Key Points
Realty Income has a dividend yield of over 5% and has increased its dividend every year since it went public.
Amazon is trading at its lowest valuation in more than 10 years.
Both of these stocks are excellent long-term buys right now.
If you are looking for long-term buy-and-hold stocks right now, you have to be selective. There are many stocks out there, particularly large caps, that are overvalued and may not deliver the long-term performance they once did.
But the good buys are still out there; you just have to look a little harder and go a little deeper in your research.
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Two of the absolute best buys out there right now are Amazon (NASDAQ: AMZN) and Realty Income (NYSE: O) -- and for very different reasons.
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1. Realty Income
Realty Income is a real estate investment trust (REIT) that is literally built to provide dividend income. It actually calls itself the Monthly Dividend Company.
It has been providing high-yield dividends since it started trading as a public company in 1994. This marks the 32nd straight year that it has raised its annual dividend. Nothing in life is certain, but you can be fairly certain that it will keep raising its dividend for another 10 years in a row, and probably well beyond that.
As a REIT, Realty Income is required by law to distribute 90% of its taxable income to shareholders through its dividend, which it pays out monthly. It is currently enduring one of the worst real estate markets in more than a decade and is still raising its dividend. Realty Income also managed to raise its dividend through the housing market crash that rocked the economy during the Great Recession.
Realty Income owns roughly 15,500 properties leased to some 1,800 customers in 92 different industries throughout the U.S., the U.K., and Europe. There are many reasons why Realty Income has been such a reliable dividend payer, but it mainly stems from its diverse group of holdings and its highly selective process, as it focuses on single-tenant, freestanding commercial properties with high-quality clients and long-term leases typically of at least 10 years. The leases also require the tenant to pay rent, taxes, insurance, and maintenance, which keeps expenses lower.
Realty Income pays $0.27 per month at an extremely high yield of 5.19%, which is about five times the S&P 500 average. Also, after a rough stretch, the real estate market should be slowly improving, which bodes well for Realty Income in the years ahead. That consistent, high dividend yield will provide investors with the income and total return they need, particularly if markets stumble or stagger.
2. Amazon
Investors all know Amazon as one of the "Magnificent Seven" stocks, but it is particularly magnificent right now for one major reason -- its valuation.
Amazon stock is as cheap as it's been in more than a decade, even longer perhaps, trading at just 20 times earnings.
And concerns about its high capex have begun to subside a bit, as the company has a surging backlog of $496 billion and saw its highest sales growth in Amazon Web Services in more than four years last quarter.
This is a perfect opportunity to buy one of the best companies in the world at a 10-year low valuation. That should set it up for significant long-term growth, given its massive backlog and sales momentum.
Dave Kovaleski has positions in Amazon. The Motley Fool has positions in and recommends Amazon and Realty Income. The Motley Fool has a disclosure policy.