Estimated read time: 3 minutes
Publication date: 16th Dec 2020 16:13 GMT+1
Dividend-paying companies have the ability to increase investor wealth by providing a steady stream of recurring income as well as via long-term capital gains. But not all dividend-paying companies are good investments.
Dividend stocks need to generate predictable cash flows across business cycles. They should have a low payout ratio allowing them to increase dividends over time. Here we look at three such dividend stocks that have increased payouts for the last 25 consecutive years.
Procter & Gamble
One of the leading consumer goods company Procter & Gamble (NYSE: PG) has increased dividend payments for 64 consecutive years. It has a wide portfolio of popular products giving it pricing power over peers. Further, most of the company’s products are recession-proof or essential in nature.
The stock has a forward yield of 2.3% which might not look attractive but its stock price has gained over 80% in the last five years. In fiscal 2020, it managed to increase operating cash flow by 14% to $17.4 billion allowing it to increase dividends this year as well.
In the September quarter, it grew online sales by 50% indicating the company continues to innovate even after all these years. Since 1989, the company has increased dividend payments at an annual rate of 9% from $0.0496 per share to $0.79 per share.
The energy sector has been hit hard amid the pandemic due to falling oil prices driven by COVID-19 related lockdowns and the price war between Saudi Arabia and Russia. However, few midstream companies such as Enbridge (NYSE: ENB) have managed to be relatively immune to crude oil prices.
Enbridge is a diversified energy infrastructure company and has increased dividends at an annual rate of 11% in the last 25 years. Going ahead, it expects to increase dividends between 5% and 7% due to its robust business model.
Over 95% of the company’s EBITDA is generated via long-term or regulated contracts. Enbridge has a strong balance sheet and a solid financial profile that has helped it tide over multiple economic downturns in the past.
Now with a juicy yield of 7.6%, Enbridge is one of the most attractive dividend companies that is also trading at a cheap valuation. Its backlog of projects and focus on renewable energy expansion will help the energy giant increase cash flows and dividend yields in the upcoming decade.
The final stock on the list is real estate investment trust Realty Income (NYSE: O). The company aims to generate monthly cash distributions from a consistent level of funds from operations per share.
Realty Income is one of the largest REITs with a market cap of $21 billion and a portfolio of 6,500 properties. Its portfolio consists of retail (85%), followed by industrial at 10%, office at 3%, and 2% from an “opportunistic vineyard investment”.
Realty Income has paid dividends for 604 consecutive months, increasing its payout 108 times since it went public in 1994. Its forward yield is a healthy 4.3% and its upward trajectory with regards to the company’s dividend yield should continue in 2021 as well.
In order to look at Finscreener’s dividend dashboard that rates stocks by several metrics, you can click on this link.
Disclaimer: The writer is an experienced financial consultant who writes for Finscreener.org. The observations he makes are his own and are not intended as investment or trading advice.
Copyright © 2016-2021 Finscreener.org. All Rights Reserved.
Disclaimer: Before deciding to trade you should carefully consider your investment objectives, level of experience and your risk appetite. Forex and Tradegate data is a real-time with a 30 second refresh. Prices may not be accurate and may differ from the actual market price. Prices on the website are indicative and solely for informational purposes, not for trading purposes or advice. Please be aware of the risks associated with trading the on financial markets, it is one of the riskiest investment forms. Past performance does not guarantee future profits. We take no responsibility for any losses that may arise as a result of the data contained on this website. The content and the website are provided "as is", without any warranties. In no event will Finscreener.org, its employees, owners, directors, affiliates, partners, data provider, third party or anyone else liable to anyone else for any decision made regarding information on this website.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
This could take some time, please wait.