1 Magnificent S&P 500 Dividend Stock Down 35% to Buy and Hold Forever

Key Points

• The stock is down about 35% from its 52-week high.

• Even in a weak freight market, Old Dominion is protecting price and service.

• The dividend is conservative, growing, and backed by strong cash flow.

• 10 stocks we like better than Old Dominion Freight Line ›

Old Dominion Freight Line (NASDAQ: ODFL) has been a market darling for years. The less-than-truckload carrier consistently posts industry-leading efficiency and service. In addition, its balance sheet is clean, and its dividend is reliable and growing. But the stock has fallen sharply in 2025. Shares are now about 35% below their 52‑week high.

A drawdown that steep often signals real business problems. In Old Dominion's case, however, the decline reflects a soft freight backdrop and expectations that got ahead of themselves. The core of the business is still intact. For long‑term investors who want a dependable dividend and one of the best operators in trucking, this rare pullback is worth a close look.

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Why the stock fell

The second quarter showed what investors feared: Revenue fell 6% year over year and earnings per share declined 14%. With less freight moving around the country, Old Dominion faced deleveraging (fixed costs weighing more as volumes fell). Its operating ratio (its operating expenses as a percent of revenue) climbed to 74.6%, up from 71.9% in the year-ago quarter.

But the headline numbers don't tell the whole story. The company protected pricing power, with revenue per hundredweight, excluding fuel surcharges, up a little over 5%. Service levels stayed elite, with 99% on‑time deliveries and an industry‑best cargo claims ratio of just 0.1%. That combination -- holding yield and service while volumes are down -- is exactly what sets Old Dominion apart from most peers.

A dividend built for the long haul

Old Dominion doesn't win income investors with a high yield. The draw is consistency.

In July, the board declared a quarterly dividend of $0.28 per share. That's a 7.7% increase from the payout a year ago. Based on today's price, the yield is roughly 0.7%. But dividend durability is what matters. In the first half of 2025, Old Dominion generated about $622 million in operating cash flow. Roughly $119 million of that went to dividends. The rest left plenty of room for reinvestment and buybacks. This conservative approach makes the payout resilient, and it should keep rising steadily year after year.

Returning cash while reinvesting

Alongside the dividend, Old Dominion returned about $543 million to shareholders in the first six months of 2025, with roughly $425 million of that via repurchases. At the same time, management has committed around $450 million in capital spending this year. About half is earmarked for real estate and service‑center expansion. The other half is going toward tractors and trailers.

This prudent balancing of key priorities -- returning cash to shareholders while continuing to build out the network -- is why Old Dominion is so well positioned for the next freight upcycle. When demand recovers, it will have more doors, more trucks, and more density to run freight more efficiently than competitors.

Built to endure

Old Dominion's discipline shows up everywhere: in its margins, in its service, and in its capital allocation. The balance sheet carries little debt, the dividend payout is conservative, and business reinvestment never takes a back seat to dividend payouts.

Yes, freight cycles can drag on longer than expected. In the meantime, valuation can stay under pressure. But Old Dominion is built to play offense. It keeps investing while others pull back. That's how it continues to take share -- and why it has compounded value for decades.

At roughly one‑third below its recent high, Old Dominion gives investors a chance to own a high‑quality S&P 500 dividend stock at a more reasonable price. For long‑term holders, that mix of quality and value is hard to beat.

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Daniel Sparks and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Old Dominion Freight Line. The Motley Fool recommends the following options: long January 2026 $195 calls on Old Dominion Freight Line and short January 2026 $200 calls on Old Dominion Freight Line. The Motley Fool has a disclosure policy.