2 Magnificent S&P 500 Dividend Stocks Down 30%: Buy and Hold Forever

The S&P 500 has been on a tear, but some of the strongest dividend-paying companies have been left behind. This presents an opportunity for long-term investors to buy these stocks at discounted prices and lock in compelling yields. Two such companies, Prologis and Mid-America Apartment Communities, have seen their stock prices decline by about 30% from their peak levels of three years ago. However, with interest rates starting to fall and market conditions improving, these real estate investment trusts (REITs) are poised to rise.

Prologis, a leading industrial REIT, has seen its stock price decline despite robust demand for industrial real estate. The company has grown its core funds from operations (FFO) per share at a 13% compound annual rate over the last three years, faster than the REIT sector's 10% average growth. However, this growth has not been reflected in the company's stock price, which has fallen by about 30% from its peak levels. This decline has pushed Prologis' dividend yield up to over 3%, more than twice the S&P 500's average. With its FFO and dividends rising rapidly and its stock price down sharply, Prologis trades at a compelling level. Its dividend yield is over 3%, and it trades at a discount to the S&P 500 at 22.5 times earnings. This is an attractive valuation for a company that should grow its earnings and dividend at double-digit percentages in the coming years as it capitalizes on the rising demand for logistics real estate.

Mid-America Apartment Communities, a leading apartment REIT, has faced some headwinds in recent years due to the apartment-building boom in the Sun Belt region where it operates. However, demand for apartments has remained strong, and the company has continued to increase its dividend. Despite the headwinds, Mid-America Apartment Communities has extended its payment-hiking streak to 14 straight years. With interest rates higher in recent years, the rate at which new apartment supply becomes available will start to slide in the second half of this year and into 2025. This should drive a resurgence in rent growth, benefiting the company. Mid-America Apartment Communities currently trades at a compelling level of about 19.5 times its adjusted FFO, and its dividend yields nearly 4%. With its growth primed to reaccelerate, the REIT looks like an attractive long-term investment opportunity.

These two dividend stocks are still on sale, offering higher dividend yields thanks to their lower valuations. Add in their upside potential as rates fall and market conditions improve, and these REITs could produce healthy total returns over the long run. Don't miss this second chance at a potentially lucrative opportunity.