Bank of Nova Scotia (NYSE: BNS) is offering investors a nearly 3.5% yield. The average bank's yield is around 2.2%, and the S&P 500 index (SNPINDEX: ^GSPC) has a tiny 1% yield. If you are looking for a high-yield bank stock, Scotiabank, as it is more commonly known, is probably worth a close look. But the real dividend story is about consistency. Here's what you need to know.

Bank of Nova Scotia has shifted gears, but not changed its dividend policy

Recently, Scotiabank made a major change in its business. For a long time, the Canadian bank had skipped the U.S. market, focusing instead on Central and South America. That differentiated it from its large Canadian peers, which had focused on growth in the U.S. Scotiabank's plans didn't work out as well as hoped, so it shifted gears. Now, like its peers, it is increasing its focus on the U.S., with a goal of offering its services from Mexico to Canada. Those three countries are contiguous and important trading partners.

Image source: Getty Images.

What's notable is that Scotiabank has made this shift without resorting to a dividend cut. In fact, the biggest impact that dividend investors felt was a one-year pause in dividend increases. When you look at the company's history, however, that makes total sense. Scotiabank has paid dividends every year since 1833, over 190 years ago. And, unlike many of the largest U.S. banks, it also didn't cut its dividend during the Great Recession.

Scotiabank's efforts to grow in the U.S. market will likely be a net positive, but the real story here isn't about growth. This is a slow-and-steady business that will help you build wealth over time. Dividend reinvestment would allow for powerful compounding, given the above-average yield and incredible dividend history. The real story, then, is consistency, which is powered by the bank's Canadian operations.

Canada's banking system is highly regulated. That has left Scotiabank with a fairly conservative corporate culture and provides it, along with a small number of other large banks, with a protected market position. So its efforts outside of Canada are building atop a strong foundation. That foundation is so strong that Scotiabank was able to materially change its corporate direction without a major impact on the dividend.

When it comes to dividends, slow and steady can be very exciting

Will Bank of Nova Scotia make you rich? Perhaps, but certainly not quickly. This is the type of company you buy and hold for the long term because it has a fundamentally strong business. If you give it long enough, it can be a powerful wealth builder when included in a diversified income portfolio.

Reuben Gregg Brewer has positions in Bank Of Nova Scotia. The Motley Fool recommends Bank Of Nova Scotia. The Motley Fool has a disclosure policy.

Businesses change over time. Sometimes that change can turn a once-risky company into an attractive investment, but only if you can overlook the prior history. Here's why Energy Transfer (NYSE: ET) could be a buy now and why some investors may still prefer to own a lower-yielding peer like Enterprise Products Partners (NYSE: EPD).

Energy Transfer has made "mistakes"

Let's get the bad news out of the way first. Energy Transfer agreed to buy pipeline peer Williams (NYSE: WMB) in 2006. It got cold feet when the energy sector hit a weak patch and worked to scuttle the deal. That was probably the right move for the business, which would have likely needed to load up on debt to get the deal done and/or cut the dividend. However, as part of its effort to get out of the acquisition it had agreed to, the company issued convertible securities that appeared to protect insiders from a dividend cut if the deal had gone through.

Image source: Getty Images.

The deal was called off, so the converts turned out to be a non-issue for dividend investors. However, it was a move that would justifiably leave investors with trust issues. Then, during the 2020 oil downturn that accompanied the coronavirus pandemic, the partnership cut its distribution in half. The goal was to strengthen the balance sheet and reposition the business.

This was, again, likely a good move for the business. However, the problem is that the recession during that period was probably a point when dividend investors were hoping for consistency, not dividend cuts. The distribution is growing again and is above its level prior to the cut. And, perhaps more importantly, the business is on a different trajectory today than it has been historically, with what appears to be a focus on slow and steady growth.

Energy Transfer wants to be a tortoise like Enterprise

At this point, Energy Transfer is looking to grow its distribution by 3% to 5% per year. That's the slow-and-steady pace that investors have come to expect from peer Enterprise Products Partners. The difference is that Enterprise doesn't have the same negative events in its past. In fact, Enterprise has increased its distribution annually for 28 years. Conservative investors will probably be better off with Enterprise.

There's just one niggle here. While Enterprise offers an attractive 5.6% yield, Energy Transfer's yield is an even higher 6.3%. To be fair, Enterprise is a simpler business, noting that Energy Transfer also controls two other publicly traded master limited partnerships. The higher yield isn't just about the history; it requires more time and effort to track Energy Transfer. And Energy Transfer does appear to be a riskier investment than Enterprise.

That said, for investors willing to take on the risk, the reward is roughly 12.5% higher income due to the 0.7 percentage-point difference in yields offered by Enterprise and Energy Transfer. Given the repositioning of Energy Transfer's business, including reduced leverage, that could be enough to entice more aggressive and active income investors.

Energy Transfer is not a slam dunk

The real takeaway here is that Energy Transfer is a far more attractive income investment today than it was in the past. But that past is important to understand because it could leave more conservative investors with trust issues. And, if that's the case, Energy Transfer, despite an attractive yield, may not be the right choice for you. But, if you can forgive those transgressions and believe the MLP has turned into a slow and steady income tortoise, you might want to give it a shot. Just go in with your eyes open and track the business fairly carefully.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool recommends Enterprise Products Partners. The Motley Fool has a disclosure policy.

If you are old enough, you remember a time before the internet. And you also remember Yahoo! and America Online being two of the most dominant internet companies early in the internet's development. The stocks were hot way back then, but today, both have basically flamed out and been swallowed up by other companies. Other internet companies became more dominant.

This isn't unusual in the tech sector, and investors piling into artificial intelligence (AI) stocks should keep that in mind. Sure, you could make a big bet on an AI stock that you think has winning tech, like a high-powered chip or a specialized application, or you could go with a picks-and-shovels play like Brookfield Renewable (NYSE: BEP)(NYSE: BEPC). Here's why this clean energy company could be the better bet.

Image source: Getty Images.

AI Investors are being driven by emotion

Right now, artificial intelligence is a hot sector. Too many investors see it as a way to get rich quickly. And that has had pretty predictable consequences. For example, SoundHound (NASDAQ: SOUN) provides AI voice services. That's exciting, but probably not unique enough to build a business around. Still, its stock skyrocketed as investors jumped on the next hot thing. The shares have since plunged back to earth, down 70% from their 2024 peak.

The same could be happening now with Western Digital (NASDAQ: WDC), a maker of data storage devices. Huge demand from the AI build got investors excited about the stock, but that excitement has begun to fade. The stock has fallen roughly 40% from its recent highs. That's actually the second huge drawdown over the last three years. Even AI poster-child Nvidia (NASDAQ: NVDA) has proven to be a highly volatile stock.

NVDA data by YCharts

If you can't stand the AI volatility, go with a picks-and-shovels play

But, there's one thing that AI can't live without: electricity. After all, AI is really just a fancy computer program. Electricity demand is so high right now that there's been a step change. Between 2005 and 2025, U.S. electricity demand increased by 10%. Between 2025 and 2045, U.S. demand is projected to increase 60%. AI is playing a major role in the changing dynamics of electricity. Globally, however, there's also a shift toward cleaner power sources and increasing demand from developing nations. A great way to benefit from AI, clean energy, and broader economic growth is Brookfield Renewable.

Brookfield Renewable owns a globally diversified portfolio of clean energy assets, with exposure to North America, South America, Europe, and Asia. Its power portfolio includes solar, wind, hydroelectric, and storage. It also owns a stake in Westinghouse, a key global supplier to the nuclear power industry. It is a one-stop shop for clean energy exposure, and it is already working with AI-focused companies like Microsoft (NASDAQ: MSFT) and Alphabet (NASDAQ: GOOG) to help them build out their AI businesses.

The best part of the story, however, is likely to be Brookfield Renewable's dividend. The yield is currently around 5% for the partnership share class and 4.9% for the corporate share class. The quarterly disbursement has been increased at a roughly 5% annualzed pace over the past decade. Add a 5% dividend to a 5% dividend growth rate, and you get roughly 10%, which is about the return most investors expect from the broader market.

The future is bright for Brookfield Renewable

AI is just part of the electricity story that supports Brookfield Renewable's long-term growth opportunity. Which is actually more exciting than if AI were the only thing this clean energy company had going for it. If you are a dividend investor looking to benefit from AI, forget trying to pick a winner in the volatile AI sector and dig into high-yield Brookfield Renewable. It is already benefiting from AI's intense demand for power, but there's much more opportunity than that.

Reuben Gregg Brewer has positions in Brookfield Renewable Partners. The Motley Fool has positions in and recommends Alphabet, Microsoft, Nvidia, SoundHound AI, and Western Digital. The Motley Fool recommends Brookfield Renewable and Brookfield Renewable Partners. The Motley Fool has a disclosure policy.

Investing is about more than just picking good stocks and bonds and holding them for the long term. You should also consider the tax implications of the investments you make. The easiest example of this is the bond space, with the dichotomy between corporate and municipal bonds. Corporate bonds are fully taxable, but muni bonds can help you avoid paying taxes on the income they generate.

But there's another level to the issue, because certain retirement accounts also allow you to avoid taxation. Investors in ultra-high-yield mortgage real estate investment trusts (REITs) and business development companies (BDCs) need to pay close attention to where they place these securities. Here's where they probably belong, if you want to minimize your tax hit.

Image source: Getty Images.

You need to pay your taxes, but you don't want to pay too much

The taxes you pay help to pay for all of the government services that you receive. That includes something as simple as having a road to drive your car on, to more complex things like paying your state representatives. For the most part, these are good things, and you should pay your taxes. If you don't, the government will eventually come calling. You don't want that to happen.

That said, the tax code is mind-boggling complex. The simple logic is that if you earn income, you have to pay some tax on that income. That's easy enough if the income you earn comes from a job. It is more complex if the income is generated from investments you own. Dividends, as it were, are not all created equally.

This is particularly important for real estate investment trusts and business development companies. Both of these corporate structures are designed to pass income on to shareholders in a tax-advantaged manner. So long as REITs and BDCs pass at least 90% of their taxable income on to shareholders as dividends, they do not pay corporate income tax. The shareholder pays taxes on that dividend income, which is taxed at the same rate as earned income. There are nuances here, but that's the big picture you need to keep in mind.

What's AGNC's 13% yield doing to your taxes?

AGNC Investment (NASDAQ: AGNC), a well-respected mortgage REIT, has a 13.5% dividend yield as of this writing. Annaly Capital (NYSE: NLY), another mREIT, yields roughly 12.5%. Main Street Capital (NYSE: MAIN), a highly respected BDC, has a yield of 5.5%, which rises to around 7.5% if you include its special dividends. And Ares Capital Management (NASDAQ: ARCC), one of the largest BDCs you can buy, has a yield of 9.5%.

The main reason to own all of these stocks is to maximize the income you generate. But, because they are REITs and BDCs, most of that income will get taxed at your normal tax rate. If you aren't prepared for that, you could be in for a surprise come April 15. There's a solution thanks to the quirks of the tax code.

Roth IRAs and Roth 401(k)s are funded with after-tax money. Because you have already paid taxes on the money in the account, the money you withdraw is tax-free. So, if you buy a BDC or REIT (including mREITs) inside of a Roth IRA or Roth 401(k), you effectively take income that would be taxed at a high rate and turn it into tax-free income.

It matters where you own your stocks for tax purposes

Let's say you own a bank with a 5.5% yield (that's kind of high for a bank right now, but go with it) and you also own Main Street Capital, which has a 5.5% yield (excluding the impact of special dividends). Bank dividends are generally treated as dividend income, which is treated more favorably tax-wise than earned income. Main Street's dividends will be treated as earned income. If you can put one of them in a Roth account, you'll be better off tax-wise if you put Main Street (or any other BDC or REIT) into the Roth.

In truth, this isn't a huge deal for your investment portfolio. It is just a matter of putting certain investments in certain accounts. But if you don't know, it can be a big deal for your taxes. Now that you do know, however, you may want to reconsider your portfolio, strategically placing dividend stocks where their dividends are subject to the most favorable tax treatment. You certainly shouldn't violate any tax laws, but you should use the favorable rules that exist to the fullest possible extent.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Ares Capital. The Motley Fool has a disclosure policy.

Coca-Cola (NYSE: KO) is one of the best-known companies in the world, thanks to its namesake beverage brand, so it needs little introduction. However, what's most impressive right now is the stock's performance. It is up 28% over the past year, as of this writing. The average consumer staples stock is only up 5% over that span. Even the S&P 500 index (SNPINDEX: ^GSPC) is "only" up 20%. After a run like that, is Coca-Cola a buy, hold, or sell?

Buy and hold Coca-Cola

Coca-Cola is a well-run business. It is one of the world's largest consumer staples companies. It is globally diversified and has industry-leading capabilities in distribution, marketing, and innovation. The company's fundamental strength is evident in its status as a Dividend King, with 64 consecutive annual dividend increases. The only consumer staples peer with a better record is Procter & Gamble (NYSE: PG), but P&G doesn't make food. So, Coca-Cola is the food company with the best dividend record.

Image source: Getty Images.

If you want to own industry-leading businesses, Coca-Cola should be on your short list. And, with an above-market yield of 2.4%, you could easily justify adding it to your portfolio. That's particularly true given recent results, with organic revenue growth of 6% in the second quarter of 2026, even as consumers tighten their belts. In fact, Coca-Cola raised its full-year guidance despite the broader food industry's struggles.

Certainly, if you have owned Coca-Cola for years, selling it right when it is performing so well as a business probably isn't something you should be considering. Unless, of course, the stock's valuation was running ahead of its historical norms. But that's not the case.

Sell or don't buy Coca-Cola

That said, Coca-Cola's price-to-sales ratio is a bit ahead of its five-year average. Its price-to-earnings and price-to-book value ratios are roughly in line with their longer-term averages. It looks fully priced to just a little bit expensive. If you are a value investor, you'll probably want to put Coca-Cola on your wish list and not your buy list. It would be tough to suggest an outright sale if you are a long-term buy-and-hold investor, but it certainly isn't a steal at its recent valuation.

Coca-Cola is a great business, but fully priced

At the end of the day, Dividend King consumer staples giant Coca-Cola is a very attractive company to own. If you don't mind paying full price for a good business, you may want to buy it even after an incredible run for the stock. However, most investors, and particularly those with a value bias, will probably be better off putting it on the wish list for now. That said, if you own it and have a long-term investment horizon, you should probably stay the course.

Reuben Gregg Brewer has positions in Procter & Gamble. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Brent crude, the global benchmark for oil, started the year at roughly $60 a barrel. Then the geopolitical conflict in the Middle East broke out, pushing crude oil prices to nearly $140 a barrel. After that spike, oil cooled off, losing around half of the gain before shifting higher again. Today, Brent crude is hovering around $95 per barrel.

What lies ahead for oil? In the near-term, the answer will be determined by the ongoing conflict in the Middle East. But if you are a long-term investor, the answer will be more of the same. Here's why that's so important to understand when selecting energy stocks to buy and hold.

Image source: Getty Images.

Oil is a commodity and prone to volatility

This is the hard truth about oil prices: oil is a commodity subject to supply and demand. Right now, the price is affected by a geopolitical conflict, but historically, natural disasters, economic swings, industry overinvestment and underinvestment, and energy-industry disasters (oil spills, etc.) have all upended the supply and-demand balance. That, in turn, leads to oil prices moving higher and lower, often in a dramatic and sometimes rapid fashion.

In other words, the current volatility in oil prices is entirely normal for the energy sector. But, at the same time, oil is vital for the normal functioning of the modern world. That is clearly on display in the current conflict, as countries and companies draw down oil stockpiles to avoid economic disruption. That effort could be helping to keep oil prices lower than they otherwise would be, given the oil market's current fundamentals, for now.

Chevron (NYSE: CVX) and ExxonMobil (NYSE: XOM), two of the world's largest energy companies, have both warned that oil prices may not be fully reflecting the on-the-ground situation in the energy sector. Higher oil prices may be in the cards, if that's the case. Most long-term investors should probably have some oil exposure, but they should own companies that can survive through the entire energy cycle.

Chevron and Exxon have proven their reliability

Owning large, globally diversified oil giants like Chevron and Exxon is likely to be a great option for most investors. Each company has exposure to the entire energy value chain, which can help to soften the swings in oil prices. Also, both companies have incredibly strong balance sheets, with Chevron's debt-to-equity ratio at roughly 0.2x and Exxon posting an even more impressive 0.16x. They have stronger balance sheets than any of their closest integrated energy peers.

