With markets navigating a genuinely uncertain backdrop this year, from geopolitical tensions to persistent inflation and a national debt that’s now crossed $40 trillion, investors have plenty of reasons to be selective about where they put new capital. Even so, equities have managed a solid year overall, and history suggests dividend-focused names tend to hold up reasonably well during periods of macro uncertainty.
Two companies in particular offer compelling entry points as the fourth quarter gets underway: Realty Income, a real estate giant built on remarkable diversification, and IBM, a tech stalwart that stumbled badly this summer but appears to be finding its footing again.
Realty Income (O): The Power of Spreading Risk Across an Entire Economy
Few companies illustrate the value of diversification quite like Realty Income. The real estate investment trust owns approximately 15,500 commercial properties, leased to 1,800 tenants operating across 92 different industries. That breadth means the failure of any individual business, or even a broader slowdown in a specific sector, is unlikely to meaningfully disrupt the company’s overall cash flow.
Look inside that portfolio and the balance becomes even clearer. Grocery stores make up the single largest slice of rental income, and even that only accounts for 11.1% of the total. Beyond that, categories including convenience stores, home improvement retailers, dollar stores, quick-service restaurants, auto parts stores, pharmacies, and fitness centers each contribute more than 4% apiece. It’s a portfolio built to withstand sector-specific downturns rather than depend on any single industry’s health.
Realty Income has also built a reputation around consistency of income. The company pays dividends monthly instead of quarterly, giving shareholders 12 opportunities per year to collect and reinvest cash rather than four. That commitment has held for 674 consecutive months—more than 56 years—during which the company has raised its payout 135 separate times since its 1994 NYSE listing.
Shares currently trade around $60, and while the stock’s price appreciation this year has been modest, factoring in dividend income tells a more complete story. The stock currently yields 5.3%, a figure that reflects both the size of the payout and the reliability behind it.
IBM: Betting on a Bounce-Back After a Rough Quarter
IBM makes for a less obvious pick at first glance. Shares are down roughly 20% year to date, and the stock suffered its worst single trading day on record after a disappointing second-quarter earnings report in July. That kind of headline tends to scare investors away, but a closer look at what actually happened suggests the selloff may have been overdone.
The core issue wasn’t really about IBM’s own execution—it stemmed from customers temporarily redirecting their budgets toward memory and storage components in anticipation of further price increases in that market, effectively pulling spending away from IBM in the near term. That shift caused a number of deals expected to close during the quarter to get pushed back, resulting in revenue of $17.1 billion, up just 1% from the prior year, along with net income of $2.2 billion and earnings per share of $2.27, both down modestly year over year.
The encouraging part is that this appears to be a timing issue rather than a sign of deteriorating demand. CEO Arvind Krishna indicated that roughly a third of those delayed transactions had already closed in early July, positioning them to show up in the company’s third-quarter results instead.
Wall Street analysts appear to agree that the setback is temporary. RBC Capital maintains an “outperform” rating with a $270 price target, suggesting approximately 15% upside from current levels. Bank of America Securities takes an even more bullish stance, rating the stock a “buy” with a $330 target implying roughly 40% potential upside. Investors willing to wait out the recovery also collect a 2.9% dividend yield along the way, a solid payout for a company in the technology sector.
