3 Top Dividend Stocks

Many of the best dividend stocks share three common features. First, they generate relatively stable cash flow that comes from recurring revenue streams. Second, they leave themselves plenty of cushion by only paying out a conservative portion of that money via the dividend. Finally, they have a solid balance sheet that gives them the financial flexibility to make it through tough times. While several dividend payers fit that criteria, three that do so while boasting a well above average current yield are TerraForm Power (NASDAQ: TERP), Medical Properties Trust (NYSE: MPW), and MPLX (NYSE: MPLX). Here's a closer look at what puts this trio among the top dividend stocks in their respective sectors. Image source: Getty Images. Powerful dividend growth TerraForm Power operates wind and solar power generating facilities in North and South America as well as Europe. These assets not only produce relatively steady renewable energy but stable cash flow. That's because TerraForm Power sells about 95% of its power under long-term contracts, which locks in a very predictable revenue stream for the company to support its 6.6%-yielding dividend. However, yield alone isn't what makes TerraForm Power a top dividend stock. What pushes it past its peers is a strengthening financial profile. First of all, the company only plans on paying out between 80% to 85% of its annual cash flow, while most yield-focused renewable peers distribute more than 90% of their cash flow each year. By retaining some cash, TerraForm can reinvest that money into high-return expansion projects to help it deliver on its plan to raise its payout by 5% to 8% annually over the next five years. Finally, while TerraForm Power, like most of its renewable peers, doesn't currently have an investment grade balance sheet, its credit metrics have improved dramatically in the past year and are on their way toward achieving investment-grade levels in the future. That combination of a conservative payout Continue Reading

3 Top Dividend Stocks to Buy in February

Whether the market is flying high or going through a period of turbulence, owning a selection of income-generating stocks backed by solid businesses is one of the best ways to position your portfolio for strong performance. Stock prices will fluctuate, but great dividend stocks offer an avenue to predictable wealth generation that adds to the benefits of long-term ownership and makes it easier to weather volatility. With that in mind, we asked three of our contributing investors to spotlight their pick for a top dividend stock to buy this month. Read on to see why think Pfizer (NYSE: PFE), IBM (NYSE: IBM), and General Motors (NYSE: GM) are top choices for income-seeking investors. Image source: Getty Images. A big pharma turnaround story Keith Speights (Pfizer): One dividend stock that I like more in February than I did only a few weeks ago is Pfizer. Why? The big pharma company recently announced its fourth-quarter and full-year 2017 results. It's not that those results were terrific. They weren't. However, Pfizer provided guidance for 2018 that beat Wall Street estimates for both top and bottom lines. I think Pfizer is in the early days of a turnaround of sorts. The company is slowly but surely moving past the patent cliff that slammed it a few years ago. Pfizer now has two products that rank among the best on the market in terms of sales growth -- anticoagulant Eliquis (which the company co-markets with partner Bristol-Myers Squibb (NYSE: BMY)) and cancer drug Ibrance. Even better, Pfizer has a pretty impressive pipeline. The company expects to win regulatory approval for as many as 15 potential blockbusters over the next five years. Two of those prospects to especially watch are experimental breast cancer drug talazoparib and promising pain drug tanezumab. And I haven't even mentioned Pfizer's dividend yet. It's an attractive one, with a current yield of 3.7%. Pfizer appears to be in solid shape to keep the dividends flowing, with dividend Continue Reading

3 Top Dividend Stocks to Buy in 2018 With Double-Digit Dividend Growth

If you're looking for steady income from your stocks, these companies should be at the top of your watchlist, if not already in your portfolio. All are not only market leaders but financially strong companies with meaningful dividends that are rising on an annual basis. These three stocks are tech giant Apple (NASDAQ: AAPL), ski resort company Vail Resorts (NYSE: MTN), and home-improvement retailer Home Depot (NYSE: HD). Here's what makes each of these names attractive dividend stocks. But first, here are their raw numbers. The numbers Company Dividend Yield Most Recent Dividend Increase 3-Year Average Annual Dividend Growth Payout Ratio Apple 1.4% 11% 10% 26% Vail Resorts 1.9% 30% 37% 65% Home Depot 1.8% 29% 24% 46% Data source: Company investor relations websites and Reuters. Table by author. Though none of these companies has a spectacularly high dividend yield, with all three companies' dividend yields below 2%, investors shouldn't overlook these stocks as good income investments. Their dividends are not only rising by double digits, but there's good reason to expect strong growth in their dividends to continue. Apple Since initiating its dividend in 2012, Apple has morphed into an excellent investment for those looking for income. Apple CEO Tim Cook. Image source: Apple. Although its 1.4% dividend yield is the lowest among these three stocks, Apple shines as a dividend stock with its extremely low payout ratio. Paying out just 26% of its earnings in dividends, it has significant room for dividend growth in the coming years, especially after a recent change in tax law that allowed Apple to repatriate boatloads of foreign cash at a significant discount. But it's not just this low payout ratio that suggests the tech company can keep increasing its dividend at meaningful rates in the years ahead. Its recent earnings growth arguably makes the best case for more dividend growth. Continue Reading