This is important because it allows Chevron and Exxon to take on debt during energy downturns, enabling them to continue supporting their businesses until the oil market recovers. Then the debt is reduced in preparation for the next downturn. Notably, this approach has also allowed each company to continue supporting its dividend through downturns. Exxon has increased its dividend annually for 43 years, while Chevron's streak is up to 38 years.

If you are looking for energy exposure, focusing on reliable dividends rather than volatile energy prices will help you stick it out through the volatility. Right now, Exxon's dividend yield is 2.5%, and Chevron is offering 3.3%. Exxon is the larger of the two companies, but either one would be a good option for a long-term investor. Obviously, if you are trying to maximize the income your portfolio generates, Chevron will probably be the preferred option.

Better and worse times to buy

All of that said, you might want to keep these two industry giants on your wish list for now. With oil prices at a fairly high level, Exxon and Chevron's stock prices are also relatively high (and their yields relatively low). If you are patient, history suggests another energy downturn is highly likely. At that point, Exxon and Chevron shares will likely be cheaper and offer higher yields. This isn't a suggestion to time the oil market, but a realistic statement of industry dynamics. Often, the best time to buy energy stocks like Exxon and Chevron is when short-term-minded investors are scared and indiscriminately selling.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chevron. The Motley Fool has a disclosure policy.

In July, exchange-traded funds (ETFs) took in $193 billion. That pushed the year-to-date total to $1.23 trillion, a record for that seven-month period. But there was an important underlying shift taking place that investors need to be aware of. It's good news for companies like BlackRock (NYSE: BLK), but it could be bad news for individual investors who keep buying ETFs. Here's what you need to know.

Exchange-traded funds are cheap to own, right?

The first exchange-traded fund ever created tracked the S&P 500 index. It made total sense to use the S&P 500 index (SNPINDEX: ^GSPC), since it is basically considered "the market" by most investors. The unique structure of ETFs allowed the fund, SPDR S&P 500 ETF (NYSEMKT: SPY), to offer a shockingly low expense ratio of just 0.09%.

Image source: Getty Images.

Most mutual funds at the time had expense ratios that were far higher than that. Even index-based mutual funds tended to be more expensive to own.

Early on, all of the ETFs created tracked large, well-known indexes. And the goal was to have low expense ratios. In fact, there was a race to have the lowest costs, with Vanguard S&P 500 ETF (NYSEMKT: VOO) eventually offering access to the S&P 500 index for a tiny 0.03% expense ratio. On an absolute basis, that's not much different from the 0.09% of SPDR S&P 500 ETF, but on a percentage basis, the difference is huge.

Wall Street gives the market what it wants

The problem is that there are only so many big indexes to copy. So Wall Street, seeing an opportunity to sell a new product, began creating bespoke indexes around which it could build new ETFs. All sorts of sector-specific ETFs were launched, and ETFs based on "factors" too. There was a Herculean effort among finance giants to slice and dice the market just to create new ETFs.

But those ETFs often require more "work" to operate. So, expense ratios were higher. For example, Vanguard Utilities Index ETF (NYSEMKT: VPU) has an expense ratio of 0.09%. But it's just an index of utility stocks, so how much extra work is really needed to create it compared to an S&P 500 index ETF? The answer doesn't matter; investors have to pay more for it either way. And Wall Street generates more fee income.

The next obvious step was for Wall Street to create actively managed ETFs. Basically, these are mutual funds with an ETF structure, but they charge higher fees than index-based ETFs. For example, the recently launched iShares Systematic Alternatives Active ETF (NASDAQ: IALT) has an expense ratio of 0.99%. That's basically what an actively managed mutual fund would charge, meaning BlackRock, one of the largest ETF sponsors, has found a way to materially increase its fee income through the ETF structure. To be fair, iShares Systematic Alternatives Active ETF is a pretty complex ETF, but investors shouldn't ignore the trajectory that expense ratios have taken.

And that brings the story back to how much money is going into ETFs more broadly. While the entire ETF category is seeing huge inflows, much of the growth is coming from actively managed ETFs, which are more expensive to own. And the shift is material, with active ETFs benefiting from a 75% year-over-year increase in inflows through the first seven months of 2026, to $466 billion. The fee mix is moving in Wall Street's favor.

Don't assume an ETF is cheap

At one point, an investor could just assume that ETFs were the cheapest option available to them for a given investment approach. That's no longer the case. Wall Street's business is to maximize profits, so this progression shouldn't be surprising. However, if you don't see the progression for what it is, you may end up paying more than you expect for the asset management services you are receiving. So, it is probably more important than ever for investors to check ETF expense ratios before making the final buy decision.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends BlackRock and Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.

JPMorgan Chase (NYSE: JPM) is one of the world's largest financial institutions. It has been run by Jamie Dimon since Jan. 1, 2006. He has also been the chairman of the board since 2007. In other words, he steered JPMorgan Chase through the very difficult Great Recession and oversaw the business's material growth since that deep economic downturn. There's a reason why Wall Street gives him high marks for his stewardship. But is that a potential risk when he eventually steps aside?

JPMorgan Chase has had a great run

Most large U.S. banks were hit hard by the 2007-2009 recession that nearly brought the world's financial system to its knees. Like many of its peers, JPMorgan Chase cut its dividend during the downturn, but it quickly began growing it again. Some of the company's biggest peers took much longer to recover. That's a testament to Jamie Dimon's leadership and shareholder focus, with the stock now closing in on a $1 trillion valuation.

Image source: JPMorgan Chase & Co.

Today, Wall Street listens to every word Jamie Dimon utters with extreme interest. For example, when he recently warned about increasing market risk in JPMorgan Chase's second-quarter earnings release, it was headline-grabbing news. When a CEO has this much prominence, investors can give the companies they oversee a bit of a premium. Some are concerned that this is the case with JPMorgan Chase today.

That's not an unreasonable assessment. JPMorgan's chase's price-to-earnings ratio is 15.5x as of this writing, versus a five-year average of 11.5x. Its price-to-book ratio is 2.7x compared to a longer-term average of 1.8x. So, historically speaking, the stock appears to be trading at a premium. That valuation story gets even worse when you compare JPMorgan Chase to the average bank, which has a P/E of 11.6x and a P/B of 1.3x.

What could go wrong with the JPMorgan Chase premium?

So long as Jamie Dimon sticks around, there's no particular reason to worry about a "Jamie premium" going away. But at 70, he's far closer to retirement than he was in 2006, when he was roughly 50. He will eventually step away from the CEO role, leaving his successor with very large shoes to fill. If you own JPMorgan Chase because of Jamie Dimon's astute leadership, you might want to consider taking some profits, given the stock's elevated valuation.

That said, if Jamie Dimon steps aside before the next recession hits, the risk of Wall Street revaluing the shares could be even bigger in a downturn. Investors trust Dimon; they won't know what to think of the next CEO until that person has proven their management chops. This is a case where good leadership may expose investors to increased risk because emotionally driven investors are placing so much trust in one person.

JPMorgan Chase is an advertising partner of Motley Fool Money. Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure policy.

Intuitive Surgical (NASDAQ: ISRG) is a volatile stock to own. Since its initial public offering, the stock has suffered eight drawdowns of 30% or more. Two of the drawdowns were over 70%. Right now, the stock is in the middle of a drawdown that has it off its recent highs by roughly 40%.

Historically, the stock has recovered from each drawdown and gone on to higher highs. That suggests that the current sell-off is a buying opportunity. However, there have been big changes in the surgical robotics space that investors have to consider, as well. Here's a look at whether or not Intuitive Surgical is worth buying today. (Hint: Selling new robots isn't the biggest piece of the story.)

Image source: Getty Images.

Intuitive Surgical: Growth isn't what it used to be

Intuitive Surgical was a pioneer in the surgical robots space, with its da Vinci system being one of the first and most widely available options. Being early allowed the company to grow its business at a fairly rapid clip. The fact that robot-assisted surgery generally requires smaller incisions and leads to better outcomes was a big selling point. Early on, investors tracked the company's da Vinci sales very closely, and they still do.

The sale of new da Vinci robots is important. But the market has new entrants, including medical device giants like Medtronic (NYSE: MDT) and Johnson & Johnson (NYSE: JNJ). These are well-heeled competitors with strong industry connections. The playing field is much different now than it was two decades ago. Simply put, there's more competition. So it makes sense that Intuitive Surgical's business would slow down a bit.

It is still selling da Vinci systems, noting that it placed 468 in the second quarter of 2026, up from 395 in the second quarter of 2025. But Wall Street clearly wasn't pleased, given the sell-off in the shares.

ISRG data by YCharts

What's interesting is that the first number the company talks about isn't new da Vinci placements; it is the number of surgeries performed with da Vinci robots. The number of surgeries rose 16% year over year, even though the number of da Vinci systems being used globally increased by 12%. That difference is very important.

The flywheel is parts and services

Intuitive Surgical breaks down its revenues across new robot sales, services, and instruments and accessories (basically, parts). New robot sales accounted for only around 24% of total sales in the second quarter of 2026. So 75% of the company's top line comes from maintaining the surgical robots it already has in place.

These are annuity-like income streams that will remain in place until those da Vinci systems are no longer being used. Given the cost of a surgical robot and the demand for robotic surgery, it is unlikely that a hospital will prematurely shut down a da Vinci robot just to switch to a competitor's surgical robot. So growth may slow down, but the core of the business remains strong.

And then there's the opportunity from continued technological advances. Most notably, artificial intelligence (AI) is already being used to assist surgeons. It doesn't seem unrealistic to believe that AI could perform basic surgery on its own someday. That would greatly increase access to medical care globally. In other words, there are still opportunities for Intuitive Surgical to grow. Perhaps that growth won't be as rapid, but so long as it continues to sell new da Vinci systems, its annuity-like parts-and-services business will grow even more powerful.

Intuitive Surgical looks historically cheap

Intuitive Surgical is best suited to more aggressive growth investors. So conservative types should probably avoid the historically volatile stock. But, if you can stomach big price swings, history suggests that large drawdowns are a buying opportunity. And, notably, the stock's price-to-sales, price-to-earnings, and price-to-book ratios are all below their five-year averages. So, too, is the price-to-forward earnings ratio, which accounts for Wall Street's growth expectations. Basically, the current drawdown has left this growth stock looking cheap again.

Reuben Gregg Brewer has positions in Medtronic. The Motley Fool has positions in and recommends Intuitive Surgical and Medtronic. The Motley Fool recommends Johnson & Johnson and recommends the following options: long January 2028 $520 calls on Intuitive Surgical and short January 2028 $530 calls on Intuitive Surgical. The Motley Fool has a disclosure policy.

Between 2005 and 2025, electricity demand in the United States increased by 10%. Not 10% a year, 10% in total. But between 2025 and 2045, there's going to be a step change in demand, with electricity demand projected to increase by 60%. That's a very good backdrop for nuclear power, which provides reliable, baseload power that is "clean" because it doesn't produce greenhouse gases.

There's a nuclear renaissance on the way. However, it looks like the United States isn't quite ready to participate yet. Here's what you need to know and how you can play the growth of nuclear outside of the U.S. market.

Image source: Getty Images.

Where are new reactors getting built?

The problem for investors seeking to participate in a U.S. nuclear power renaissance is that it really isn't taking place just yet. Sure, some companies with existing nuclear power assets are benefiting from surging electricity demand. For example, utility Constellation Energy (NASDAQ: CEG) has inked deals with artificial intelligence data center owners and other companies that will keep nuclear reactors operating longer than planned, or allow for increased output from existing reactors. And Southern Company (NYSE: SO) recently completed construction of two new reactors, positioning it to provide decades of nuclear power to the market.

However, the real nuclear power story right now is taking shape outside of the U.S. market. Of the 77 nuclear reactors under construction worldwide, only three are being built in the broader "Americas", according to nuclear fuel supplier Cameco (NYSE: CCJ). Asia is the real hub for the industry, with a total of 57 reactors being built (37 in China, eight in India, and 12 throughout the rest of the region).

Nuclear industry service providers could be the best approach

It will be difficult for most U.S. investors to invest in the Asian nuclear power boom. However, that doesn't mean it is impossible; you just need to be a little creative. For example, Cameco is one of the most important suppliers of nuclear fuel worldwide. It also owns 50% of Westinghouse, a service provider to the nuclear power industry. Cameco should benefit from nuclear power growth, wherever it occurs. And that includes the opportunity to benefit from U.S. nuclear growth if, perhaps when, it occurs.

A less direct option is Brookfield Renewable (NYSE: BEP)(NYSE: BEPC). This company owns a globally diversified portfolio of clean energy assets, including hydroelectric, solar, wind, and storage. But it also owns a piece of Westinghouse. So it, too, should benefit, though less directly, from a global nuclear power renaissance. What's notable about Brookfield Renewable is that the partnership share class offers an attractive yield of 5%, with the corporate share class coming in at 4.9%. That will likely interest dividend investors far more than Cameco's miserly 0.2%.

New reactor technology is exciting, but still not being used

That said, the future of nuclear power could be small modular reactors (SMRs) like those being developed by Oklo (NYSE: OKLO) and NuScale Power (NYSE: SMR). There is a huge long-term opportunity if SMR technology gains traction, particularly in the U.S. market, where AI data centers could benefit from the availability of the nuclear technology. Only that hasn't happened yet. Oklo, for example, recently received bad news when it was dropped from a PJM Interconnection study. That could delay Oklo's development plans by 14 months or more, according to the company.

NuScale Power, meanwhile, has at least two potential customers lined up for its SMR technology. But neither one is at a point where a confirmed sale is on the table. So NuScale Power is still just a high-risk start-up that only the most aggressive growth investors should consider buying. And even after a deal is inked, it still needs to prove it can reliably manufacture its reactors.

Nuclear is happening, but you need to tread carefully

Nuclear power is definitely on the upswing globally. However, that really hasn't led to a massive increase in opportunity in the United States. So you need to be careful how you invest. Large stock price swings in Constellation Energy, NuScale Power, and Oklo are evidence that investor emotions can get ahead of actual long-term opportunities on Wall Street. That said, industry suppliers such as Cameco and Brookfield Renewable might offer investors a good entry point, given their ability to serve the global nuclear industry right now and in the future.

Reuben Gregg Brewer has positions in Brookfield Renewable Partners and Southern Company. The Motley Fool has positions in and recommends Cameco and Constellation Energy. The Motley Fool recommends Brookfield Renewable, Brookfield Renewable Partners, and NuScale Power. The Motley Fool has a disclosure policy.

Winnie the Pooh probably isn't the investment guru that first comes to mind when you think about Wall Street. And yet he has offered some pretty sage investing advice: "Doing nothing often leads to the very best of something." The history of investing over the past 50 years very clearly shows that this fictional, honey-loving bear could be on to something. Here's why.

The S&P 500 goes up and down, and then up again

Turning to a real person, iconic investor Warren Buffett, the former CEO of Berkshire Hathaway (NYSE: BRKA)(NYSE: BRKB), has said that "Investing is not a game where the guy with the 160 IQ beats the guy with the 130 IQ. Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing."

Image source: Getty Images.

The issue of temperament is where Buffett and Pooh intersect. That's because the S&P 500 index's (SNPINDEX: ^GSPC) history shows that Wall Street switches between bull and bear markets in a zigzag fashion, while generally moving higher over time. The chart below shows that simply buying and holding the S&P 500 index would have yielded a positive long-term outcome if you had the temperament to do nothing while it gyrated in the short term.

^SPX data by YCharts

In fact, Warren Buffett has actually suggested that most investors would be better off just buying the S&P 500 index and... doing nothing. That's not entirely true; Buffett would likely recommend continuing to regularly buy an S&P 500 index ETF, such as SPDR S&P 500 ETF (NYSEMKT: SPY) or Vanguard S&P 500 ETF (NYSEMKT: VOO), regardless of market conditions.

Think long term, even when Wall Street is thinking short term

Buying every month (or at another regular interval) is known as dollar-cost averaging, which can be a powerful wealth-building tool. But the real key is to avoid market timing, or trying to buy and sell to take advantage of short-term price movements. That is difficult, if not impossible, to do successfully over the long term. Market timing would be one of the "urges" that get investors into trouble. And if you have the right temperament, 50 years of Wall Street history says you shouldn't do it.

Instead, you should channel your inner Winnie the Pooh and do nothing. Well, nothing other than sticking to the same investment plan you had before the bear market downturn. In the end, buying and holding for the long term has a pretty incredible 50-year track record.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway and Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.

Warren Buffett, the former CEO of Berkshire Hathaway (NYSE: BRKA)(NYSE: BRKB), is one of the world's most famous investors. In fact, his long-term success as an investor earned him the nickname the Oracle of Omaha. So investors should pay attention when he issues a warning about elevated risk, as he recently did by suggesting there's a gambling mentality on Wall Street today. However, Wall Street's long-term history still has an important story to tell, too.

