The saying "it's like watching a train wreck" exists for a reason. When something particularly bad is happening, human beings have a hard time looking away. That is as true of train wrecks as it is of Wall Street, where the wrecks that take place are called corrections, and can ultimately lead to the deeper correction known as a bear market.
The S&P 500 index (SNPINDEX: ^GSPC) fell into correction territory on March 13, 2025. But you don't have to, and really shouldn't, hang on every ticker move. And there's an easy way to break that habit. Buy reliable dividend stocks like Realty Income(NYSE: O), NNN REIT(NYSE: NNN), and Federal Realty(NYSE: FRT).
Why focus on dividends and not the market's gyrations?
Markets go up and down over time, often in dramatic and swift fashion. That's just how they operate, with emotional investors pushing stocks one way and then the other. In fact, if investors were truly rational, as some academics insist they are, stock prices would never change. They would always represent the most appropriate price. In theory that sounds good, but in practice it is clearly a vast oversimplification of the way markets work.
Image source: Getty Images.
And yet there's a grain of truth in the notion that Wall Street is rational. That's because over the long term, it does tend to get the prices of companies correct. The short term is the problem because mercurial investors swing back and forth between enthusiasm and pessimism. Getting caught up in the emotional shifts can leave you with sleepless nights and might lead you to make bad investment decisions. You can avoid that with a dividend-focused approach.
A dividend is a cash payment from the company to its shareholders. It comes out of the company's cash flow and is a tangible return to reward investors for being shareholders. Dividend checks are usually paid out quarterly, though some companies pay annually, semiannually, or at the other extreme, monthly.
If you are a dividend investor, one of the most important things for you will be making sure that the dividend checks keep coming in -- preferably at the same or a higher rate. If you focus on that instead of the market's unpredictable ups and downs, you'll avoid the stomach-churning madness that is a typical day on Wall Street.
Some boring stock ideas for dividend investors
All kinds of companies pay dividends, but a good rule of thumb is to focus on companies that have paid regular dividends for a large number of years. The pinnacle is a small, and elite, group of companies known as Dividend Kings. Such companies have increased their dividends annually for at least 50 years.
Real estate investment trust (REIT) Federal Realty is a Dividend King. It is, in fact, the only REIT that has achieved this status. The past 50 years have included the dramatic bear markets around the dot-com crash, the Great Recession, and the coronavirus pandemic. And that's just the list of notable downturns from the last 25 years.
Federal Realty owns strip malls and mixed-use developments. It has long focused on redevelopment to improve the performance and increase the value of the properties it owns. This skill has led the company to focus on owning a small number of properties (around 100) that are well located in wealthy and population-dense regions. Once a property has reached what management believes to be a full valuation, the real estate investment trust sells the property and reinvests in a new asset that can use a little TLC.
Given the impressive dividend streak, this landlord has clearly found a model that works in both good and bad markets.
Wall Street knows how well Federal Realty is run, so its dividend yield is material but not huge. But at 4.6% it is still well above the market's yield. You can get an even higher yield from NNN REIT, a landlord with a yield of around 5.5% today.
NNN REIT is a net lease REIT, which means its tenants pay for most property-level operating costs of the assets they occupy. The company is focused entirely on single-tenant retail properties located in the United States.
Although any single property is high risk because there is only one tenant, the company owns more than 3,500 properties. No single asset is going to have that material impact on the overall portfolio.
The REIT has increased its dividend annually for 35 consecutive years.
One of the important drivers of NNN REIT's success is that it works closely with its tenants. The goal is to buy assets from fast-growing lessees, providing them with additional growth capital and NNN REIT with new income-generating properties. Given the dividend streak, it is pretty clear that this approach worked out well for the REIT and its shareholders.
Competing with NNN REIT is Realty Income, which also uses the net lease approach. However, Realty Income is a much larger company with more than 15,600 properties. Its portfolio spans across the retail and industrial property types, with a fairly large "other" category thrown in. "Other" includes properties as diverse as vineyards and casinos. It also owns property in North America and Europe, giving it a lot of levers to pull as it looks to grow its portfolio.
Realty Income's dividend yield is the most attractive of this trio at 5.7%. The dividend is paid monthly and has been increased annually for three decades. Owning Realty Income is about as close as you can get to a paycheck replacement on Wall Street. And, with the monthly pay cycle, you'll always have a dividend to review so you can keep yourself from obsessing over the market's gyrations.
You get to choose how you invest, so choose wisely
There is no right way to invest, there is just the way you choose to invest. You can be a market junkie and try to day trade, a highly risky and difficult way to build wealth. Or you can select the turtle as your spirit guide and buy boring-but-reliable dividend stocks. If you do that, you can spend your time collecting dividend checks instead of spending sleepless nights worrying about what the market has done and what it might do next.
There's just no way to know, but with reliable dividend stocks you can be very confident of what will happen next -- another emotionally reassuring dividend check will hit your account.
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Reuben Gregg Brewer has positions in Federal Realty Investment Trust and Realty Income. The Motley Fool has positions in and recommends Realty Income. The Motley Fool has a disclosure policy.
