3 Magnificent S&P 500 Dividend Stocks Down 45% to Buy and Hold Forever

There are a few things that United Parcel Service (UPS -0.41%), Walt Disney (DIS 0.72%)and Ford Motor Company (F 0.72%) have in common. They are Wall Street magistrates, components of S&P 500. All stocks pay a dividend; two of the three currently exceed a 5% yield.

They are also out of favor. UPS, Disney and Ford are trading 22%, 28% and 29% below their 52-week highs. Stretch out the timeline, and the three stocks are trading 45% to 60% below their all-time highs set in either 2021 or 2022. That’s not a problem. It’s an opportunity. Let’s see why these are three great dividend-paying S&P 500 stocks you can hold for the long term.

1. United Parcel Service

Brown has been more black and blue lately. The package delivery and supply chain solutions provider saw its revenue fall 9% to $91 billion last year. Profitability had an even bigger impact.

The short-term challenges are real. A five-year deal with the UPS Teamsters union last summer locks in its workforce until mid-2028, but comes at the expense of a sharp increase in labor costs over the past year. Increases will continue over the next four years, but will be more manageable.

It’s no fun when an income statement burns at both ends, and this could be especially problematic for income investors. UPS has increased its quarterly distributions for 15 consecutive years. The increase in payouts and the decrease in share price finds that the stock is yielding 5% right now. Is this sustainable if business continues to contract as spending continues to expand?

This doesn’t have to be an accordion of cacophony. UPS rolled out layoffs earlier this week after a much larger sea of ​​pink slips earlier this year. Analysts see a return to revenue growth in the second half of this year, followed by a return to the bottom line in 2025. If they’re right, UPS will have room to maintain its streak of dividend hikes. You can also pick up UPS 14 times your estimated earnings for the next year.

2. Disney

Another household name with an attractive low share price is Disney. Media stocks are down for the sixth month in a row. You can buy Disney for less than 19 times forward earnings.

There are a lot of things going well for the company despite the stock chart going in the opposite direction. Disney returned to box office dominance this summer with the two highest-grossing movies in the world since 2024, and it has two movies coming out this holiday that should do even better. Disney+ is finally profitable. There are some short-term hiccups at its theme parks and a longer-term issue with its legacy media networks, but the sum of all these mouse parts points to healthy growth in the near future.

Disney’s current yield of 1% is much lower than the other names on this list, but the entertainer increased its semi-annual distributions by 50% earlier this year. The bullish play here will still be in the form of capital appreciation over dividend checks.

3. Ford

The highest yield and lowest multiple on the list belongs to Ford, but let’s start with a brake check. Growth has slowed to single-digit gains at the automaker for three consecutive quarters. Trading at a P/E ratio of 11 sounds great until you realize it’s based on a $42 billion market cap. Ford’s enterprise value is $168 billion once you factor in debt.

The auto market is cyclical, and Ford is struggling to find the balance between its electric vehicles and its more traditional cars. The current yield of 5.7% will reward patient investors, but the hefty payouts are at the mercy of Ford once again stepping on the throttle and controlling costs. Analysts see steady revenue and earnings growth for Ford next year, and we know how drivers feel about flats. The bullish catalyst here is that falling interest rates could spur renewed interest in large purchases. Don’t you deserve a new car? Ford hopes you’ll turn to the iconic automaker.