The gambling mentality is on full display

Buffett lamented that "we've never had people in a more gambling mood than now," in an interview with Fortune. He even invoked the notion of religious fervor, opining that Wall Street is like a church with a casino attached. That is a very negative view of the market environment, but it isn't unrealistic.

Image source: The Motley Fool.

After rushing headlong into cryptocurrencies, droves of people have now taken up prediction markets. Cryptocurrencies have no intrinsic value and are worth only what their owners are willing to pay. And prediction markets, by definition, have binary outcomes based on time-limited events. That predicting the outcome of a sports event (effectively gambling) can now take place at the same broker a person uses to buy stock in a company should be pretty shocking. And yet it is the norm today for many discount brokers.

^SPX data by YCharts

However, even if you are as worried as Buffett, that doesn't mean you should dump your long-term investment approach. As the chart above highlights, the market has recovered after every bear market in history. In fact, the S&P 500 index (SNPINDEX: ^GSPC) has gone on to achieve new highs after every single downturn in history so far. It is highly likely that this trend will continue, even if investment risk is high today.

Find something that works for you and stick with it

What's interesting is that if you had simply bought the S&P 500 index and kept buying it, ignoring Wall Street and famous investors (including Warren Buffett), you would have done fairly well as an investor. The real story here, however, is picking an investment approach that you can stick to and, well, stick to it through the inevitable good and bad times you'll face as an investor. History suggests Buffett is probably correct about elevated risk, and that, despite his concerns, you probably shouldn't change your long-term investment approach.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.

Accounting is complicated, which is why quarterly and annual reports are so long and boring to read. But when you see a company like Alphabet (NASDAQ: GOOG) reporting that its second-quarter earnings benefited from $77.1 billion in unrealized gains, you have to pause for a second. That's a huge number, but what does it really mean for the business?

Google's investments did well in the second quarter

Earnings are a snapshot, and generally accepted accounting principles (GAAP) make the final earnings number a lot more complicated than you'd hope. Unrealized gains are one of the many complications that investors have to deal with. Normally, unrealized gains aren't such a big deal, but sometimes they can be. When the gain is $77.1 billion, it needs extra attention.

Image source: Alphabet Inc.

Essentially, Alphabet has been investing in other companies. It does so to get access to technological advances, so this effort probably makes a lot of sense for the business. CEO Sundar Pichai isn't doing anything wrong here. But the value of those investments changes, just like the value of any public company.

GAAP accounting rules require a company to include the change in the value of investments in earnings. But you can't count on big gains every single quarter. For example, in the second quarter of 2025, the gain on securities was $1.3 billion. These gains are lumped into "other" income, with the second-quarter 2026 "other" income leaping to nearly $98 billion from roughly $2.7 billion a year earlier.

To put the impact of that year-over-year change into perspective, in the second quarter of 2025, Alphabet's net income was just over $31 billion. That's much larger than the $2.7 billion in "other" income it reported. Not a big deal. In the second quarter of 2026, however, the technology giant's net income was $41 billion, or less than half the $98 billion of "other" income it reported. A very big deal.

Alphabet isn't doing anything wrong, but you can't ignore "other" income

There's nothing nefarious going on here; Alphabet is just working within GAPP accounting rules. But you have to understand the impact of its investment gains on earnings. Essentially, earnings were greatly inflated in the second quarter of 2026. That's good news, for now.

The company, however, is very clear: "Fluctuations in the value of our investments may be affected by market dynamics and other factors and could significantly contribute to the volatility of OI&E [other income and expenses] in future periods." The company is telling you that you can't count on these gains, and they could even turn negative if Alphabet's investments decline in value. In other words, they have little to do with the business's underlying growth story.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.

The global energy market has been upended by the geopolitical conflict in the Middle East, with reduced supply driving up oil and natural gas prices. However, companies like Chevron (NYSE: CVX), while benefiting from today's high energy prices, think in decades, not days, weeks, or months. In fact, volatility is the norm for the energy sector. Management's long-term approach is why Chevron is actively looking to invest in the conflict-torn Middle East. But what does this really mean for dividend investors?

Chevron has a great dividend track record

There are many reasons to like Chevron as an investment. For example, it is large and geographically diverse, with exposure to the entire energy value chain. But one of the biggest is the company's consistency, which is highlighted by a 38-year streak of annual dividend increases. Add in a well-above market 3.5% yield, and the story gets even better for dividend lovers seeking to add some energy exposure to their portfolios.

Image source: Getty Images.

Chevron's willingness to look beyond the conflict that is raging today is part of the story, too. In fact, it is planning to invest in Iraq and hopes to help build a pipeline that will allow energy companies to avoid traversing the Strait of Hormuz. Both could help the company maintain its impressive dividend growth streak, but they aren't the real dividend growth story investors need to be watching.

The real dividend growth story is Chevron's ability to think and act with a long-term mindset. The Iraq investment and pipeline are merely examples of decisions that allow the company to keep increasing its dividend. But what enables such decisions in the first place is the company's financial strength, as highlighted by its impressive balance sheet. At the end of the second quarter of 2026, its debt-to-equity ratio was 0.2x, second only to ExxonMobil (NYSE: XOM) in its peer group.

Watch Chevron's balance sheet if you own it for the dividend

The key is that Chevron has the financial strength to make big, long-term investments at just about any time in the energy cycle. And, notably, when energy prices are low, it has the leeway to take on debt to fund its business and dividend. When energy prices recover, as they always have historically, it reduces leverage ahead of the next downturn. It is this approach that has built Chevron's 38-year dividend streak, and that will extend it, not any single investment. So, if you own Chevron for the dividend, make sure you keep a close eye on the energy giant's balance sheet.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chevron. The Motley Fool has a disclosure policy.

The energy sector has been thrown into disarray since the geopolitical conflict in the Middle East began in early 2026. Oil and natural gas prices have been volatile, often driven more by investor sentiment than by market fundamentals. And through it all, Enterprise Products Partners (NYSE: EPD) has continued to provide investors with a well-above-market yield backed by reliable cash flows. Here's a quick look at the buy, sell, hold call on this energy industry stalwart.

Buy and hold Enterprise Products Partners

The reasons to buy and to hold Enterprise Products Partners are essentially identical. For starters, it is a service provider to energy companies, collecting fees for helping to move oil and natural gas around the world. The price of the commodities moving through Enterprise's vast North American energy infrastructure network is less important than the volume being moved. And since energy remains vital to modern life, volumes tend to be robust most of the time. In a sector known for volatility, Enterprise has a very consistent and reliable business.

Image source: Getty Images.

It is also financially strong, with an investment-grade credit rating. And its distributable cash flow in 2025 covered its distribution by a robust 1.7x, leaving ample room for adversity before a cut would likely be on the table. There's no reason to expect the 28-year streak of annual increases to be at risk. And given the $6.5 billion in capital investment plans the master limited partnership (MLP) has lined up, further increases seem highly likely. Now add in the well-above-market 5.6% yield, and you can see why dividend investors might want to buy and hold Enterprise Products Partners over the long term.

Sell or avoid Enterprise Products Partners

With that background, the one thing investors shouldn't expect is for Enterprise to benefit directly from rising energy prices. An oil and gas producer like Devon Energy (NYSE: DVN) would be the better choice for that, or even an integrated energy major like Chevron (NYSE: CVX), which has exposure across the entire energy value chain. Also, investors seeking rapid dividend growth will likely want to look elsewhere. Enterprise's distribution tends to rise in the low- to mid-single digits. It is a slow-and-steady tortoise, in which the yield will make up a significant portion of an investor's total return over time.

If you don't like boring dividend stocks, you almost certainly won't like Enterprise. However, this MLP could be the perfect fit if you are looking to maximize the income you generate from your portfolio and want to add some energy exposure for diversification purposes.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chevron. The Motley Fool recommends Enterprise Products Partners. The Motley Fool has a disclosure policy.

Canopy Growth (NASDAQ: CGC) started trading publicly in Canada in 2014 via a reverse merger (then known as Tweed). It eventually got a listing in the United States in 2018, becoming one of the first U.S.-traded marijuana companies. The stock rocketed higher as investors jumped into the sector, expecting growth to be driven by the legalization of marijuana in more and more regions.

But Wall Street has a habit of getting too excited about hot investment ideas. The marijuana sector's growth didn't live up to expectations, and investors went from exuberance to despair. Today, Canopy Growth is a penny stock. But the first quarter of fiscal 2027 actually showed broad business improvement. Is the business rebound worth buying into?

Image source: Getty Images.

Canopy Growth is in better shape than it was, but at a cost

In early 2026, Canopy Growth announced that it was undergoing a strategic recapitalization. Essentially, it reduced its debt, strengthening its balance sheet, by issuing equity to bondholders. Shortly thereafter, the company acquired MTL Cannabis, a Canadian medical marijuana company. That expanded the company's position in this important niche of the marijuana industry.

However, the recapitalization left the company with more shares, which diluted current shareholders. And the MTL Cannabis acquisition was an all-stock transaction, which required issuing even more shares. Over the past year, the share count has increased by over 25%. And over the past three years, the increase is over 400%. Canopy Growth is in a better business position, but the improvement hasn't come cheaply.

Notably, the stock has been trading in penny-stock territory since mid 2025. This is a high-risk investment, no matter how you look at it. And most investors should not consider buying it. But the pot company did just have a strong quarter.

CGC data by YCharts

Canopy Growth's first quarter turned for the better

In the first fiscal quarter of 2027, Canopy Growth reported 13% year-over-year revenue growth. But the real story was that all of its business divisions contributed to the top-line improvement. Its Canadian medical marijuana business saw sales growth of 22%; its Canadian adult-use business grew sales by 10%; its international cannabis business grew sales by 10%; and the company's Storz & Bickel business increased sales by 6%.

That wasn't the only good news. Gross margin improved to 27%, two full percentage points higher than the year-earlier period. And the company's net loss was 68% lower than it was a year earlier. Of course, losing money isn't great, but losing less is at least moving in the right direction. The company also refreshed its brand image to help further reset the business.

If you are an extremely aggressive investor, you might be tempted to take a second look at Canopy Growth. However, one quarter doesn't make a trend, and the business revamp is still relatively fresh. So, even then, investors should probably monitor the stock rather than jump aboard. Yes, that may mean losing out on some early stock gains if business performance continues to improve. However, it will save you from buying into a marijuana story that has already fallen far short of investor expectations before and could easily do so again.

Canopy Growth isn't the only one buying

Canopy Growth isn't the only company that's consolidating the marijuana sector. So, more broadly speaking, the industry may be entering a new phase. For example, Tilray Brands (NASDAQ: TLRY) recently acquired Brew Dog, expanding its beverage business. And Aurora Cannabis (NASDAQ: ACB) completed an acquisition only to find itself the target of a hostile takeover by peer Curaleaf. Something important may be happening in the marijuana sector. However, it still isn't clear which companies will end up as the winners in this consolidation effort.

So for most investors, it is probably better to keep a penny stock like Canopy on the watch list for now. If the business turnaround continues, it may be worth reconsidering, eventually. But there are just too many moving parts to keep track of right now for all but the most aggressive investors.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool recommends Tilray Brands. The Motley Fool has a disclosure policy.

Wall Street goes through cycles. One that recurs with some regularity is the shift between conglomeration and corporate separations. Right now, conglomerates are separating, creating multiple businesses from one. Honeywell is a good example of this trend, with the conglomerate breaking into Honeywell Technologies (NASDAQ: HON), Solstice Advanced Materials (NASDAQ: SOLS), and Honeywell Aerospace (NASDAQ: HONA).

If you are thinking about buying one of these three companies, you may want to consider following the CEO who orchestrated the corporate split. Here's what you need to know.

Image source: Getty Images.

What is the point of a conglomerate like Honeywell?

When it comes to acquisitions, there can be a fine line between a CEO who is simply trying to build an empire and one who is piecing together a coherent business. Honeywell was a large industrial company with the financial resources to support the businesses it operated. Bringing more industrial businesses under one roof could increase revenue diversification, eliminate redundant tasks (such as accounting), share technology and innovation among businesses, and enable enhanced access to capital markets.

Those are all good things, but conglomerates also have their downsides. For example, business units often compete for funding. Bureaucracy can slow down decision-making. And sometimes small or underperforming business units get ignored, making poor performance hard to fix. When the negatives outweigh the positives, conglomerates often spin off businesses or break up, as Honeywell has done. That said, Wall Street's desire for de-conglomeration can also lead to business breakups simply to satisfy shifts in investor sentiment.

By breaking a business into parts, each new business can focus all its energy on just one thing. That, in turn, is expected to lead to improved results for each of the newly independent businesses. Sometimes it works out, sometimes it doesn't. But it is usually worth watching to see which company the CEO who initiated the corporate split-up sticks around to manage.

What is Honeywell today?

The company that retained the HON ticker is Honeywell Technologies, a pure-play industrial automation business. This is the company run by Vimal Kapur, the CEO who led Honeywell when it was an industrial conglomerate. That likely suggests that he believes automation is the most desirable business within Honeywell, noting that artificial intelligence (AI) is likely to be an important trend in industrial automation. When the company reported second-quarter 2026 earnings, the reason for his choice became clear.

The spin-off of Honeywell Aerospace didn't occur until June 29. So it was still part of Honeywell for the quarter, but it will not be part of it going forward. Thus, Honeywell provided two sets of earnings, one with Honeywell Aerospace included and one without. One key number was very different. With the two businesses, orders rose 4%. If you isolate Honeywell Automation, however, orders rose 16%. Meanwhile, Honeywell Automation accounted for $20 billion of the combined business' $38 billion backlog. Adjusted earnings rose 10% year over year.

Automation looks like the business that is set to grow more rapidly. That's not to suggest that Honeywell Aerospace is a bad business; that's hardly true. Aviation spending is expected to remain strong as more people travel by plane. Still, when Honeywell Aviation reported second-quarter earnings, it lowered its organic sales growth guidance. It is clearly off to a bit of a rocky start.

But don't forget about Solstice Advanced Materials, the first business to be spun off, which reported an 11% year-over-year sales increase and a 23% jump in earnings per share in the second quarter, while increasing its full-year guidance. However, at a roughly $9.5 billion market cap, it is a relatively small business compared to Honeywell, which has a market cap of $65 billion. For reference, Honeywell Aerospace's market cap is $49 billion. If you owned Honeywell because it was a large business, Solstice Advanced Materials would be the smallest piece of the puzzle.

No easy answers, but I'd follow the CEO

You can make a case for owning any of the three businesses that have come out of Honeywell. Honeywell Aerospace lowering guidance out of the box probably makes it the easiest to pass over, despite the long-term opportunity in the aviation industry. Solstice Advanced Materials, despite solid early results, is the smallest of the three companies, which could be viewed as a negative. That leaves Honeywell's automation business, which is both large and appears to be doing relatively well.

But the real key could be that the CEO who initiated the corporate breakup decided to oversee Honeywell's large automation operations. The business is seeing robust demand, as evidenced by a growing backlog. Second quarter earnings rose a solid 10% when the company's automation operations were separated out. And AI is likely to lead to a renewed push for industrial automation as it is used to improve corporate operations. That's a very solid story, and I think it makes Honeywell the best pick of the three. Though, to be honest, I'd probably have preferred if Honeywell had just remained a diversified conglomerate.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Honeywell Aerospace and Honeywell Technologies. The Motley Fool has a disclosure policy.

American Financial Group (NYSE: AFG) is an $11 billion market cap property and casualty insurer. It has an impressive 21-year streak of annual dividend increases. And the last dividend hike, announced in Aug. 2026, was a huge 10.2%. Add in a well-above-market dividend yield of nearly 2.5%, and there's good reason for dividend growth investors to do a deep dive here. But there's another piece to the story: stock buybacks.

American Financial Group is doing well

A key metric for property and casualty insurers is the combined ratio. This metric compares the company's costs (expenses and claims) to the premiums it earns. A number under 100% means that a company is making a profit. The lower the percentage, the better. American Financial Group's combined ratio in the second quarter of 2026 was 91.6%. But the real story is that it improved from 93.1% in the same quarter of 2025. Things are going well for the company.

Image source: Getty Images.

However, according to industry watcher Marsh, the property and casualty industry is getting more competitive. After a strong period, companies are increasingly competing on price, with property rates falling 12% in the second quarter, more than offsetting a 2% increase in casualty rates. This is why it is notable that American Financial Group continued to buy back stock in the second quarter.

