Given the current interest rate environment, we are looking for companies that offer a yield notably above the market’s “risk-free” rate. I believe a dividend yield of that level makes for a decent starting point for investors looking to generate meaningful income.
The selected companies must also have a proven track record of increasing their dividends for at least 10 consecutive years. This ensures management’s commitment to returning capital to shareholders while also increasing the chances that the companies we are looking at will feature profitable growth over long time periods.
You might be surprised to learn that applying these filters results in only 13 stocks. After conducting further research, I have identified the top three dividend stocks among them that will hopefully tantalize your taste for profits.
Dividend Stocks to Buy: Enterprise Products Partners L.P. (EPD)
The first pick we are looking at is Enterprise Products Partners L.P. (NYSE:EPD), a partnership that has historically stood out amongst its energy peers due to consistently exceptional performance.
If you’re not familiar with EPD, it is a leading midstream natural gas and crude oil pipeline business boasting a vast network of pipelines, storage facilities, and processing plants. The partnership’s asset base is highly mission-critical, including over 50,000 miles of pipelines and significant storage capacity. Thus, its infrastructure is vital to the energy supply chain, ensuring the efficient transportation and storage of essential fuels across the country.
Due to its distinctive operational model, EPD remains notably resilient to the sector’s inherent volatility, including fluctuations in commodity prices, in contrast to many peers within the sector, such as oil and natural gas producers.
This strength is attributed to its infrastructure assets, which are typically tied to long-term contracts featuring minimum volume commitments. Thus, the partnership tends to enjoy a steady stream of cash flows with a relatively predictable nature.
Evidently, the company has been able to increase its dividend for 25 consecutive years. Today, it offers an impressive dividend yield of 7.3%, making it a highly attractive option for income-focused investors.
Universal Health Realty Income Trust (UHT)
Universal Health Realty (NYSE:UHT) isn’t just another Real Estate Investment Trust (REIT). Besides owning 76 high-quality healthcare and human-service-related facilities, it boasts one of the sector’s longest dividend growth track records, including over 30 consecutive years of dividend increases. Consequently, it has solidified its position as a reliable income generator for investors.
Noticeably, UHT stock has experienced a steady decline since its peak in 2020, primarily attributed to the upward trajectory of interest rates. This trend isn’t unique to UHT alone but rather common to the broader asset class, which is quite sensitive to rising rates. Yet, despite this challenging backdrop, the company has consistently increased its dividends year after year.
In the meantime, the continuously declining share price has pushed UHT’s dividend yield upward to a noteworthy 7.5%. This is the highest yield the REIT has traded at in about 15 years, offering an attractive entry point for investors who were previously waiting on the sidelines.
Enbridge (ENB)
The last pick on this list is Enbridge (NYSE:ENB), one of the most prominent Canada-based energy infrastructure companies. The company’s operational model bears striking similarities to that of Enterprise Products Partners. Yet, unlike EPD, whose operations are primarily concentrated in the southern regions of the U.S., Enbridge’s assets are mainly situated in the northeastern parts of the country and Canada.
One of Enbridge’s key strengths lies in its resilient business model, characterized by long-term contracts, diversified operations, and stable cash flows. Its essential-for-the-economy assets have historically provided a dependable revenue stream, even during unfavorable market periods for the sector. Take 2020, for instance, which saw many energy companies report massive losses due to plummeting oil prices. Even then, Enbridge remained highly profitable.
Enbridge’s dividend growth track record is another helpful indicator of its operational excellence. The company has increased its dividend for 29 consecutive years, instilling confidence amongst investors even during highly volatile market environments. Finally, with its dividend yield now hovering close to 7.5%, Enbridge will most certainly tantalize your taste for profits! Make the smart play and grab this and the rest of these dividend stocks.
On the date of publication, Nikolaos Sismanis did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Nikolaos Sismanis is a professional research analyst with five years of experience in the field of equity research and financial modeling. Nikolaos has authored over 1,000 stock-related articles that focus on uncovering deep value opportunities, identifying growth stocks at reasonable valuations, and shining a spotlight on overlooked international equities.