3 Top Dividend Stocks to Buy in January

With 2018 here, I'm sure there are plenty of you that made some new years resolutions to make better investment decisions. If the objective is to build wealth over the long haul or provide a nest egg that throws off cash, then investing in dividend stocks should be high on your list for your portfolio. So we asked three of our investing contributors to each highlight a dividend stock they see as a great pickup this month. Here's why they picked Braksem (NYSE: BAK), Public Storage (NYSE: PSA), and Pembina Pipeline (NYSE: PBA). Image source: Getty Images. Less uncertainty to start 2018 Maxx Chatsko (Braskem): While most of the United States is being blasted by cold air, Brazil is smack-dab in the middle of its rainy summer season. But it offers more than dreams of climate refuge, like an investment opportunity in its leading chemical manufacturer, Braskem. The dividend yield is a bit more difficult to calculate than for most stocks because it's usually paid out once per year and the timing has been interrupted by Brazil's (and Braskem's) economic and political woes in recent years. That said, the company agreed to a $957 million global settlement for its role in the country's bribery scandal and still managed to post a 2.8% dividend yield in 2017. Historically it's been above 4%. Why buy in January? Well, Braskem is beginning 2018 with the least amount of uncertainty in years. Sure, the total amount outstanding on its global settlement payment was $501 million at the end of September 2017, but increasing margins from favorable petrochemical spreads and $2.4 billion in cash on hand significantly blunt the financial effect of the fine. Cash flow remains strong and growing, which will help to continue mopping up a messy balance sheet. Growing production volumes this year and several growth projects coming online by 2020 promise to push the stock -- trading at just 10 times future earnings -- higher. Long story short, Braskem is solid dividend stock in a Continue Reading

2 Top Dividend Stocks to Buy in 2018

Dividend stocks are a critical part of a well-structured portfolio because of their ability to generate passive sources of income, or alternatively, compound returns on capital via a dividend reinvestment plan. Picking top dividend stocks, though, is anything but a straightforward process. The good news is that the best dividend stocks have historically shared a few underlying qualities that make them stand out from the crowd. The key traits that most elite income stocks have in common are stable and growing free cash flows, a strong track record of regular increases to the dividend, and a positive long-term outlook. Image source: Getty Images. So what's the best space to uncover the most compelling dividend plays right now? In my view, the biopharmaceutical industry arguably occupies the top spot when it comes to dividend stocks. Biopharmaceutical giants like AbbVie (NYSE: ABBV) and Amgen (NASDAQ: AMGN), after all, both possess an intriguing mix of strong free cash flows, exceptional dividend track records, and better-than-average growth prospects over the next decade. Read on to learn more. Top of its class AbbVie is a solid dividend stock to buy (or continue holding) for a few reasons. First off, the drugmaker has grown its dividend at the fastest pace among large cap pharmas since being carved out of Abbott Laboratories in 2013. Its modest trailing payout ratio of 60.4% also implies that further increases are feasible moving forward -- especially since the company's free cash flow is forecast to grow at industry-leading levels in the next two to three years. AbbVie, for what it's worth, is living up to its status as a dividend aristocrat, bestowed upon it by Abbott. While top-flight dividend programs are unusual in the pharma space because of the enormous costs associated with clinical trials, AbbVie has managed to find a nice balance between maintaining its upper-tier dividend and investing in its vast clinical pipeline. In fact, AbbVie's Continue Reading