The $26 million stock buyback in the second quarter adds to the $60 million it bought in the first quarter, bringing the year-to-date total to $86 million. Buying back shares helps support earnings because earnings are spread over fewer shares. Notably, while the company's combined ratio was lower year over year in the second quarter, it was higher sequentially from the first quarter's 90.4%. Preparing now for increasing competition could be a good move.

A reasonably priced dividend growth stock

American Financial Group's dividend has been growing at an attractive rate, which often leads investors to award a stock a premium price. However, the insurance company's price-to-book and price-to-sales ratios are roughly in line with their five-year averages. The price-to-earnings ratio, meanwhile, is only slightly above its longer-term average. The stock looks reasonably priced, historically speaking.

While value-conscious investors probably won't find American Financial Group attractive right now, dividend growth investors may still want to take a look. And the stock buybacks are notable because they could help protect earnings as industry competition heats up.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The departure of Steve Jobs from Apple (NASDAQ: AAPL) was not a happy event. The innovative founder, who himself had returned to the company after being ousted by the board, had a terminal illness. Tim Cook was taking over in a very difficult situation and didn't have much help during his transition. That's not what is happening this time around, as Cook hands the CEO job over to John Ternus. That's positive news for worried investors.

What did Cook do for investors?

When Tim Cook took over Apple in 2011, it had a market cap of around $350 billion. That's a very big company, but its market cap is $4.7 trillion today. Very clearly, investors benefited greatly under Cook's tenure. It seems reasonable for investors to wonder if John Ternus can keep Apple's successful run going.

Image source: Apple

The honest truth is that there's no way to know how he will handle the CEO role at this industry-leading technology giant. But this CEO transition is very different from the last one, which should reduce the risk of failure. Most notably, Cook will stick around as executive chairman. That means he will be available to Ternus if the new CEO needs some guidance. This should make for a smooth transition.

Also important is that Ternus is a 25-year Apple veteran whose most recent role was overseeing the company's hardware engineering business. He joined the company's product design team in 2001. Essentially, he's steeped in what is likely the most important aspect of Apple, making products that customers love. It is probably reasonable to give him the benefit of the doubt that he can, indeed, keep Apple focused on what sets it apart from the competition.

A difficult time to take over the top job at Apple

That said, there are many moving parts in the technology sector right now. For example, artificial intelligence (AI) is a new technology that is expected to materially change the world, let alone the tech sector. Apple has yet to stake out a material position in the AI space, focusing mostly on integrating the tech into its product offerings rather than investing heavily in AI infrastructure. Ternus will have to deal with the impact of this disruptive technology.

That, notably, includes the impact of AI spending on the tech sector's cost structure. Apple has already hiked prices, and Ternus will likely be responsible for initiating further price increases at a time when consumers are stretched. Given the business's consumer focus, the new CEO clearly faces headwinds. However, given Cook's continued availability and Ternus' long tenure at Apple in key roles, investors probably shouldn't count him out just yet.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple. The Motley Fool has a disclosure policy.

Robinhood (NASDAQ: HOOD) is a large discount broker. One of its primary goals as a business is to introduce new people to investing, which has generally led the company to lean into innovation. That includes offering new products and services, like cryptocurrency trading and prediction markets.

The company isn't doing this out of the kindness of its heart; it generates fees for its services. The interplay between cryptocurrencies and prediction markets is one that investors need to watch very carefully.

Image source: Getty Images.

The source of Robinhood's fee income is shifting

Robinhood breaks its transaction fee income down into four main buckets: stock trading, options trading, cryptocurrency trading, and event contracts (prediction markets). An "other" category rounds things out. Transaction fees from stock and options trading vary from quarter to quarter but remain fairly consistent over time. The same cannot be said of cryptocurrency trading and event contracts.

Without getting into the merits of crypto and event contracts as "investments," they are newer products and often attract more aggressive investors. Aggressive investors, particularly those new to investing, are sometimes lured into areas perceived as hot investment themes.

So it should come as no surprise that the transaction fee income Robinhood generated from crypto in the second quarter of 2026 fell 38% year over year, while the increase in transaction fees from prediction markets was too large to calculate (it came off of a small base). Sequentially, from the first quarter, crypto fees fell by 25%, while prediction fees rose by 50%.

Investors following the money could lead to an eventual exit

Essentially, what it looks like is Robinhood's customers have shifted from buying crypto to buying event contracts. Before event contracts, however, crypt was a strong fee generator for the discount broker. If the company's customers are just trying to "get rich quick" by investing in whatever is hottest at the moment, what happens when there's a deep, prolonged bear market? Young investors stung by huge losses could leave Wall Street forever.

There hasn't been a really bad bear market since the Great Recession. Robinhood didn't become a publicly traded company until after that painful downturn. Essentially, there's no history to rely on for guidance on what could happen to its business during a similarly bad market. This isn't a knock on Robinhood, which has been executing extremely well and providing its customers with the products and services they want. But there is a risk here that long-term investors shouldn't ignore, highlighted by the change in Robinhood's crypto revenues relative to the change in event contract revenues.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

In the first half of 2026, Progressive (NYSE: PGR) bought back roughly $1 billion worth of its own stock. Chubb (NYSE: CB) bought back $1.37 billion in shares in the second quarter alone (bringing its first-half repurchases to $2.12 billion). Those numbers make Prudential's (NYSE: PRU) $250 million in second-quarter share repurchases sound like chump change, even though that's still a massive amount of cash to devote to a stock buyback.

Stock buybacks are often pitched as a way to return value to shareholders, and they are. However, there's another issue to consider here that may be just as important: Property and casualty insurance pricing is softening.

Image source: Getty Images.

What does a buyback do?

When a company buys back its own stock, the number of shares in the market decreases. That sounds simple, but it's worth putting some numbers on this with a simple example. If a company has 100 shares and buys back 10, then there are only 90 shares left for investors to trade.

That has a significant impact on any financial measures based on shares. For example, if the company earns $100 and it has 100 shares, then earning per share are $1. If that share count falls to 90 and it still earns $100, then earnings per share improves 11% to $1.11. That said, if earnings fall, stock buybacks remain beneficial. An earnings drop to $90, along with that 10 share buyback, would keep earnings per share at $1.

But there's an important middle ground. If earnings only dropped to $95, the 10-share buyback would leave the company with earnings per share of roughly $1.05. In other words, a moderate drop in earnings could still lead to higher earnings per share, with the reduction in the share count effectively offsetting the impact of a weakening business environment. Now it's time to start looking at the insurers and their stock buybacks.

The P&C insurance market is getting more competitive

In a recent industry report, Marsh estimated that global insurance rates fell 6% in the second quarter. That said, casualty rates were estimated to have increased by 2%, while property rates dropped by a fairly sizable 12%. Property is typically a major line of business for most public P&C insurance companies.

What's going on, according to Marsh, is that after several strong years, companies are competing more aggressively, including on price. That's a fairly typical cycle in the insurance industry. Absent any large weather events or other disasters, pricing power is likely to remain under pressure.

To give a specific example, Progressive's combined ratio increased to 86.8% in July, up 1.5 percentage points from a year ago. A combined ratio is a measure of profitability, comparing an insurance company's costs (operating costs and claims) to the premiums it collects. A number below 100% indicates a company is making a profit. So the 1.5 percentage-point increase indicates that Progressive's profitability is weakening.

Chubb's second-quarter results show that its combined ratio remained flat year over year at 81.9%. However, if property and casualty pricing is getting more competitive, buying back stock could help protect earnings from any potential business weakness in the future. So it probably isn't shocking that two insurers bought back huge amounts of stock in the first half of 2026.

Notably, Prudential's buyback was much smaller. Prudential primarily sells life insurance, and its business continues to perform very well, buoyed by an asset management business benefiting from a strong stock market. You could argue that it simply doesn't have the same need to buy back shares as a property and casualty insurer like Chubb and Progressive.

Chubb and Progressive are likely protecting earnings growth

Buying back shares is a way to return cash to shareholders without creating an ongoing obligation, unlike a dividend increase. So Chubb and Progressive are acting in a shareholder-friendly manner. However, the large stock buybacks will also help support earnings as the property and casualty sector gets more competitive, so there's more to the story here. And life insurance-focused Prudential's smaller buyback could be the example that shows what's really going on in the property and casualty insurance space.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool recommends Progressive. The Motley Fool has a disclosure policy.

The biggest change in years at Berkshire Hathaway (NYSE: BRKA)(NYSE: BRKB) occurred at the start of 2026, when Greg Abel replaced Warren Buffett as CEO, with Buffett taking on the role of president of the board. But how much really changed when it comes to stock picking? If Buffett's admission that he initiated a massive second-quarter investment in Alphabet (NASDAQ: GOOG) is any indication, the answer could be not much. But, perhaps that's the best outcome possible. Here's why.

Buffett was a good manager and a bad manager

Warren Buffett is famous because of his investment success. But that was largely driven by his acumen in buying good businesses at reasonable prices and holding them for the long term. It was not because he was good at running the businesses he bought outright for Berkshire Hathaway. In fact, Buffett was known as a hands-off manager, letting the CEOs of the businesses he acquired run them without his interference.

Image source: The Motley Fool.

That generally worked out well for Buffett and Berkshire Hathaway shareholders, but it has left the company with a sprawling collection of fully owned businesses. While many have little in common, others overlap materially. Abel has already made clear that he intends to take a different, more active approach.

When Berkshire Hathaway announced the $8.5 billion acquisition of Taylor Morrison Home, Abel specifically said that: "Over time, we expect to unify our site-built homebuilding operations into a combined platform enabling us to deliver the dream of homeownership to more Americans." It is highly unlikely that Buffett would have made a similar statement.

Given the size of Berkshire Hathaway's portfolio of owned companies, Abel likely has his hands full. Actively managing that portfolio and handling investments in Berkshire Hathaway's portfolio of publicly traded companies is a big ask. After all, Buffett himself basically only did one of those two jobs.

Buffett won't be around forever

Buffett is already laying out the plans for his eventual passing, noting that he recently changed how he was giving away his ownership stake in Berkshire Hathaway (it's going to foundations run by his children). So investors can't expect the current separation of powers at the company to remain as it is forever, with Abel running the business side and Buffett handling the investment side.

However, the breakdown between running the business and running the investment portfolio makes logical sense. Both are big jobs. The current split could simply be a precursor to a new normal, in which one of Abel's lieutenants, or even a team, takes care of investing in publicly traded stocks. While that would be unusual for Berkshire Hathaway, it would be entirely normal for a large insurance company to operate in that manner.

In fact, what investors may be watching unfold is really just a transition period. The old company leader, Buffett, could be slowly handing over the company to new leaders. The first step was the day-to-day management of the business, which went to Abel. The next step may be Buffett allowing more of the investment portfolio to be managed by others. Buffett has been doing this part of the job for so long that it probably makes sense to handle it as its own transition.

Abel is a different CEO from Buffett

Abel doesn't have any formal training in managing an investment portfolio. Running businesses, however, is something he's done for a long time. If the result of his taking the top spot at Berkshire Hathaway is that the insurance company starts to run more like other large insurers, with a separate asset management team, that's not a terrible outcome at all. In fact, it might be in the best interest of the company and its shareholders not to have everything resting on the shoulders of just one person, as was the case, at least in Wall Street's view, under Warren Buffett.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Berkshire Hathaway. The Motley Fool has a disclosure policy.

The CEO is the person who runs a company on a day-to-day basis. However, technically speaking, the CEO reports to the board of directors. The board of directors, in turn, report to the shareholders who elected them. This chain of control is important to remember because it means that very large shareholders often have a huge say in how a company is managed.

That is the backdrop investors need when considering Warren Buffett's plans to give away around $17 billion per year in shares he owns in Berkshire Hathaway (NYSE: BRKA)(NYSE: BRKB), the company he used to run as CEO. And it is also why Greg Abel's, Buffett's handpicked successor, repurchase of $4.5 billion in Berkshire Hathaway stock comes into the picture. But you probably shouldn't read too much into the timing of these two decisions. Here's what you need to know.

Image source: The Motley Fool.

Could Berkshire Hathaway eventually pay a dividend?

Warren Buffett didn't like the idea of paying dividends. He was the CEO and a large shareholder of Berkshire Hathaway (and a Wall Street icon because of his long history of investment success), so nobody questioned that decision. However, Buffett's plan to give his shares to foundations run by his children could change the dynamic here in a big way.

Foundations created with large stock donations, such as the Hershey Trust or the Hormel Foundation, often use the dividends they collect to fund their philanthropic efforts. That way, the foundations don't have to sell shares to pay their bills. Meanwhile, these two foundations have significant influence over how Hershey (NYSE: HSY) and Hormel (NYSE: HRL) are operated because of their large stakes in the respective companies. The Hershey Trust has stepped in to prevent Hershey from being acquired, while one of the Hormel Foundation's specific goals is to ensure Hormel remains independent.

While it is unlikely that Buffett's children will do anything to change the way Berkshire Hathaway is run while their father is alive, it will be a whole new ballgame after he passes. It wouldn't be at all shocking to see these foundations agitate for Berkshire Hathaway to start paying dividends.

Is Abel trying to limit the impact of Buffett's stock giveaway?

There's not much that Greg Abel can do about this control dynamic. He will simply have to make his dividend case to the board of directors and hope they see things his way. Of course, Abel might decide that paying a dividend makes sense, noting that many large insurance companies pay dividends. Still, while Buffett is alive, it is unlikely that anything will change on the dividend front, given that Buffett is the chairman of the board. So Abel's buying back around $4.5 billion in Berkshire Hathaway stock in the second quarter probably wasn't related to Buffett's plans to give away stock.

However, Buffett's shares are effectively "off the market" today because he owns them and isn't going to trade them. But once they are owned by foundations, the shares could be traded. And that could increase the number of Berkshire shares that get regularly traded in the future. Abel might be trying to offset that impact with his purchase. Only the shares are going to foundations that are also unlikely to sell them immediately. At least in large quantities. So, this probably isn't the reason for the move, either.

Investors should probably just take Greg Abel at his word that he believes Berkshire Hathaway shares are attractively priced. That he bought shares with his own money at the same time adds credence to this take. It is unusual for Berkshire Hathaway to buy back stock, but not unheard of. Trying to read more into the move than the CEO has stated is probably overthinking things.

Should you buy along with Abel and Berkshire?

With Abel only taking on the role of CEO at the start of 2026, Berkshire Hathaway remains in the early days of a massive leadership change. But so far, Abel hasn't done anything that should worry investors, and he still has Buffett around to offer guidance when asked. If you are fond of Berkshire Hathaway's business, the company's move to buy back its own stock is probably more telling than Buffett's plans to give his shares to his children's foundations.

That said, you'll still want to keep an eye on what those foundations plan to do with all of the shares they will eventually control. But that's unlikely to be an issue for at least several years, and you might even like the notion that it could increase the chances that Berkshire Hathaway someday becomes a dividend stock.

Reuben Gregg Brewer has positions in Hershey and Hormel Foods. The Motley Fool has positions in and recommends Berkshire Hathaway and Hershey. The Motley Fool has a disclosure policy.

It is a CEO's job to put the company they run in the best light possible in every circumstance. So it shouldn't be surprising that Jensen Huang, the CEO of Nvidia (NASDAQ: NVDA), told investors to buy Nvidia stock amid a broader pullback in artificial intelligence (AI) stocks. That said, since his call, Nvidia is up just about 4%, as of this writing. That's not great compared to this alternative AI investment approach. Should you worry?

Nvidia is lagging... after three months

Huang made his "buy" call roughly three months ago. Since that point, his company's stock has been up 4%. An investment in the S&P 500 index (SNPINDEX: ^GSPC) would have returned about the same amount. So, it is hard to suggest it was a bad call. However, if you had put equal amounts into Nvidia, Microsoft (NASDAQ: MSFT), Amazon (NASDAQ: AMZN), and Alphabet (NASDAQ: GOOG), creating a diversified artificial intelligence basket, you'd have benefited from an 8% gain. So it is hard to suggest Huang's call was a winner, either.

Image source: Nvidia Corporation.

Notably, almost all of the diversified AI basket's gains were attributable to Microsoft, which rose a huge 24% over the period. Alphabet actually fell 5%, while Amazon was up 8%. The real takeaway here? Three months is just too short a period to decide whether an investment is good or bad if you are a long-term investor.

Which brings up Jensen Huang's "buy" recommendation. While he was reacting to market movements in some respects, his logic was clearly grounded in his belief that AI is a long-term growth engine for both his company and the world. In fact, the company's financial results in the fiscal second quarter of 2027 show that demand for AI chips remains very strong. Revenues rose 18% sequentially from the first quarter and an impressive 106% year over year.

