A lot of high-quality dividend growth stocks don't offer super high yields. Instead, it's all about letting those dividend increases slowly compound over time, which eventually turns your passive income into a runaway snowball of dividend income you can't reasonably spend. But what if you don't have a decade or two to let the compounding process play out? What if you're at retirement age, or close to it, and need income now? Or, what if you're a younger investor who wants to amplify the overall yield of your portfolio?
I'm going to tell you about three dividend growth stocks that offer big, strong dividends.
They're big because we're talking about yields that are more than four times higher than the S&P 500's 1.5% yield. And they're strong because they're backed by the necessary cash flows. The last thing you'd want is to chase after a high yield and then see that dividend cut and the investment value drop like a rock. Also, these dividends are still growing. Not as fast as many lower-yielding stocks, sure.
The first stock I want to bring to your attention is AT&T Inc. - stock ticker T. If that kind of yield doesn't get the bills paid, you might have too many bills. AT&T is a Dividend Aristocrat with 36 consecutive years of dividend raises. The 10-year dividend growth rate is only 2.2%, so there's not a ton of growth here. But that's the trade-off with a 7% yield.
The company took in over $27 billion in free cash flow last year, and the dividend only sucked up 55% of it. So this is a stock where you can count on that big dividend to keep coming.
The next stock is Enbridge Inc. - stock ticker ENB. This Canadian energy company moves oil and gas through its pipelines, but it also pipelines big dividends (7% yield!) straight into its shareholders' brokerage accounts.
Enbridge has increased its dividend for 25 consecutive years. And with a 10-year dividend growth rate of 11.3%. This is a pretty compelling combination of yield and growth.
This keeps Enbridge's dividend safer than a lot of other energy plays. Distributable cash flow per share easily covers the dividend. Keep in mind, holding this stock in a US taxable brokerage account will trigger a dividend tax withholding from Canada, which you'll have to claim back at tax time.
Last, but certainly not least, we have Altria Group Inc. - stock ticker MO. If you have no reservations about investing in a tobacco company, this stock is great for investors who want income now. MO may as well mean mo' money.
Altria yields 7% and has increased its dividend for 51 consecutive years, which puts it in rare company. And the 10-year dividend growth rate is an impressive 9.1%. However, more recent dividend raises have been small.
Altria is guiding for adjusted EPS of between $4.49 and $4.62 for this fiscal year, which clearly exceeds the $3.44 dividend. This stock can pave your portfolio with one of the biggest, strongest dividends out there.
All three of these stocks offer a safe, growing 7% yield. And with all three of them being in very different industries, you almost have a miniature portfolio here. If you're an investor who needs income now, do consider these three dividend growth stocks for your portfolio.
Video Length: 00:06:29
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