If You Like Dividends, You Should Love These 3 Stocks

If you are looking for dividend stocks today, this trio of longtime payers is going to be right up your alley. They range from dividend growth names to high-yield, but all of them are worthy of some serious investor love. Here’s why you’ll probably like Hormel Foods (HRL -0.02%), W.P. Carey (WPC 0.97%), and Enbridge (ENB 0.61%) enough to add them to your portfolio.

1. Fast-growing dividends

In 2012, foodmaker Hormel paid $0.30 per share in dividends for the year. In 2022, the annualized dividend is $1.04 per share, nearly three and a half times larger in less than a decade. That’s impressive dividend growth. Sure, the current yield is only around 2%, but the dividend growth makes up for the modest starting yield. Here’s the thing, though: That yield is toward the high end of Hormel’s historical yield range, so the stock looks relatively cheap.

What are you getting? A food company with a long history of growth focused around protein products. It owns some of the most iconic brands in the food space, including SPAM, Skippy, and Planters. And, proving its long-term success, it has managed to increase its dividend every single year for a huge 56 years, making it a Dividend King. The company has deftly used acquisitions to spur its expansion of late, including deals that have increased its reach into foreign markets. Inflation is a headwind right now, but inflation is a normal fact of life in the food space that management knows how to handle. Dividend growth investors should definitely like Hormel.

2. Ready to pick things up

W.P. Carey is a real estate investment trust (REIT) that has increased its dividend every year since its 1998 initial public offering (IPO). It is on the verge of becoming a Dividend Aristocrat, and the yield is a generous 4.8%. That said, dividend growth has been slow, in the low single digits, for a while. That’s not surprising given its net-lease focus (net-lease properties are single-tenant locations where the tenant is responsible for most property level operating costs). Slow and steady is generally the name of the game here.

However, W.P. Carey has been on a transformational journey since it went public as a limited partnership, and has only just completed the shift to a “simple” REIT as it exits the non-traded REIT space. It was a bit of a complex ride, but now that it is over, everything the company does is for its own portfolio — and that should help the REIT pass more cash on to shareholders. Property acquisitions and rent hikes allowed W.P. Carey to increase real estate revenue by 7.9% in the second quarter. With a portfolio diversified by property type and geography, this is a name that even a conservative dividend investor could love.

3. Too much cash

Enbridge is a Canadian midstream energy giant with over 25 years of annual dividend increases under its belt. The yield is a very pleasing 6.1%. The company’s business is spread across oil pipelines (58% of earnings before interest, taxes, depreciation, and amortization), natural gas pipelines (26%), a natural gas utility (12%), and renewable energy (4%). It is, basically, using a solid core of fee-generating assets in the oil space to shift toward cleaner options over time. Right now that means growing in natural gas (considered a transition fuel) and clean power (including a number of large offshore wind projects in the works in Europe).

That’s all great news, but there’s an interesting wrinkle. Management is currently generating around $2 billion more in cash flow than it knows what to do with. Not only is that a huge cushion of safety for the dividend, but it gives management a lot of options. Lately it has been buying back stock, but it could put that cash to work paying down debt, investing in new growth projects, or buying assets, all of which would be good for shareholders. If you like big, safe dividend yields, you’ll want to dig into Enbridge.

Lovable dividend payers

While there’s no such thing as a perfect investment, Hormel, W.P. Carey, and Enbridge all have unique features that make them very attractive investment options. Hormel is the dividend growth name here, W.P. Carey is a diversified name on the cusp of turning its business in a slightly different direction, and Enbridge has an abundance of cash and a high yield. One, if not all, of these stocks will likely tickle your fancy.

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