Is Nvidia still trading at a discount?

While it seems unlikely that this level of growth can continue forever, it is very clear that Huang's optimism about the future is founded in the success his company is seeing as global AI investment continues to grow. If you think long-term, that suggests the CEO could still be right about buying at a discount. In fact, the stock's 17.5x price-to-earnings ratio is not only below its 23x five-year average, but it is also far below the S&P 500 index's 25x P/E ratio. For tech investors looking to buy and hold an AI stock for the long term, Huang's advice could still be worth heeding, even if it wasn't a clear winner over the short term.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.

Elon Musk, the CEO of Tesla (NASDAQ: TSLA), is known for being a visionary. But it is important to remember that not every big idea turns into a big, profitable business. For example, the company recently stopped selling solar roofs, which sounded like a great idea, but it just didn't work out.

And yet, Tesla pretty much created the electric vehicle (EV) market that exists today. So sometimes Musk's vision creates hugely profitable businesses. This dichotomy is why investors need to pay close attention to the spending going into Tesla's Optimus humanoid robots.

Image source: Getty Images.

How much money is Tesla spending?

When Tesla reported second-quarter 2026 earnings, Musk noted that 2026 would be a "massive" year for capital expenditures. The current expectation is that the company will spend at least $25 billion. That seems to worry investors since the stock dropped sharply after its earnings release highlighted the company's spending had turned the business's cash flow negative. Optimus isn't the only thing the company is working on, but it could be one of the most impactful cash drains.

This is because Tesla has closed down some of its electric vehicle production lines and switched them to producing Optimus robots. That's a massive undertaking that's not only expensive but also leaves the company with no easy way to backtrack. It is going all in on Musk's vision around autonomous robotics. That's the same vision driving the company's robotaxi push, but at least the robotaxi effort builds on its existing car platform.

The real problem here, however, isn't 2026. Elon Musk has telegraphed a multi-year period of elevated capital expenditures as it builds out its Optimus manufacturing capabilities, among other things. But Optimus robots stand out because they are a unique product and vastly different than anything else the company currently produces. If this product doesn't catch on, Tesla could have a very big headache on its hands. At the very least, there could be massive one-time charges for investors to contend with.

Par for the course with Elon Musk

Bold bets are nothing new with Elon Musk, so the massive spending going toward the Optimus robot isn't exactly a shocking development. But investors shouldn't just glance over this product and move on. It represents a very important business shift that will have material near-term ramifications given the capital spending going toward the project, and could have even larger long-term implications for Tesla as a company. If you own Tesla, you need to pay close attention to this car company's shift toward robotics over the next couple of years.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.

NuScale Power's (NYSE: SMR) big goal is to mass-produce small-scale modular nuclear reactors (SMRs). These factory-built reactors could help to revolutionize the nuclear power industry, but there's one small problem. NuScale Power has yet to get a customer to sign on the dotted line. And even then, that's just the start of the process of proving the company's SMR technology is a winner. Here's the trade-off investors have to consider when looking at NuScale Power today.

NuScale Power is a money-losing start-up

NuScale Power is only appropriate for the most aggressive investors. To put the risk here into perspective, the company generated just $75,000 in revenue in the second quarter of 2026. However, its business expenses totaled over $64 million. To be fair, it's a start-up in a capital-intensive business, so the fact that it is losing money isn't shocking. But the yawning gap between revenues and expenses highlights the risk.

Image source: Getty Images.

Another risk, however, is that the losses here mean NuScale is burning through cash. It has to generate money in some way if it wants to keep supporting its business. And in this situation, a key source of funding is the sale of stock. It recently announced plans to sell up to $750 million in shares. Every new share issued dilutes the nuclear power upstart's existing shareholders.

The truth is, most investors will probably be better off waiting until NuScale Power has at least signed a definitive contract for one of its SMRs. However, even then, the company still has a lot to prove. After a contract is signed, the company needs to successfully build and deliver an SMR. And that SMR needs to operate as expected. Assuming everything goes well with that first SMR, the company still needs to ramp up production to a level that allows it to operate profitably over the long term. There are a lot of puzzle pieces that need to fit together perfectly here.

NuScale Power is only appropriate for risk takers

Surging electricity demand, especially from artificial intelligence data centers that could benefit from dedicated SMRs, suggests a significant opportunity for NuScale Power. However, the company's early stage of development means costs are likely to continue to outrun revenues for a while longer. And that means only the most aggressive investors should even consider owning NuScale Power today. Dilution is a big deal, but it is just one of many risks you'll need to keep in mind.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool recommends NuScale Power. The Motley Fool has a disclosure policy.

Right now, Archer Aviation (NYSE: ACHR) is a money-losing start-up. Only the most aggressive investors should even consider owning the stock. But the company is making some important strategic decisions as it looks to take a leading position in the electric vertical take-off and landing (eVTOL) vehicle space. One big move was to gain control of Hawthorne Airport in California. Here's what you need to know.

Electric vertical take-off and landing: Air taxi

The acronym eVTOL is a mouthful, but it makes more sense when you consider what the purpose of these vehicles really is. They are meant to carry small loads, like a package or a couple of people, over short distances. Think of them as air-taxis, quickly flying over the traffic in congested cities. eVTOL's could revolutionize the aerospace industry.

Image source: Getty Images.

It is clearly very important for Archer Aviation to get its aircraft, known as Midnight, approved for commercial use as soon as possible. That said, it isn't the only company working on an eVTOL vehicle. So time really is of the essence. And the company's move to take control of Hawthorne Airport is a big plus on this front. It gives the company a base from which to test Midnight.

The long-term picture for Hawthorne is far more interesting

That's the near-term benefit. The long-term benefit of controlling this airport is probably more important. Hawthorne is centrally located in California near major cities, making it a potential hub for the air taxi service Archer Aviation hopes to launch in the state. That's obviously a positive, but it's not the end of the story.

Other companies are likely to try to set up air taxi services in California, too. Controlling the well-located Hawthorne Airport could make Archer Aviation a vital service provider to the industry, allowing it to collect fees from its competitors. That's an additional revenue stream and one that would give Archer Aviation a solid, recurring income foundation as it looks to expand its own air taxi service into new markets.

The key to Archer Aviation's success is still Midnight

To be fair, controlling Hawthorne Airport probably isn't nearly as attractive if Archer Aviation doesn't get its Midnight aircraft approved for commercial use. So Midnight is still the linchpin to the whole story, and most investors should probably watch from the sidelines until Midnight is approved. However, Hawthorne makes that story much more interesting, and once Midnight is approved, it could be equally important to the company's long-term success.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Caterpillar (NYSE: CAT) is an iconic industrial company. Chevron (NYSE: CVX) is an iconic oil and natural gas business. And both are competing to provide reliable electricity to artificial intelligence (AI) data centers. The AI revolution is so big that you need to throw out industry labels. But which of these reliable dividend stocks has the better business plan? It depends on how you look at it.

Caterpillar is a near-term winner

When it comes to providing reliable power to AI data centers, Cat likely has the lead right now. A big part of the problem for AI is that electricity demand is huge, and the power grid can't respond quickly enough to meet the demand it is seeing. This is where Cat comes in: in addition to large earth-moving equipment, it also makes generators that provide electricity in remote locations.

Image source: Getty Images.

Historically, Cat's generators have been used as backup power or as primary power in places like remote mining operations. But they can also be placed next to an AI data center if a grid connection isn't available, allowing the facility to come online more quickly. The company is hitting on all cylinders today, with its backlog at the end of the second quarter of 2026 sitting at a record $72 billion. That was up 92% year over year.

To be fair, building AI infrastructure requires the earth-moving equipment Cat makes, too, so there's more than just power at play here. Still, Cat is probably better positioned right now than Chevron when it comes to providing AI with the electricity it needs to "live."

Chevron is working the long game

But don't count Chevron out. It has inked a deal with Microsoft (NASDAQ: MSFT) to build a natural gas power plant dedicated to serving a data center. The power plant still has to be constructed, but it comes along with a 20-year power contract. Caterpillar products are part of the deal, but this highlights an important difference between the two companies.

Caterpillar sells an item, and then it is largely done. Sure, there could be service contracts involved, but the big financial benefit is the sale of a discrete industrial item (be it a backhoe or a generator). Chevron is attempting to build a business that will generate consistent revenues year in and year out for decades. If it can replicate the deal it now has with Microsoft, it could represent an important new avenue for long-term growth.

Cat vs Chevron: What's your time frame?

Stepping back, Cat and Chevron are both working to provide AI with the power it needs. And they are doing so in ways that make sense for each of their businesses. The winner today looks like Cat, which is seeing huge demand for its products. But if you are a long-term dividend investor, you may find that Chevron's approach is more attractive.

The dividend yield may be the key. Investors have bid up Cat's price, pushing its yield down to a miserly 0.8%. Like Chevron, it has increased its dividend annually for more than 30 years, but that yield is even lower than what you'd get from the S&P 500 index (SNPINDEX: ^GSPC). Chevron, by contrast, has a 3.5% yield and a plan that will produce consistent revenues even after the AI construction boom ends. For many, that will be the more attractive model.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Caterpillar, Chevron, and Microsoft. The Motley Fool has a disclosure policy.

How much is enough? That's a really important question when it comes to saving for retirement. You can compare your savings to other people's nest eggs or use a rule of thumb, like 10x your salary, but the answer to how much is enough is highly personal. If you don't come up with an answer, however, you could risk having too much money, which could be bad for your retirement and your heirs. Here's why.

The saving lifestyle versus the retirement lifestyle

In order to save money, you need to spend less than you earn. That's simple logic, but the delayed gratification this requires is an important emotional skill. You are, in effect, willingly putting off the pleasure of using your money today so you can use the money in the future. Along the way, you hope to grow the size of your nest egg by investing your savings.

Image source: Getty Images.

Retirement requires a completely different mindset. You have to allow yourself to start spending. Some retirees find this difficult, so they remain in saving mode. If that sounds like you, you are at risk of having too much money. OK, that's probably not a huge problem, but think about the implications for your lifestyle. If you can't switch out of saving mode, you'll likely stop yourself from enjoying the fruits of your savings, like eating out, trips, and spending time with friends and family.

In other words, you risk missing out on the whole point of building your nest egg in the first place. But there's a secondary impact here because compounding is most powerful at the end of the sequence. You could end up with retirement accounts that are larger than you expect if you don't spend the money.

Your finances and your heirs are at play

Having too much because you can't bring yourself to spend money could be an issue for you if you have a traditional IRA and/or a 401(k). These accounts have required distributions that begin after you reach the age of 73. The money you withdraw is taxable, and the income could affect the benefits you receive. That said, if your saving habit leads your estate to grow past the estate tax exemption ($15 million per person in 2026), your heirs could be hit with taxes on your estate when you pass.

You may not consider either of these two financial issues material, which is fine. But stopping yourself from enjoying the benefits of your savings in retirement because you can't shift from saving mode to spending mode is a risk that you shouldn't ignore. You didn't put in all that work building a nest egg just to look at it; you saved so hard for so long so you could enjoy it.

The Motley Fool has a disclosure policy.

Eli Lilly (NYSE: LLY) was the second company to market a GLP-1 drug. That's important to keep in mind as you look at the competitive landscape for this new class of weight-loss drugs. In some ways, investors do need to worry that companies like Amylyx (NASDAQ: AMLX) are developing next-generation GLP-1 drugs. New drugs are a threat to Eli Lilly's business. But Eli Lilly isn't ignorant of that threat. Here's what you need to know.

Novo Nordisk drops the ball

Novo Nordisk (NYSE: NVO) was the first to market with a GLP-1 weight-loss drug. It faced production issues and, when Eli Lilly's Mounjaro and Zepbound proved more effective, Novo Nordisk lost its early lead to Eli Lilly. Today, Eli Lilly is the industry leader, but these drugs are so popular that they accounted for nearly two-thirds of the company's revenue in the second quarter of 2026.

Image source: Getty Images.

The company faces material risk as other pharmaceutical companies look to bring out competing GLP-1 products. And investors are on the lookout for the next big winner, too. Notably, Amylyx's shares surged 50% in a single day after it reported strong research results for its GLP-1 drug candidate. The drug is still working through the approval process, so it isn't a threat to Eli Lilly just yet. But it could be at some point.

However, this isn't the only company gunning for the industry leader. Novo Nordisk is still working hard on the GLP-1 front, recently being the first to market with a pill version of its GLP-1 drug. And Pfizer (NYSE: PFE), after an internal setback, quickly acquired a company with a more attractive GLP-1 drug candidate to get back in the game.

Eli Lilly is making the right moves

The truth is, Eli Lilly knows full well that its competitors are gunning for it. The drug sector is highly competitive, and Eli Lilly basically did to Novo Nordisk what everyone is now trying to do to Eli Lilly. Which is why it is important to note that Eli Lilly isn't resting on its laurels. It is focused on research and development, too. For example, it now has a GLP-1 pill on the market to compete with Novo Nordisk's pill.

However, the bigger picture is that Eli Lilly has been using its GLP-1 profits to expand into new areas. Acquisitions have played a big part here, but the takeaway is that Eli Lilly has a much broader business today than it did just a few years ago. And that means it has more ways to offset the hit when competition to its leading GLP-1 drugs heats up. Which it almost inevitably will. So investors should be worried about companies like Amylyx, but not too worried because Eli Lilly is increasingly prepared to deal with headwinds in its GLP-1 business.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Eli Lilly, Novo Nordisk, and Pfizer. The Motley Fool has a disclosure policy.

Target (NYSE: TGT) has an incredible dividend history, with 50 consecutive annual dividend increases. That makes it a Dividend King, an elite group that not every company can join. Target has a strong business model that is executed well in both good times and bad. The company is currently working its way out of a bad time, but after gaining 66% in 2026, as of this writing, is there still any value left in the shares?

What went wrong with Target?

Target is a mass-market retailer, but it tends to focus on offering a higher-quality shopping experience. That generally means nicer stores, a more pleasant shopping environment, and higher prices than those of its main peer, Walmart (NASDAQ: WMT), which has an everyday low-price focus. As elevated inflation levels pressured consumers' budgets, Target was out of step with the market.

Image source: Getty Images.

As consumers shifted to lower cost competitors, its revenues and earnings fell. Investors dumped the stock with such vigor that it seemed to suggest a belief that Target would never be able to adjust. At one point, the stock was down nearly 70% from its 2021 high. But a company doesn't join the ranks of Dividend Kings by accident, and the retailer got to work on a turnaround plan. That plan began to bear fruit in 2026, leading to renewed market interest in the stock. In the first quarter, sales rose 6.7%, with same-store sales up 4.4%. The second quarter proved that it wasn't a fluke, with sales up 5.3% and same-store sales rising by 3.8%.

Does Target have more room to run?

That 66% price advance is a very big move in a very short period of time. In fact, it has pushed the company's price-to-sales and price-to-earnings ratios above their five-year averages. That suggests the big value opportunity here is gone, but you have to keep in mind that the stock was deeply depressed due to weak financial performance. So the five-year averages could be skewed low.

While it is completely fair to say that Target doesn't offer the same value as it did at the start of 2026, Walmart's P/S and P/E ratios are 1.1x and 38x, respectively. Target's P/S and P/E ratios are roughly 0.7x and 17x, respectively. Moreover, the high end of those metrics for Target was around 1.1x and 23x, respectively, in the early 2020s. Given that the stock is still nearly 40% below its 2021 high, there could be more room to recover.

Still, deep value investors should probably look elsewhere. Investors have already priced much of the recovery news into the stock price, as reflected in valuation metrics relative to their five-year averages. In fact, if you bought at the low, you may want to consider locking in some profits. Further gains are likely to require Target to continue posting very strong numbers. If it falls short of that, a sell-off wouldn't be surprising.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Target and Walmart. The Motley Fool has a disclosure policy.

Artificial intelligence is changing the landscape in the technology sector. So, as Tim Cook gets set to retire from the CEO spot at Apple (NASDAQ: AAPL) on Sept. 1, investors should probably anticipate some change. But will the stock's performance follow the trend set by Amazon (NASDAQ: AMZN), which has underperformed since Jeff Bezos stepped down as CEO?

Image source: Apple.

Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »

What happened to Amazon?

Jeff Bezos helped turn Amazon into an industry-leading technology company, taking it from an e-commerce disruptor selling books to a diversified technology services company. There's no question that he was an important figure at the company. However, he stepped down as CEO in mid-2021. Since that point, Amazon's stock has been a laggard.