3 Top Dividend Stocks With Yields Over 2%

Dividend investors often look for stocks based on yield. Sometimes that can make you miss out on great investments simply because they don't meet a minimum threshold. And if you skip right past the best companies, that can hurt your returns. So we decided it would be well worth the effort to "lower" the bar for a change and find some of the best dividend stocks with yields around 2%. While a 2% yield won't make anyone rich (it will barely cover inflation), screening for dividend stocks at this starting point will help you find some of the best companies you can buy, many of which you might miss out on completely if you only look for a higher yield. Case in point: Three Motley Fool investors identified healthcare giant Johnson & Johnson (NYSE: JNJ), resurgent big pharma Bristol-Myers Squibb Co. (NYSE: BMY), and stalwart steelmaker Nucor Corporation (NYSE: NUE) as top dividend stocks for investors to buy. Keep reading to learn why you can look beyond the yield, and count on these three top dividend stocks to help grow your personal wealth. Stretching for high yield might make you miss better investments. Image source: Getty Images. A stalwart that doesn't rely on brand power alone Brian Stoffel (Johnson & Johnson): At an investment conference in Vancouver last month, former hedge fund partner Mike Alkin argued that many consumer staple companies -- particularly those that relied on brand strength for pricing power -- were in for trouble. The combination of an aging baby boomer population that will be spending less in retirement, combined with millennials who have absolutely no brand allegiance whatsoever, will change the landscape considerably. That's why, despite the bevy of solid dividend payers in the consumer staple industry, I think Johnson & Johnson -- and its 2.5% dividend yield -- is one of the most solid picks today. While the company's consumer division relies on the strength of brands like Band-Aids and Visine, it is also the Continue Reading

3 Top Dividend Stocks With Yields Over 4%

Great dividend yields come with great anxiety. Now that the average dividend-paying stock in the benchmark S&P 500 index offers a paltry 1.8% yield, most stocks that offer 4% are just too hot to handle. To help you sift through the haystack, we asked three Motley Fool investors each to highlight a stock that currently offers a yield of 4% or better. Here's why they think L Brands Inc. (NYSE: LB), AT&T Inc. (NYSE: T), and Realty Income Corp. (NYSE: O) are worth a closer look. Image source: Getty Images. A risky apparel stock Tim Green (L Brands Inc.): Thanks to a steep slump over the past couple of years, shares of apparel retailer L Brands currently sport a 4.7% dividend yield. That's been little consolation to investors, who have watched the stock drop nearly 50% since it peaked in late 2015. But for dividend investors looking for a high-yield stock today, L Brands is an interesting option. L Brands owns well-known brands such as Victoria's Secret and Bath & Body Works, with over 3,000 company-owned stores and an additional 1,000 franchised stores. The company's results have been far from stellar recently. In the third quarter, L Brands reported a 1% decline in comparable sales and an 18% decline in operating income. L Brands is dealing with the same problems plaguing the brick-and-mortar retail industry -- weak traffic and competition from e-commerce. For dividend investors, there is some risk that L Brands will eventually need to cut its dividend. Based on the company's fourth-quarter guidance, it will produce $3.00 in earnings per share for 2017. With a quarterly dividend of $0.60 per share, the payout ratio is at an elevated 80%. L Brands is not a stock for dividend investors looking to buy and ignore; the company will need to stabilize its earnings to avoid an eventual dividend cut. If you're looking for a safe dividend stock, L Brands isn't it. But for those willing to take on some risk to score a high yield, it may be worth a Continue Reading

3 Top Dividend Stocks for 2018

In the last few years, investors have found that some dividend stocks weren't as stable as they once seemed. Plunging energy prices forced once safe dividend stocks like Seadrill and Kinder Morgan to cut their dividends and Seadrill eventually went bankrupt. Even the once impenetrable General Electric had to slash its dividend in 2017. There are solid dividends available to investors and some have extremely high yields. Some of my favorites are yieldcos, or companies who own renewable energy assets that have contracted cash flows years, sometimes decades, into the future. Pattern Energy (NASDAQ: PEGI), Brookfield Renewable Partners (NYSE: BEP), and 8point3 Energy Partners (NASDAQ: CAFD) are from different parts of the renewable industry sector but they all have top dividends that investors shouldn't ignore. Image source: Getty Images. Pattern Energy Wind energy is one of the fastest growing energy sources in the U.S. and Pattern Energy owns wind turbines in the U.S., Canada, and Chile that provide consistent cash flows to investors. It currently has 19 wind farms in operation and one under construction with a total of 2,736 MW of generating capacity. The average power purchase agreement backing those projects is over 14 years with investment grade off-takers. There should be significant growth ahead for Pattern Energy with a $1 billion new capital commitment for its development arm called Pattern Development 2.0. There's as much as 10 GW of potential pipeline for the company, which could keep the dividend growing for years. Pattern Energy's 7.8% dividend yield is among the highest in the yieldco space and while that might be a deterrent to growth -- because yieldcos issue stock to buy projects and a high dividend raises the cost of capital -- the worst case scenario is that investors just collect a lofty dividend for more than a decade. The upside scenario is that Pattern Energy is able to grow its dividend, pushing the stock higher, making it easier Continue Reading

