s yield isn’t astronomical, but it’s still more than twice the rate of the S&P 500 average of 1.1%. This is also a top dividend growth stock to own, with Exxon raising its payout for decades, giving investors a ton of incentive to just buy and hold for the long haul.
Exxon, despite its sharp rally this year, still trades at a fairly modest forward price-to-earnings (P/E) multiple of 15, suggesting that analysts continue to see much more profit growth ahead. This can be a terrific stock to buy right now, for not only the dividend income, but also the safety and stability it can offer if there’s a downturn in the markets.
Realty Income
Another struggling dividend stock to make this list is Realty Income. It’s declined 4% this year, and over a five-year stretch, it’s down around 18%. While it hasn’t been on a steep sell-off, investors can definitely buy it at a reduced price these days.
At 6.1%, its yield is almost as high as Pfizer’s. It also has a dividend growth streak that spans decades, not unlike Exxon. But what sets it apart from other dividend stocks is that it makes payments on a monthly basis. The more frequent payouts make it an ideal option for investors who want to collect recurring income, as they won’t have to wait long to get it, with payments flowing in every month.
Realty Income is a top real estate investment trust that has a broad mix of tenants, making its business fairly stable overall. Its forward P/E of 34 is a bit rich compared to the other stocks on this list, but investors have been willing to pay even higher premiums in the past for the stock, due to its stability and the attractiveness of its monthly payout.
Should you buy stock in Pfizer right now?
Before you buy stock in Pfizer, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Pfizer wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $364,023!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,467,933!*
Now, it’s worth noting Stock Advisor’s total average return is 948% — a market-crushing outperformance compared to 214% for the S&P 500. Don’t miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Pfizer and Realty Income. The Motley Fool has a disclosure policy.