As the chart below highlights, Amazon's roughly 50% price advance is well behind the over 100% gain of the Nasdaq-100 and the roughly 90% rise in the S&P 500 index (SNPINDEX: ^GSPC), as of this writing. To be fair, Bezos was at the helm while the company was still a relatively small business, so growth was much easier to achieve. Today, Amazon is a $2.8 trillion market cap technology giant. It is much harder to grow a large business, as it often requires massive capital investments.

AMZN Total Return Level data by YCharts

That, of course, is showing up in the artificial intelligence (AI) spending underway today. AI really only started to take off after Bezos stepped aside. Although there is massive spending across the industry, Amazon alone is expected to invest $220 billion in 2026. While the now-giant Amazon hasn't kept up with the broader market, it has continued to cement its position as an industry leader. This dynamic is important to keep in mind as you consider Tim Cook's departure from Apple.

Tim Cook is stepping aside as the AI race heats up

Could Apple underperform after Tim Cook leaves? Yes, and the timing of his exit is important because it coincides with the world's big AI technology transition. Under Cook, Apple hasn't taken as aggressive a stance in the AI race, focusing on using AI to enhance its products rather than trying to be a hyperscaler like Amazon, which is building massive AI data centers. That's the path he's laid out for his successor, but it is too early to know if it is a good or bad direction.

The benefit for Apple is that it isn't spending as heavily on AI infrastructure as its technology competitors. The risk is that Apple ends up left behind in a fast-developing market. Right now, given that Apple's stock is trading within 10% of its all-time high, it seems like investors like the plan. Indeed, there is increasing concern about the amount of money being spent on AI infrastructure by companies like Amazon. But investor enthusiasm for Apple's approach could quickly shift in a highly competitive industry as the AI space continues to evolve.

There is always uncertainty, and each company charts the course it thinks best. But even the best-laid plans sometimes fall short. It is almost a certainty that Apple will eventually go from industry leader to industry laggard at some point in the future. It has happened before. Whether that occurs after Cook leaves is hard to say, but it is possible. And it will likely depend heavily on the AI decisions currently being made.

Focus on the big picture, not the CEO

Good companies adjust to market conditions, as Apple has many times in the past. So, too, has Amazon. Moreover, a CEO doesn't operate in a vacuum; they have a team behind them. So Apple's differentiated approach to AI isn't of Cook's sole design. In other words, don't expect a dramatic change in the company's business direction until it is clearly out of step with AI's trajectory or with shifts in consumer demand. That's the real takeaway.

The company has made a strategic bet. Whether or not Apple leads or lags the market will likely depend on how well that bet plays out. Cook stepping down as CEO isn't really going to be the biggest deciding factor in the outcome, even though he was at the head of the company when the path was laid out. But even if the company does fall behind, it is likely to adjust, as it has before.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Apple. The Motley Fool has a disclosure policy.

At first blush, there's nothing connecting the businesses of Space Exploration Technology (NASDAQ: SPCX) and Hershey (NYSE: HSY). One makes spacecraft, AI technology, and operates the Starlink satellite telecommunications network. The other makes candy bars. But when you dig into the ownership structure, you start to see the connection. Here's what you can learn about SpaceX from Hershey.

Who has the biggest voice at a company?

The CEO is likely to have the most influence on a business, but there are limitations. That's because the CEO actually works for the board of directors. And the board of directors is hired by the shareholders. So, if anything really big is going to take place, such as a merger or acquisition, the largest shareholders will have an important say. In the case of consumer staples maker Hershey, the largest shareholder is The Hershey Foundation.

Image source: The White House.

The Hershey Foundation has said no to multiple takeover offers. The foundation uses the dividends it collects from owning Hershey stock to support its philanthropic endeavors, so it is acting to protect the reliable income stream it receives. That may or may not be in the best interest of shareholders, noting that a buyout could lead to a sizable capital gain. But the real takeaway is that Hershey is beholden to The Hershey Foundation in important ways, as the foundation controls 80% of the company's voting power.

Elon Musk controls 48.4% of SpaceX's voting power. That's not as much control as The Hershey Foundation has at Hershey, but it is close enough to 50.1% to give him effective control over all decisions. Add in that he's the CEO, and Musk's position of power gets even stronger. If you own SpaceX, you are effectively investing alongside Elon Musk. What he wants to do is almost certainly going to get done. Mergers, acquisitions, and major capital investments are his to decide because it would be hard, if not impossible, for the board or shareholders to muster the votes needed to oppose Musk.

I'm happy with Hershey. Are you happy with SpaceX?

The real takeaway here isn't about Musk's control. It is to understand the implications of that control. I happily own Hershey stock because I'm a dividend investor looking to own a reliable income stock for the long term; I'm not looking for quick gains from mergers and takeovers. I believe my goals are well aligned with those of The Hershey Foundation.

Elon Musk's ownership in SpaceX is only a problem if you don't think he should have that much power to control the company. If you think giving Musk a free hand to do what he wants is a good idea, then you'll likely see his 48.4% stake as a reason to buy the stock.

Reuben Gregg Brewer has positions in Hershey. The Motley Fool has positions in and recommends Hershey. The Motley Fool has a disclosure policy.

Ares Capital (NASDAQ: ARCC) is a business development company (BDC). Its core business is making loans to smaller businesses. So the ability of its clients to repay their loans on time is very important. In the second quarter of 2026, there was a 60-basis-point year-over-year increase in the number of troubled loans Ares Capital is carrying. That's a move in the wrong direction, but don't get overly concerned just yet. Here's why.

Loan quality matters for Ares Capital

There's no question that investors in a BDC like Ares Capital have to pay close attention to loan quality. The company issues stock and takes on debt to fund the loans it makes to its clients. As long as those loans continue to be paid, Ares Capital earns the spread between its cost of capital and the interest it charges on its loans. In the second quarter, the average interest rate paid by its clients was 10.3%. This can be a very lucrative business.

Image source: Getty Images.

However, the loans Ares Capital makes are typically to smaller companies that lack access to lower-cost funding. During periods of economic weakness, such as a recession, smaller companies can find it increasingly difficult to cover the costs of high-interest loans. If too many loans become troubled, Ares Capital could struggle to support its lofty 9.5% yield.

That's why non-accrual loans are so important to watch. If the percentage of non-accrual loans is increasing, your risk as a dividend investor is increasing, too. So the 60-basis-point rise in non-accrual loans shouldn't be ignored. But it also has to be put into perspective.

Wrong direction, but not yet a problem

Directionally, rising non-accruals isn't good news. But there will always be some number of troubled loans in a portfolio. Which is why it is important to keep the absolute percentage in mind. In the second quarter of 2026, Ares Capital's non-accrual loans accounted for 2.4% of its portfolio (up from 1.8%). That's a fairly modest number on an absolute basis.

Even better, the 2.4% figure is below Ares Capital's historical average since the Great Recession, which is around 3%. The industry average is roughly 4%. The 60-basis-point increase could simply be a reversion to the mean. So, at this point, Ares Capital's non-accrual loans aren't a problem, though the direction of the rate change should still be monitored. If non-accrual loans jump to 3% and still continue rising, there could be deeper issues to consider.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Ares Capital. The Motley Fool has a disclosure policy.

CBOE Global Markets (NYSEMKT: CBOE) reported record revenues in the second quarter of 2026, up 25% year over year. Earnings rose 50%. And a key driver was record trading volume. That's great for CBOE, but that same Wall Street enthusiasm has been helping discount brokers Robinhood (NASDAQ: HOOD) and Interactive Brokers (NASDAQ: IBKR).

Only, these discount brokers aren't going down the same path as businesses. Here's a key difference that may affect which discount broker you choose to buy.

Image source: Getty Images.

Direct competitors with slightly different models

Robinhood and Interactive Brokers are competitors. However, they are focused on different subsets of the market. Robinhood is looking to attract newer investors, while Interactive Brokers is targeting more experienced investors. Right now, each company is doing very well amid a long bull market and expanding trading opportunities for investors, including things like cryptocurrencies and prediction markets.

To put some numbers on it, Robinhood saw transaction-based revenues jump 44% year over year in the second quarter of 2026. Interactive Brokers' commission revenues increased 30%. That difference isn't shocking, since Robinhood customers are likely younger, which may make them more active traders and more attuned to hot trading themes, like prediction markets. However, there's a more important difference when you examine two other revenue sources.

Robinhood's interest income rose 9% year over year, and its "other" income increased 54%. Other income includes the revenue from its Gold subscriptions. By contrast, Interactive Brokers' interest income rose 23%, while its "other" income jumped 40%. Interactive Brokers does not offer a subscription service similar to Robinhood. However, Interactive Brokers does a lot more on the interest side, more aggressively supporting traders who use margin and paying attractive interest rates on idle cash (earning spread income). To put a specific number on that, Robinhood had interest income of $389 million, compared with roughly $1.06 billion for Interactive Brokers. That's a big difference.

The implications of the model differences

Margin loans and cash are clearly boosting Interactive Brokers' performance today. But there's a downside to consider. If there is a bear market and its customers reduce their margin debt, either by choice or due to margin calls, the company's interest income will begin to shrink. That could exacerbate the hit if a downturn also reduces trading volumes, thereby reducing transaction revenues.

To be fair, Robinhood wouldn't be immune to the impact of reduced trading volumes. However, its use of a subscription service could help protect some of the revenue it generates in the "other" category. Subscriptions tend to produce fairly resilient revenues. In a market downturn, that could make Robinhood's business more resilient than Interactive Brokers'.

There is the risk that the new investors Robinhood tends to target simply stop investing, which shouldn't be overlooked, as it could leave the company with fewer customers. However, it seems likely that Gold subscriptions are tied to the more experienced customers it serves. Those clients are likely to stick around through a downturn.

Which model wins?

There hasn't been a really deep bear market since the Great Recession, so it is hard to tell if Robinhood or Interactive Brokers has the better model. In fact, Interactive Brokers went public in 2007, at the start of that downturn, while Robinhood held its IPO in 2021, well after it was over. Those IPO dates make it difficult to use that downturn as a guidepost, as you could with a discount peer like Charles Schwab (NYSE: SCHW), which has been public for much longer.

That said, it is likely that Interactive Brokers' approach will lead to more volatility in its financial results. The good years will probably be really good, while the bad years could be really bad, as both transaction and interest revenues both dry up at the same time. For some, that may make Robinhood's attempt to build a subscription business a more attractive choice, even though the resilience of its subscription revenue stream has yet to be tested by a deep and prolonged market pullback.

Charles Schwab is an advertising partner of Motley Fool Money. Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Interactive Brokers Group. The Motley Fool recommends Cboe Global Markets and Charles Schwab and recommends the following options: long January 2027 $43.75 calls on Interactive Brokers Group, short January 2027 $46.25 calls on Interactive Brokers Group, and short September 2026 $95 calls on Charles Schwab. The Motley Fool has a disclosure policy.

Eli Lilly (NYSE: LLY) is a market darling, given its success in the GLP-1 weight-loss space. That's understandable, given the huge opportunity ahead in helping the world address a health issue that has such a material, and usually negative, impact on people's lives. But as you look at Eli Lilly, investors should consider these three things that are likely to matter more than you think.

1. Are Eli Lilly's GLP-1 drugs too successful?

Is there such a thing as too much success? That depends on how you look at it. In the second quarter of 2026, sales of Mounjaro rose 91% year over year. Sales of Zepbound jumped 46%. And the company's newly introduced Foundayo GLP-1 pill began generating revenue. Taken together, the weight-loss drugs produced nearly $15 billion of Eli Lilly's nearly $23 billion in revenue in the quarter. That's nearly two-thirds of the company's top line.

Image source: Getty Images.

That's a huge risk because Eli Lilly has all (OK, most) of its eggs in one single basket. Sure, that's been a very good thing so far, but eventually being so reliant on GLP-1 drugs is likely to be a problem.

2. Eli Lilly's GLP-1 growth is going to slow down (and it already is)

The next big thing that investors need to understand is simple math. As a business grows, future growth becomes increasingly difficult to achieve. So the success Eli Lilly is having right now, expanding its GLP-1 business, can't last forever. In fact, the growth slowdown may already be occurring. In the second quarter of 2025, Zepbound's sales grew 172% compared to the 46% in the second quarter of 2026. To be fair, Mounjaro's growth accelerated from 68% to 91%, so there's still room to run. But trees don't grow to the sky, as the old Wall Street saying goes.

3. Eli Lilly is using its GLP-1 success wisely

So Eli Lilly is seeing huge success in the GLP-1 space. That success won't last forever, given basic math, the highly competitive nature of the pharmaceutical industry, and the finite duration of drug patents. Which brings up another big opportunity and risk. Eli Lilly has been aggressively using its GLP-1 success to fund acquisitions that expand its business into new treatment areas.

That's a wise move, so investors should be pleased with management. However, developing new treatments is time-consuming, difficult, and sometimes new drug candidates don't work out. So Eli Lilly is doing the right thing given the situation, but that doesn't mean it will result in long-term success for the business.

Three big-picture issues to watch at Eli Lilly

If you are looking at Eli Lilly today, three things to monitor are the sheer size of the GLP-1 business, its growth rate, and the company's efforts to expand beyond the weight-loss market. If you only see the success the company is achieving, you could end up surprised when the GLP-1 story eventually starts to look less positive.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Eli Lilly. The Motley Fool has a disclosure policy.

Novo Nordisk (NYSE: NVO) started the GLP-1 weight-loss revolution that is sweeping the world. Its Wegovy/Ozempic shot was so popular that the company couldn't keep up with demand. That proved to be a major problem for the company, particularly after competitor Eli Lilly (NYSE: LLY) introduced its own GLP-1 weight-loss drug, Zepbound/Mounjaro, which enabled greater weight loss.

But Novo Nordisk has been fighting back. Right now, that's all about its Wegovy pill. But a new partnership with Vivani Medical (NASDAQ: VANI) could flip the script on the entire GLP-1 industry.

Image source: Getty Images.

Novo Nordisk is working to get back on top

The healthcare industry is highly innovative and highly competitive. It isn't surprising at all that Novo Nordisk's early success in the GLP-1 weight-loss niche didn't last. But the fact that Eli Lilly introduced a more desirable GLP-1 product should not be taken as an indication that it has a permanent lead.

One of the big problems with early GLP-1 weight-loss drugs is the delivery method. Shots are not something that most people like to take, let alone give to themselves on a weekly basis. Which is why both Eli Lilly and Novo Nordisk were working on daily pills. Novo Nordisk was, again, first to market with a pill version of Wegovy. The uptake of this version of the drug has been strong, as you might expect.

Eli Lilly has since introduced its own GLP-1 pill. However, that pill delivers a different GLP-1 drug, known as Foundayo. That means Eli Lilly can't lean as heavily on its success with Zepbound/Mounjaro when marketing Foundayo. It has to introduce an entirely new drug, which is a much more difficult process. Novo Nordisk is in an advantaged position, for now.

Novo Nordisk leans into convenience

The difference between a shot and a pill is pretty big. While a daily pill may require more frequent dosing, it is likely to be seen as much more convenient than a weekly shot. But Novo Nordisk isn't done yet. It inked a deal with Vivani Medical to explore an implant that will automatically administer Novo Nordisk's Wegovy.

Research on this delivery method is still in its early stages, but it could mean patients only need to manage their GLP-1 drugs once or twice a year. That would take convenience to the next level and could totally change the dynamics of the GLP-1 race. At this point, it doesn't appear that Eli Lilly is working on anything similar.

It is too early to suggest that Novo Nordisk has found the tool it needs to regain the GLP-1 lead. But in the highly innovative pharmaceutical sector, it is clearly working hard to differentiate its weight-loss offerings. The more choices patients have with Wegovy, the more ways Novo Nordisk has to catch up to Eli Lilly.

Eli Lilly isn't sitting still; it's moving in a different direction

For its part, Eli Lilly has been using its GLP-1 success to expand its business into new treatment areas. That may sound like a mistake as Novo Nordisk leans into the hot GLP-1 niche, but it really isn't. In the second quarter of 2026, GLP-1 drugs accounted for roughly two-thirds of Eli Lilly's revenue. From a strategic standpoint, focusing on diversification is a good plan.

Still, Novo Nordisk's continued innovation in the GLP-1 space could give it a chance to regain the lead. And that's something that investors shouldn't ignore, noting that Eli Lilly's price-to-earnings ratio is 40x compared to Novo Nordisk's 11.5x. The underdog here looks relatively cheap, but it also isn't out of the fight yet.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Eli Lilly and Novo Nordisk. The Motley Fool has a disclosure policy.