3 Top Dividend Stocks With Yields Over 5%

It's been shown that dividend-paying stocks outperform non-dividend paying stocks, but not just any dividend stock deserves a spot in your portfolio. Investing in high dividend-paying stocks can be especially tricky because sometimes, high yields are the result of struggles that are weighing down shares prices. To help investors avoid the risk of buying a high-yield stock at the wrong time, we asked three Motley Fool investors what stocks are on their radar for income portfolios. In their view, the time is right to buy Baldwin & Lyons (NASDAQ: BWINB), HCP, Inc. (NYSE: HCP), and AT&T Inc. (NYSE: T) A specialty insurer on sale Continue Reading Below Todd Campbell (Baldwin & Lyons): OK. You got me. I rounded up. Baldwin & Lyons' dividend yield of 4.8% is a little below the 5% cut off, but there's a reason I think this small-cap dividend stock could be a good fit for income investors willing to take on some risk. Here's what I like about it. Baldwin & Lyons is a property & casualty insurer that's been around since 1930. Its insurance products focus on the transportation industry, including buses and commercial trucking. It also offers worker's compensation insurance. The company's been expanding its distribution strategy, and that's translating into more policies being written. It's also earning more money on its investment portfolio because of rising interest rates. Its gross premiums written increased 37.5% year over year to $144.2 million in Q4 2017, and in 2017, it's full-year EPS was $1.21. As a reminder, while insurers wait to pay out claims, they pocket dividends and gains on investments made with their premium revenue. Since interest rates on short-term bonds climb as the Fed hikes rates and the company writes more business, the current environment should offer some profit-friendly tailwinds. For instance, net investment income increased 42% in Q4 2017 from Q4 2016 and it grew 25% year over year for the full year 2017. An argument can Continue Reading

Investing: What is Warren Buffett’s top dividend stock?

Berkshire Hathaway (NYSE: BRK-A)(NYSE: BRK-B) has a portfolio of dozens of common stocks, many of which were hand-picked by CEO Warren Buffett himself. Buffett is a big fan of reliable dividends, so as you may expect, many of the stocks in the portfolio are dividend payers.However, some have high dividend yields, some pay Berkshire more money overall than others, and some have excellent track records of dividends. Berkshire's "top dividend stock" depends on how you define that term.In terms of dividend yield, the top dividend stock in the portfolio is real estate investment trust (REIT) Store Capital (NYSE: STOR). On the other hand, the stock that pays Berkshire the most money each quarter is Kraft Heinz (NASDAQ: KHC). Finally, the Buffett stock with the longest track record of dividend increases is Coca-Cola (NYSE: KO).The highest-yielding stock in Berkshire's portfolio is also one of its newest investments. Real estate investment trust Store Capital pays a 4.8% dividend yield based on the current share price, and is the only REIT currently in Berkshire's portfolio.Store Capital is a net-lease REIT specializing in single-tenant retail and entertainment properties. If you're not familiar, a "net lease" is a form of commercial lease where the tenant agrees to cover property taxes, insurance, and maintenance expenses — pretty much all of the variable costs of property ownership. In addition, net leases typically have long initial terms — 15 years or so — which minimizes turnover risk.In other words, all Store Capital has to do is put a tenant in place and enjoy years of predictable, growing income with minimal risk. This is a business model that has "Buffett" written all over it.Kraft Heinz is Berkshire Hathaway's single largest common stock investment. In fact, it's so big as a percentage of Kraft Heinz's outstanding shares (nearly 27%), Berkshire has to account for it differently than the rest of its stocks because of the Continue Reading