The market has been a real gift for many investors in 2024, with the S&P 500 setting new all-time highs at the end of 57 different trading days (so far). As we enter the gift-giving season and invest for 2025, it might be time to think about giving yourself some gifts, too. After all, investing in your future is one of the best gifts you can give. And if that gift is a reliable dividend stock, it can become a gift that keeps on giving.
Many people pick up a little extra cash around the holidays, whether it’s a year-end bonus, a seasonal side job, or a gift from a wealthy uncle to some lucky person. Others may have bonds or CDs that mature and require the cash to be reinvested. So if you have $10,000 (or any real money) available to invest, consider these two dividend stocks as long-term investments.
Big tech companies like Elon Musk’s xAI, Microsoft, and Metaplatform are building massive data center complexes to capitalize on the burgeoning interest in artificial intelligence (AI). These hyperscale data centers are at least 100,000 square feet (some even larger) and filled with computing equipment that work together. xAI’s Memphis data center currently has 100,000 GPUs that power the servers that train our AI models, and we plan to expand the center 10x to meet our growing needs. Dell is the primary supplier of infrastructure for this xAI project. Microsoft’s server center project in Wisconsin will occupy more than two square miles and will also use Dell equipment.
As shown below, hyperscale data center growth will accelerate in 2023 and reach well over 1,000 in 2024. It is estimated that an additional 120 to 130 hyperscale centers will come online per year over the next few years.
hyperscale data center
These centers require infrastructure such as servers, racks, and cabling, as well as Dell Technologies. (NYSE:Dell) is the largest supplier on the market. Last quarter, Dell’s Infrastructure Solutions Group (ISG) revenue increased 34% year-over-year to $11.4 billion. The most important driver for this segment was servers and networking, which grew 58% to $7.4 billion. This is a direct result of our data center business. Total sales grew 10% to $24.4 billion.
Dell’s other divisions, which serve the computing needs of businesses and individuals, underperformed, with sales down 1% from a year earlier to $10.1 billion. But Dell believes a computer upgrade cycle driven by artificial intelligence (AI) is coming. Still, investors shouldn’t expect this sector to drive growth as much as ISG.
the story continues
Dell plans to return 80% of its adjusted free cash flow to shareholders through stock buybacks and dividends. The company aims to increase dividends by at least 10% every year until at least 2028. This year’s dividend was increased by 20%. The futures yield is 1.26%. This yield is roughly in line with the S&P 500 average, so it may not seem like a dividend stock worth pursuing. However, Dell’s stock price is expected to rise steadily. Of the 25 analysts covering the stock, 21 rate the stock as a “buy” or “strong buy,” with an average price target of $151 per share. is 27% higher than the current price.
The huge need for data center infrastructure puts Dell in the right place at the right time. Those who buy now can benefit in the long term.
If you’re strictly looking for high-yield income stocks, check out real estate investment trust (REIT) Vici Properties (NYSE: VICI) Your speed may be faster. Vici owns some of the most prestigious real estate properties on the planet and rents them out to these famous experiential brands.
Image source: Vici
These “trophy characteristics” are difficult to replace and create high barriers to competitive entry. Major corporate tenants include MGM Resorts International and Caesars Entertainment. A tenant with deep pockets makes rent collection more stable. In fact, Vici collected 100% of its rent during the COVID-19 pandemic, even though many casinos and entertainment venues were temporarily closed.
Vici has raised its dividend every year since its inception, and as you can see below, this dividend is likely to continue as funds from operations (where the dividend is paid) are increasing.
VICI Dividend Data by YCharts
The current forward yield is 5.5%, significantly higher than Dell’s yield. However, Vici is unlikely to deliver a significant increase in its share price. It’s a stock for stable and growing income.
Dell and Vici could not be more different companies, giving investors the choice between generating low-yield or high-yield income with the potential for stock price appreciation. One or both may be right for you.
Have you ever felt like you missed out on buying the most successful stocks? Then you’ll want to hear this.
On rare occasions, our team of expert analysts will issue a “Double Down” stock recommendation on a company we think is about to crash. If you’re already worried that you’re missing out on an investment opportunity, now is the best time to buy before it’s too late. And the numbers speak for themselves.
NVIDIA:If you invested $1,000 when it doubled in 2009;That’s $356,125!*
Apple: If you invested $1,000 when it doubled in 2008, you would have earned $46,959. *
Netflix: If you invested $1,000 when it doubled in 2004, you would have earned $499,141. *
We currently have “double down” alerts on three great companies, and we may not see an opportunity like this again anytime soon.
See 3 “Double Down” stocks »
*Stock Advisor returns as of December 9, 2024
Randi Zuckerberg is a former head of market development and spokesperson at Facebook, sister of Meta Platforms CEO Mark Zuckerberg, and a member of the Motley Fool’s board of directors. Bradley Guichard works at Dell Technologies and Vici Properties. The Motley Fool has a position in and recommends Meta Platform and Microsoft. The Motley Fool recommends Vici Properties and recommends the following options: A January 2026 $395 long call on Microsoft and a January 2026 $405 short call on Microsoft. The Motley Fool has a disclosure policy.
“The Smartest Dividend Stocks to Buy With $10,000 Right Now” was originally published by The Motley Fool.