Chevron (NYSE: CVX) and Occidental Petroleum (NYSE: OXY) both operate in the energy industry. Chevron offers investors a well-above-market 3.5% yield as of this writing. Oxy's yield is 1.9%, which is still higher than the 1% or so you'd get from the S&P 500 index (SNPINDEX: ^GSPC), but clearly not as high as Chevron's yield. But is Oxy's lower yield a safer bet if dividend consistency is important to you? Here's what you need to know.

The basics of the oil industry have to be addressed

The geopolitical conflict in the Middle East has disrupted the energy market, leading to volatile oil and natural gas prices. Supply has been constrained, pushing up the prices of these commodities. That said, news flow and investor sentiment have led to material volatility in energy markets. Uncertainty is high.

Image source: Getty Images.

While this feels like a unique situation, and it is in some ways, volatility is fairly normal for the energy sector. Oil prices rise and fall frequently and often dramatically. So, as a dividend investor, you need to consider the entire energy cycle when you look for a dividend stock.

Oxy looks good right now

The typical metric that investors use to assess dividend safety is the dividend payout ratio. This measure compares dividends to earnings, which makes a lot of sense. If a company earns more than it pays out in dividends, then the dividend should be secure. Oxy's trailing 12-month dividend payout ratio is roughly 30%. Chevron's is about 66%.

From this perspective, Oxy's dividend is safer. But oil prices are relatively high right now. Go back a single quarter, and the numbers were dramatically different. Both companies had payout ratios above 100%. That's the type of volatility that can occur in the energy sector, which is why earnings aren't the best measure of a dividend's safety. In a cyclical industry like this, the board of directors' commitment to the dividend is the key variable.

On that front, Chevron wins hands down. It has increased its dividend annually for 38 years. Oxy cut its dividend in 2020 when oil prices plunged during the COVID pandemic. The reason for Oxy's dividend cut, however, is really important to understand.

Oxy took on more than it could chew

Shortly before the pandemic started, Oxy bought Anadarko Petroleum. Oxy outbid Chevron to win the deal, but it ultimately took on significant debt to complete the acquisition. When oil prices plunged during the pandemic, the company was left with no wiggle room. It had to free up cash by cutting the dividend to focus on debt reduction.

In fairness, Oxy has materially reduced its leverage. Its debt-to-equity ratio has gone from 2x in 2021 to just 0.35x today. The dividend wouldn't be at the same level of risk if oil prices fell dramatically again. However, Chevron's debt-to-equity ratio is an even lower 0.2x. And even during the pandemic, the ratio rose only to 0.37x, roughly where Oxy's debt-to-equity ratio is today.

Which brings up another important factor. Chevron is one of the world's largest energy companies, with a $390 billion market cap. Oxy is big, but with a $59 billion market cap, it is still relatively tiny compared to Chevron. Oxy has more growth potential, as it looks to expand to better compete with the industry's giants. But that aspiration has already proven it can put the dividend at risk. Meanwhile, Chevron has clearly demonstrated that the dividend is a top priority and that it is financially strong enough to support it through the entire energy cycle.

Chevron is the dividend stock to go with here

There is nothing wrong with Oxy. It is a well-run energy company, but it is more growth-oriented. If dividend safety is important to you, history has proven that Chevron is the more reliable income investment. Add in Chevron's higher yield, and it seems like an easy win, even if the dividend payout ratio suggests otherwise.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chevron. The Motley Fool recommends Occidental Petroleum. The Motley Fool has a disclosure policy.

There are technology stocks that pay dividends, and I own some. But it is a competitive industry with fast-changing trends. If you are looking for a great dividend stock to buy and hold, you'll be better off building your foundation around a boring, reliable, high-yield business like Realty Income (NYSE: O). Only, this real estate investment trust (REIT) is likely to be more innovative than you think. Here's why you may want to buy this 5.1% yielding landlord right now.

Realty Income is a foundational dividend investment

Technology stocks can be volatile. I know, I own International Business Machines (NYSE: IBM) and Texas Instruments (NASDAQ: TXN). They are both reliable dividend stocks, but Wall Street's mood can shift wildly at times. Earlier this year, IBM fell 25% in a single day! I'm not selling this 100-year-old business anytime soon, but I'm glad I own boring and reliable Realty Income beside these tech names to provide some consistency to my portfolio.

Image source: Getty Images.

Don't underestimate the value of a high-yield dividend tortoise when you build an income portfolio. With 31 annual dividend increases behind it and a rock-solid business, I know I can count on that 5.1% yield to keep being paid. Note, too, that the 5.1% yield gets me halfway to the 10% return most investors expect from the market over time. All the REIT needs to do is grow in the low- to mid-single digits, and I'm a happy camper.

Realty Income is changing with the times

What's interesting is that Realty Income is far more innovative than you may think, given its industry. Leasing out properties seems pretty mundane, and it is. But the company has evolved a lot over time. For example, it started out investing mainly in the U.S. market. Seeing an opportunity in Europe, however, it now generates around 20% of revenues from across the pond.

The majority of the REIT's revenues are generated from single-tenant retail properties (roughly 80%). But it also has exposure to other sectors, including industrial properties, casinos, and, wait for it, data centers. Realty Income uses the net lease approach, which means tenants are responsible for most property-level expenses. Its leases also tend to be long-term. The company has a fairly risk-averse business model. But the move into casinos and data centers highlights management's willingness to lean into new opportunities. And they add diversification to the portfolio, which contains over 15,500 properties.

More recently, Realty Income has begun making debt investments and has created a fee-based asset management service for institutional clients. Both of these moves use the tools the company already has in-house, but expand the business in new directions. The high yield and reliable dividend make it appear like Realty Income is a boring, sleeper of a business. But this dividend stock is anything but boring when you dig a little deeper into the story.

Realty Income won't keep you up at night

That said, despite Realty Income's successful efforts at modernizing its business to keep pace with the world around it, it is not the type of investment that will leave you with sleepless nights. Maintaining and growing the dividend is a core goal for management, which has trademarked the nickname "The Monthly Dividend Company." That speaks to the dividend's frequency and highlights its primacy as a corporate goal.

I'm not suggesting that you avoid dividend-paying tech stocks. After all, I own some myself. But I have built those more growth-oriented positions atop the reliable dividend foundation provided by Realty Income. And I'm confident that this innovative REIT, despite being a bit of an income tortoise, will continue to position itself for long-term success. Slow-and-steady high-yielders like Realty Income should have a prominent place in every dividend portfolio.

Reuben Gregg Brewer has positions in International Business Machines, Realty Income, and Texas Instruments. The Motley Fool has positions in and recommends International Business Machines, Realty Income, and Texas Instruments. The Motley Fool has a disclosure policy.

Elon Musk has always been something of a maverick in the technology industry. Tesla (NASDAQ: TSLA) was a major win, with Musk essentially creating the electric vehicle industry (EV). The CEO is currently making another big call, shifting toward autonomous tech, and Tesla is a big part of the story. But the Optimus humanoid robot the company is building needs particularly close monitoring.

Optimus is not a logical progression

One part of Musk's shift toward autonomous technology is building a taxi service atop the Tesla vehicle platform. Self-driving cars are really just a small step away from what the EV maker already does. While there's material competition in the robotaxi space, and Tesla is playing catch-up, investors should see this as a logical progression for the company.

Image source: The White House.

Elon Musk is known for making big, bold leaps. Which is where the company's Optimus autonomous robots come in. To be fair, a high-tech manufacturing business like Tesla building robots isn't outlandish. In fact, Toyota has been building robots for years. The Japanese automaker developed a humanoid robot capable of mimicking a controller's movements in 2017. Still, robots are definitely not the same product as cars.

That's the big issue investors need to wrap their heads around as Tesla begins mass-producing Optimus robots at its Fremont plant in Texas. Notably, the carmaker switched production lines from building cars to building robots. That's a huge capital investment and means that there's no easy way to backtrack on this effort.

If Optimus robots don't turn into a successful business, Tesla will be in trouble. At the very least, a setback here would probably require large write-offs. And at this point, there's no way to know how well the product will be received. So, the Optimus robot has gone from an exciting idea to a major financial bet for Musk, Tesla, and Tesla shareholders.

Elon Musk is leaping in with both feet again

Nobody should be surprised to see Elon Musk making bold decisions. It is pretty much par for the course for the CEO. However, as an investor, you need to view Optimus robots for what they are: An entirely new product category. Mass-producing Optimus robots today could be a prescient move, which puts Tesla at the forefront of a new industry. Or not...

Keep a close eye on both the company's production success and the market acceptance of the Optimus. Tesla needs to see wins on both sides if it wants to turn this wager into a business win.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.

Who is winning the artificial intelligence (AI) chip war? Right now, it looks like Nvidia (NASDAQ: NVDA). But at one point, Intel (NASDAQ: INTC) was the chip industry's "undisputed" king. Being atop the chip industry just means everyone is gunning for you, and there's always a risk you'll be unseated.

There are many companies competing to produce AI chips. But there's one thing that every AI chip needs: Electricity.

Artificial intelligence is just a fancy computer program

When you break it down, artificial intelligence is simply a very complex computer program. It needs a lot of computing power, for sure, so having the best chips is important. But regardless of which chip ends up reigning supreme in the AI space, they will all need electricity to run. I'm not willing to bet that Nvidia's lead in AI chips lasts, but I know that modern life, including AI, can't continue as it is without reliable electricity.

Image source: Getty Images.

This is a pick-and-shovel view of investing. That saying harkens back to the gold rush, when the people who reliably made money were the ones selling picks and shovels to miners. The chance of a specific miner striking gold was hit-or-miss, at best. The same is true for AI chipmakers.

And if the AI gold rush doesn't turn out to be as successful as everyone hopes, I'm still willing to bet that electricity remains highly important to the world. So, by investing in electricity stocks, I win if AI wins and I win if AI flames out. I like those odds in case the worst-case scenario for AI comes to pass.

Which is why I own Brookfield Renewable Partners (NYSE: BEP), Southern Company (NYSE: SO), and Black Hills (NYSE: BKH). I've owned them for years now, largely because they pay reliable dividends (Black Hills is a Dividend King, with over 50 consecutive annual dividend increases) and offer attractive yields. Brookfield Renewable, meanwhile, is focused on clean energy, which taps into another global trend.

A one-stop shop to benefit from AI's power demands

That said, if you are looking to own just one utility to benefit from AI, a good choice would be NextEra Energy (NYSE: NEE). It operates a large regulated utility business and is also one of the world's largest producers of solar and wind power. It's kind of like owning Southern and Brookfield Renewable, but you only have to buy one stock.

With a yield of nearly 3% (the utility average is around 2.6%) and decades of annual dividend increases behind it, NextEra Energy could be the perfect picks-and-shovels AI power play for your dividend portfolio today. As an added bonus, NextEra Energy is in the middle of acquiring Dominion Energy (NYSE: D), which will make it an even more dominant utility. And it is basically explicit proof that the company is leaning into the world's growing demand for electricity.

Reuben Gregg Brewer has positions in Black Hills, Brookfield Renewable Partners, and Southern Company. The Motley Fool has positions in and recommends Intel, NextEra Energy, and Nvidia. The Motley Fool recommends Brookfield Renewable Partners and Dominion Energy. The Motley Fool has a disclosure policy.

Bristol Myers Squibb (NYSE: BMY) was created via the combination of companies founded in 1858 and 1887. It has a proven history of survival in the highly competitive and innovative pharmaceutical industry. That's important to remember as investors examine the upcoming patent cliff for cardiovascular drug Eliquis in 2028. It will be a big revenue hit, but patent expirations are just a normal part of the drug business. Here's why Bristol Myers Squibb is still worth buying, and it has nothing to do with the big rumor.

A merger is unlikely

The big story around Bristol Myers Squibb over the past month or so was the rumor that AstraZeneca (NYSE: AZN) was in discussions to buy it. Bolt-on deals are pretty common in the pharmaceutical space, but this wouldn't be a bolt-on; it would be a mega merger. Industry watchers don't see a high likelihood that it will get done. In the grand scheme of investing, trying to invest around mergers and acquisitions isn't the best long-term plan, anyway.

Image source: Getty Images.

Focusing on the fundamentals is a much better idea. But, as noted, Bristol Myers Squibb's core story isn't great right now. One of its most important products, Eliquis, is about to lose patent protection. When that happens, competitors can sell generic versions of Eliquis, and Eliquis revenues are likely to decline sharply. It seems like a mistake to buy into that story.

But patent expirations are normal for a drug company like Bristol Myers Squibb. It isn't waiting around and hoping for a miracle; it has been working for years to develop new drugs to replace the revenues lost to patent expirations. It is already seeing solid results from new drugs like Camzyos, Opdualag, Breyanzi, and Reblozyl. And it has more new drug candidates in the pipeline, as well. In fact, the company's CEO has been talking up the depth of the pipeline, which he believes is the most impressive in a decade.

Don't buy Bristol Myers Squibb for the short term

Shares of Bristol Myers Squibb are up materially over the past year, but still below the peak levels of late 2022. So the stock isn't cheap, but neither does it look particularly expensive. Notably, the stock's 15x price-to-earnings ratio is well below the industry average of 26x. And while new drug developments don't always line up with patent expirations, the long-term history for Bristol Myers Squibb suggests it will eventually find new and innovative drugs to sell. In fact, it is already doing just that, even though it will likely need more successes to offset Eliquis.

If you are a long-term investor, you could do a lot worse than taking a risk on a historically successful healthcare stock like Bristol Myers Squibb while collecting its well-above market 3.7% yield. And if the company does get bought by AstraZeneca, well, that could just be icing on the cake.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AstraZeneca Plc and Bristol Myers Squibb. The Motley Fool has a disclosure policy.

There is a lot to like about Coca-Cola (NYSE: KO) as a business. But investors have to juxtapose the business they are buying against the price they are paying. To paraphrase famous value investor Benjamin Graham (the man who helped train Warren Buffett), paying too much for a good company can turn it into a bad investment. Here's what you need to know about Coca-Cola as the stock reaches new all-time highs.

Coca-Cola is on a run!

Coca-Cola, one of the world's largest consumer staples companies, has seen its stock price rise around 30% so far in 2026 as of this writing. By comparison, the S&P 500 index (SNPINDEX: ^GSPC) is up "only" 12%. To be fair, Coca-Cola is doing fairly well right now as a business, so the strong stock performance isn't unexpected. Notably, in the second quarter of 2026, Coca-Cola's organic sales growth was 6% compared to PepsiCo's (NASDAQ: PEP) slim 1.3%. Investors are simply buying into a strong story with Coca-Cola.

Image source: Getty Images.

However, after such a rapid stock advance, Coca-Cola's stock looks a little expensive. The price-to-sales, price-to-earnings, and price-to-book ratios are all above their five-year averages. If you have a value bias, you probably won't find the stock all that interesting right now. But there's another fact that you should consider, and the P/E ratio winds up being pretty telling.

There is likely to be a better time to buy

Before getting into the weeds, it is important to note that buying Coca-Cola at an all-time high like today wouldn't be a massive mistake. Given the company's long history of growth, if you buy and hold for the long term, you'll likely end up OK. However, notice that the line in the graph below isn't straight. It is a zig-zag, which is just how stocks behave.

KO data by YCharts

Over the last few years, when Coca-Cola's stock price has risen sharply, it has pulled back before moving higher again. It appears that a P/E ratio in the high 20x range triggers investors to get worried about the valuation. And that happens to be where the P/E is right now, at roughly 27x. There's no way to know if this pattern will repeat itself, but trees also don't grow to the sky. So investors aren't going to pay an unlimited amount of money to buy a share, either. In other words, if you are patient, you can probably get a better entry point with Coca-Cola.

Coca-Cola is definitely worth the wait

If you just have to buy Coca-Cola today, it isn't the end of the world. It is a very well-run business, highlighted by its status as a Dividend King, with over 50 consecutive annual dividend increases backing its 2.3% yield. But, as Graham noted, overpaying for a good company can hamper your long-term returns. A better option for investors right now would be to keep this iconic beverage giant on their wish list.

When the P/E ratio gets into the lower 20x range, you'll want to take a second look. Over the past few years, that has proven to be a far better buying opportunity. The pattern of selling off after reaching a P/E in the high 20x range and rebounding after falling to the low 20x P/E range could repeat simply because of a mood shift among investors or if Coca-Cola's organic growth misses expectations, even by just a little bit (investors can be shockingly unforgiving at times). But you should prepare to act now, so you'll have the wherewithal to buy this well-run company when other investors are selling. If history is any guide, Dividend King Coca-Cola will overcome any short-term headwinds it faces and continue to grow over the long term.

