I often say that investing rarely has a dull moment, which is why I find it so fascinating. The beginning of 2025 certainly has been no different.
The new administration wasted no time implementing many policies, including sweeping layoffs of federal employees and tariffs and tariff threats. But as investors, it is crucial to put personal political beliefs aside.
One thing is clear: The market does not like uncertainty, and there is much of it now. As of Monday's close, the S&P 500 was down 8.6% from its recent high, and the Nasdaq was off 13.4%.
Artificial intelligence (AI) stocks have also been hammered in many cases. Nvidia is about 14% off its year-to-date high. So, what can investors do to protect their capital in case the market continues to swoon? One way is to own rock-solid dividend stocks that provide reliable income and less volatility than high-flying growth and tech stocks. The following two stocks fit the bill.
A unique REIT
Real estate investment trusts (REITs) are terrific vehicles for income-focused investors. They tend to have higher yields than other stocks since they are required to distribute 90% of taxable income to stockholders.
REITs are also a way for investors to own real estate and collect rent without the complications and expense of buying real estate directly. However, not all REITs are created equal.
The increase in remote work damaged the office real estate market, and some other REIT sectors contain easily replaceable assets like strip malls, office buildings, and single-tenant retail. Not so for Vici Properties(NYSE: VICI). It owns "trophy properties" that are extremely difficult to replace.
The Las Vegas casino resorts Caesars Palace, MGM Grand, The Venetian, and Mandalay Bay and the Chelsea Piers entertainment and dining complex in New York are among its 93 properties in 26 states and Canada.
Owning these massive properties also means large corporate tenants with deep pockets to keep the rent flowing even during difficult economic times. Vici collected 100% of its rents during the worst of COVID-19, when many properties were closed, and increased the dividend during that time. As shown below, the dividend has increased every year since the company's inception and at a faster pace than many other REITs.
Source: Vici Properties.
REITs pay dividends out of their funds from operations (FFO), and Vici's FFO per share is $2.61 over the last 12 months. This is plenty to pay the current $1.73 annual dividend per share and indicates that it will continue rising.
Vici pays a quarterly dividend and yields 5.3% on a forward basis as of this writing. Its reliable, rising, high-yield payout and unique portfolio make it an excellent place for investors to stash their cash and watch it grow.
Another rain-or-shine dividend stock
Remember when tech stocks soared in 2021, only to be trounced in 2022? When economic trouble brews, investors in recession-resistant sectors can rest easy.
For instance, when inflation soars, consumers will cut back on luxury items but less so on staples like pharmaceuticals. As you can see below, AbbVie(NYSE: ABBV) crushed the tech-heavy Nasdaq in 2022.
This is why owning some all-weather dividend stocks alongside those exciting growth stocks is crucial during uncertain markets.
AbbVie was once a one-trick pony that thrived because of its blockbuster drug Humira, which treats autoimmune diseases and became the best-selling prescription drug ever. Humira sales peaked in 2022 at more than $21 billion, or more than 37% of AbbVie's total sales.
However, consumers can now get cheaper biosimilar drugs, so those sales cratered to only $9 billion in 2024. But AbbVie is no longer a one-trick pony.
The company acquired Allergan in 2019, which added numerous products to its portfolio, including Botox, Juvederm, and Vraylar. This solidified AbbVie's aesthetics and neuroscience presence.
Then, it developed the anti-inflammatory drugs Skyrizi and Rinvoq, which are expected to hit $27 billion in sales by 2027 -- well ahead of peak Humira sales. Both drugs grew sales by over 50% in 2024 to a combined $17.7 billion.
These additions are why revenue is rising again after a brief, mild slowdown due to the decline in Humira sales:
This will allow the company to continue growing its dividend, which has risen annually since AbbVie's spinoff from Abbott Laboratories in 2013 and pays $1.64 quarterly now. Investors can get a 3% forward yield on a safe stock that is great for weathering market turmoil.
There are some stocks that investors can buy and hold forever, confident that they will receive a steady, growing dividend regardless of the broader market's performance. Vici and AbbVie are two of these now.
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Bradley Guichard has positions in AbbVie and Vici Properties. The Motley Fool has positions in and recommends AbbVie, Abbott Laboratories, and Nvidia. The Motley Fool recommends Vici Properties. The Motley Fool has a disclosure policy.