Reuben Gregg Brewer has positions in PepsiCo. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

If you are just starting out as an investor and looking to generate a reliable income stream, you should begin your search with companies such as Realty Income (NYSE: O), PepsiCo (NASDAQ: PEP), and Enbridge (NYSE: ENB). In fact, these three stocks could offer new investors a highly diverse portfolio with a relatively small investment of even $5,000. Here's a look at each of these high-yield dividend stocks and why they work so well together.

Realty Income: The Monthly Dividend Company

Realty Income is the largest net-lease real estate investment trust (REIT). That means that it owns properties and leases them to tenants, but the tenants agree to pay most property-level operating expenses. This reduces Realty Income's costs and risk because it doesn't have to handle day-to-day operations at its properties. The company owns over 15,500 properties across the retail and industrial sectors, including unique property types such as casinos and data centers. And its portfolio spans both North America and Europe.

Image source: Getty Images.

The big story here, however, is Realty Income's commitment to the dividend, which has been increased annually for 31 years. It is paid monthly, which is why the company trademarked the nickname "The Monthly Dividend Company." The REIT is built from the ground up to be a reliable dividend payer, with a diversified foundation that it has gradually expanded over time, building on the company's strengths to enter new markets and property niches. For example, it recently started offering institutional asset management services, generating a new fee-based income stream for shareholders. The key is that the services it provides are essentially built on what it is already doing. More revenue, little extra work.

With a well-above-market 5.1% dividend yield, Realty Income is a solid foundation for a diversified dividend portfolio.

PepsiCo: Three businesses in one

PepsiCo is one of the world's largest consumer staples companies and a name you probably know well from the grocery store. What you might not know is that it has increased its dividend annually for over 50 years, which makes it a Dividend King. You don't build a dividend streak like that by accident; it requires a strong business plan that gets executed well in both good times and bad. Unfortunately, right now isn't the best of times for PepsiCo, and the stock is trading with a historically high 4.1% yield. That's an opportunity for long-term investors, whether they are new to investing or old hands.

What's most interesting is that PepsiCo is really three businesses in one. The company operates the world's largest salty snack business in Frito-Lay. It is the second most important beverage company, via its namesake Pepsi business. And its Quaker Oats operation is a large packaged food business. With a global distribution system, the company provides a huge amount of diversification in one food business. And if history is any guide, the company will eventually turn its sluggish recent performance around and start growing again. For most, the risk-versus-reward balance will be well worth the investment given the highly attractive yield on offer right now.

Enbridge: Changing with the world

Last up is North American energy giant Enbridge, which has a 5.5% yield. The energy sector is highly volatile, since oil and natural gas are commodities. However, Enbridge doesn't sell these fuels; it charges fees for helping to move them around the world. Given the importance of oil and natural gas to the global economy, demand for Enbridge's fee-generating services is always fairly strong. And those reliable cash flows back a strong and growing dividend. Notably, the dividend has been increased annually in Canadian dollars for 31 years.

However, diversification is a key theme. While energy infrastructure is the focus, Enbridge doesn't only own oil and gas pipelines. It also operates regulated natural gas utilities and a handful of clean energy assets. These businesses generate reliable income streams just like the pipeline business. But they highlight that Enbridge is living up to one of its key goals, providing the world with the energy it needs, whatever that may be. History shows that Enbridge provides investors a way to gain broad energy exposure that adjusts to the world around it, meaning you can buy and hold without worrying too much about changing energy trends.

$5,000 to start and a growing income stream

How you break up a $5k investment is up to you. But an equal amount in Realty Income, PepsiCo, and Enbridge is probably a good starting point, given there's little overlap between the businesses. That would equate to around 26 shares of Realty Income, 11 shares of PepsiCo, and 32 shares of Enbridge. A solid start for a bright dividend future, particularly if you can reinvest your dividends, allowing them to compound over time.

Reuben Gregg Brewer has positions in Enbridge, PepsiCo, and Realty Income. The Motley Fool has positions in and recommends Enbridge and Realty Income. The Motley Fool has a disclosure policy.

Bloom Energy (NYSE: BE) only reports its backlog once a year. But during the company's second-quarter 2026 conference call, management noted that it has material new customers that aren't yet reflected in the backlog numbers it provided at the start of the year. So the backlog is likely even bigger today than it was just eight months ago. But it's the breakdown of the backlog that explains why I'm not willing to buy Bloom Energy, or at least not yet.

What kind of business is Bloom Energy?

Bloom Energy makes hydrogen fuel cells. It is experiencing massive demand for its products due to the rapid build-out of artificial intelligence infrastructure. Simply put, the electric grid can't keep up with electricity demand, and Bloom Energy's fuel cells are being used to bridge the gap. They can provide off-grid power, allowing AI data centers to come online without waiting for the local electric utility to connect them to the grid.

Image source: Getty Images.

The company's product backlog was 2.5x larger at the start of 2026 than it was at the start of 2025. And according to management, it is likely even larger now. But here's the interesting thing: that product backlog only accounted for $6 billion of the $20 billion backlog at the start of the year. The rest of the backlog is tied to services.

Each new fuel cell Bloom Energy sells comes with a long-term service contract. The fuel cell is a one-time sale; the service contract creates an annuity-like income stream. Right now, investors are excited about the company's opportunity to sell fuel cells. I'm a dividend investor, so I see the service contracts as the bigger story. The reliable revenue generated from service contracts could someday support a reliable dividend.

Bloom Energy: An evolving business

It's entirely possible that Bloom Energy never gets to the point where it pays a dividend. But that's still the one number I want to see before I will consider buying it. I don't think it is an unreasonable expectation, noting that major technology companies eventually evolved to the point where paying dividends was not just possible, but expected.

Today, Bloom Energy is still a fast-growing hydrogen fuel cell start-up. However, given the importance of services to Bloom Energy's story, I believe it, too, could grow to the point where dividends get paid. And if it does, I'll happily take a closer look at the stock and its reliable recurring service revenues.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bloom Energy. The Motley Fool has a disclosure policy.

Most investors buy dividend stocks to create a reliable income stream to pay bills. Costco (NASDAQ: COST) and Walmart (NASDAQ: WMT) are both reliable dividend stocks. But they have taken dramatically different approaches with their dividends. For most, Walmart and its roughly 0.9% yield will be a better fit than Costco's 0.6% yield. Here's why.

Neither stock is cheap

Before getting into the relative merits of Walmart and Costco and their dividend policies, it is important to address the value equation. Neither of these globally dominant retailers is cheap right now. Each company's price-to-sales and price-to-earnings ratios are above their five-year averages. And their yields are both below that of the S&P 500 index (SNPINDEX: ^GSPC). If valuation is important to you, you'll probably want to keep these stocks on your wish list.

Image source: Getty Images.

That said, Walmart's yield is materially higher than Costco's. Sure, 0.3 percentage points doesn't seem like a lot on an absolute basis, but it is 50% more income. If you are trying to live off of your dividend, as many dividend investors are, that makes a big difference. The fly in the ointment is that Costco has a history of paying very large special dividends. It paid special dividends of $7 per share in 2017, $10 per share in 2020, and $15 per share in 2023. Given the cadence, another one could be on the way soon.

It is hard to argue with a huge dividend like that, but you can't budget around special dividends. Maybe one gets paid soon, maybe it doesn't. There's no way to tell. Walmart has increased its dividend every year for 53 years, making it a Dividend King. While Costco is no slouch, with more than two decades of regular dividend hikes, it just doesn't have the same track record. Add in the relatively higher yield on offer from Walmart, and most dividend investors will probably prefer Walmart.

Costco wins on dividend growth

That said, if you are looking for a dividend growth stock, the story switches. Over the past decade, Walmart's dividend has grown at around 4% a year. Costco's dividend has grown at a 10% rate over the same period. If you reinvest dividends and add in the special dividends along the way, Costco is likely to be a more attractive dividend growth option. But you will be paying an even larger premium for the stock than you would pay with Walmart.

The caveat with both stocks, however, is valuation. Neither is cheap today, and anyone with even the slightest value bias will probably be better off putting both of these industry-leading retailers on their wish list. But if you feel you have to buy, Walmart probably wins for income, while Costco stands out for dividend growth (with any special dividend that may get paid being an added bonus).

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale and Walmart. The Motley Fool has a disclosure policy.

Dividend yield equals the annualized dividend divided by the stock price. It is one of the easier financial metrics to calculate and understand. But the dividend and the dividend yield can tell you much more than just what income you can expect from an investment. In fact, the dividend and dividend yield are core components of my investment approach, helping me identify high-conviction opportunities such as Procter & Gamble (NYSE: PG), Federal Realty (NYSE: FRT), and Enbridge (NYSE: ENB).

Using dividends to identify high conviction investment ideas

Before getting to dividend yield, I usually start with the dividend alone. Or, more precisely, a company's dividend history. It requires a strong and growing business to support a dividend that is regularly increased. So, a dividend history that is filled with annual increases is solid evidence that a company is worth owning.

Image source: Getty Images.

I normally start by only considering companies that have at least 10 annual dividend increases. But ideally, I prefer longer dividend streaks, with many of my investments falling into the Dividend King grouping, which indicates at least 50 annual dividend increases. Procter & Gamble and Federal Realty are both Dividend Kings, while Enbridge has increased its dividend for 31 years, in Canadian dollars.

That said, a great company can be a bad investment if you pay too much for it, as Benjamin Graham famously said (Graham helped train Warren Buffett of Berkshire Hathaway (NYSE: BRKA)(NYSE: BRKB) fame). Luckily, you can also use dividends to assess valuation.

The simple math of a dividend yield tells you how much income you'll generate from an investment. However, dividends tend to be more consistent over time than earnings. And stocks tend to trade within yield ranges. When a company I'm interested in has a historically high yield, I believe it indicates a good entry price. I added P&G, Federal Realty, and Enbridge to my portfolio when they were trading at historically high yields.

Sticking it out for the long term

This isn't a foolproof method for selecting stocks. Even Dividend Kings cut their dividends occasionally. So you have to dig into each stock you are considering buying to understand the story you are investing in. Sometimes, a high yield indicates that a business is deeply troubled. But I've found that dividends and dividend yield have consistently identified great opportunities for me.

For example, when Dividend King Procter & Gamble underwent a business overhaul a few years ago, its stock fell sharply. The consumer staples giant's plan was to sell smaller, less profitable brands so the company could focus on its largest and most profitable ones. That sounded like a good move to me, and I jumped on the opportunity to buy the stock while the yield was historically high (and high relative to the market, as well). I'm not selling anytime soon.

Federal Realty is the only real estate investment trust (REIT) that is a Dividend King. It owns strip malls and mixed-use developments in high-density locations with wealthy populations. I had long admired the business, but the REIT is usually afforded a premium price. I kept it on my wish list, just in case. During the coronavirus pandemic, I had the opportunity to buy it when investors were acting as if people would never shop again. I have no plans to sell this REIT icon.

Enbridge is a giant North American midstream company that also owns regulated natural gas utilities and clean energy assets. It generates reliable fee-driven cash flows that support an attractive yield. The Canadian company's goal is to supply the world with the energy it needs, leading management to slowly adjust its portfolio mix beyond pipelines and carbon-based fuels. During the pandemic, when oil prices cratered, Enbridge's stock sold off even though energy prices aren't a major factor in its financial results. The volume of energy that flows through its system is the bigger determinant of success. With a historically high yield, I bought Enbridge, and I haven't looked back.

Dividend Yield: Easy to explain, but more powerful than you think

My biggest investment successes have been driven by analyzing dividends and dividend yields. If you are patient, you can use dividends to build a portfolio of high-yield stocks backed by great businesses. In fact, P&G's roughly 3% yield is fairly attractive again, amid concerns about consumer spending and inflation. I have no doubt the company will survive the headwinds, and I've been considering adding to my position.

Enbridge's 5.5% yield is also attractive, though it has been higher in the past. If you are looking for energy exposure but don't like the idea of commodity risk, it is worth a deep dive today.

Federal Realty's 3.8% yield is high on an absolute level and might interest conservative dividend investors. But most should probably keep it on their wish list. A yield closer to 5% would be much more enticing. A recession could give you the opportunity to buy, even though the Dividend King has easily survived many recessions over the last 50 years. And it highlights the importance of keeping a list of great dividend stocks on hand so you are prepared to act when the timing is right.

Reuben Gregg Brewer has positions in Enbridge, Federal Realty Investment Trust, and Procter & Gamble. The Motley Fool has positions in and recommends Berkshire Hathaway and Enbridge. The Motley Fool has a disclosure policy.

Investors like big, round numbers, which is what Anthony Scaramucci, founder of SkyBridge Capital, suggests in his assessment of Bitcoin (CRYPTO: BTC). In his defense, that's likely to be true. However, it highlights an important factor you shouldn't ignore when considering Bitcoin. Here's why $100,000 was an important level, according to Scaramucci, and why he thinks Bitcoin could rise again.

Bitcoin plunged dramatically

Even after a rally, Bitcoin remains more than 33% below its 2025 high, as of this writing. That's a massive drop, which took the cryptocurrency from over $100,000 to well below that figure. What happened? According to Scaramucci, the reason is that people who had held Bitcoin for a long time viewed the big round number as a sell trigger. That's not a shocking thing, as every big round number the S&P 500 index (SNPINDEX: ^GSPC) passes through gets highlighted, as well.

Image source: Getty Images.

Selling pressure from longtime Bitcoin holders pushed the price lower as ownership of the cryptocurrency shifted to newer buyers, according to SkyBridge partner John Darsie. It was a transition period that may be nearing an end, given the recent rally in Bitcoin. Meanwhile, Scaramucci believes there are major tailwinds to consider, most importantly the convergence of artificial intelligence and blockchain technology.

Bitcoin Price data by YCharts

The risk in Scaramucci's argument

Scaramucci's belief that $100k was an important price point is completely reasonable. However, it is a completely arbitrary number, even if Bitcoin investors peg their expectations to it. It highlights that the only thing backing the prices of Bitcoin and other cryptocurrencies is the willingness of their holders to own them. That's vastly different from a stock, where you can assess the value of the business that has issued it using audited balance sheets, income statements, and cash flow statements. Those tools don't exist for cryptocurrencies.

This is the inherent risk investors are taking on when buying Bitcoin. However, if Scaramucci is correct that AI agents will use blockchain to track their activities, then Bitcoin could, in the near future, have a more trackable functional purpose. That is a development worth watching, and one that could turn Bitcoin from a merely speculative asset into one with an increasingly important functional value. It isn't yet clear how that value would impact the price of Bitcoin. But if you share his vision, Scaramucci could be right that the future is bright for Bitcoin and, perhaps, the broader crypto space.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.

Pfizer (NYSE: PFE) has an attractive 6.1% dividend yield, as of this writing. That compares with roughly a 1% yield for the S&P 500 index (SNPINDEX: ^GSPC) and a 1.4% yield for the average pharmaceutical stock. Investors should probably be worried about Pfizer's shockingly high yield. But you may not be looking at the right metric to gauge how worried you should be.

Where do Pfizer's dividends come from?

Most investors look at the dividend payout ratio when they consider dividend safety. This metric compares dividends to earnings, which is a logical concept. If a company earns more than it pays in dividends, the dividend should be safe. Pfizer's dividend payout ratio is currently above 200%, which is not comforting.

Image source: Getty Images.

Which is why it's a good thing that the financial impact of dividends doesn't appear on the earnings statement. It shows up on the cash flow statement. When you compare Pfizer's dividend to its free cash flow using the cash dividend payout ratio, you get around 90%. That's not exactly great, but it is far better than the earnings comparison. Notably, the cash to pay dividends doesn't have to come from earnings; it can come from other sources, such as cash on a company's balance sheet.

Which is why, if you are worried about Pfizer's dividend, you should probably be paying extra attention to the company's cash and short-term investments right now. And there is a material reason to worry. First, the good news: The company ended the second quarter of 2026 with nearly $1 billion in cash and $10.7 billion in short-term investments. Moreover, management continues to voice strong support for the dividend, which costs about $2.5 billion per quarter.

For now, there's no particular reason to believe the dividend is at risk. However, the bad news is that Pfizer is facing several patent expirations, and its pipeline of new drugs isn't producing blockbusters just yet. So research and development spending is likely to be a key priority. R&D spending competes with the pharma giant's dividend for cash.

Watch the right metrics if you own Pfizer

To be fair, Pfizer's elevated payout ratio is a sign of risk. But at the moment, it continues to have sufficient cash flow to cover the payment, as seen with the cash dividend payout ratio. But the real story may boil down to the cash the company has to support both its business and its dividend. With over $11 billion in cash and short-term investments on its balance sheet, Pfizer is fine today. But what should probably concern you most is the competing demands of the business and the dividend on that same pile of cash.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Pfizer. The Motley Fool has a disclosure policy.