Not every investor is solely focused on maximizing their returns. For some, it’s more about having stocks that yield high dividends, providing a steady income stream. With that in mind, let’s explore five dividend stocks worth considering over the next five years.
1. Realty Income
Realty Income, offering a 5.5% yield with monthly dividends, is a strong choice for those looking for reliable supplemental income. This real estate investment trust (REIT) leases out single-tenant properties, mainly to retailers in resilient sectors. Interestingly, it’s also branching out into industrial properties, gaming, and data centers. The company utilizes long-term triple-net leases, meaning tenants handle property taxes, insurance, and maintenance, so Realty Income typically doesn’t face unexpected expense hikes.
Although Treasury yields and cap rates can influence the stock’s performance, it seems like a favorable time to own shares of Realty Income.
2. AGNC
If you’re in the market for a high yield, consider AGNC Investment, a mortgage REIT boasting a 14% yield. It has maintained consistent monthly dividends since April 2020. The REIT’s portfolio consists of agency mortgage-backed securities, which have minimal default risk due to backing by governmental entities. However, these securities are affected by Treasury yields and the spread between Treasuries and agency MBS, which significantly impacts its portfolio’s performance. Given that Fannie Mae and Freddie Mac are actively buying these MBS, now might be a good moment to invest in AGNC.
3. Verizon
Verizon stands out with a 5.7% yield and a well-supported, growing dividend. The company has shifted its focus towards customer service rather than just technology, resulting in lower churn rates and an increase in subscribers. Additionally, the completion of its Frontier acquisition enhances opportunities for bundling and upselling services.
Verizon is also looking to leverage its fiber network for data center connectivity, having recently entered a significant partnership with Alphabet for this purpose. They’ve also teamed up with Corning to obtain over 80 million miles of fiber, which will support AI infrastructure and network expansion.
4. Enterprise Products Partners
Enterprise Products Partners, with a 5.7% yield and a solid 28-year record of increasing its distribution, is another strong candidate to hold for the next five years. This master limited partnership (MLP) operates conservatively with low leverage and a healthy distribution coverage ratio. The company anticipates robust growth in EBITDA and distributable cash flow, especially with new projects expected to launch soon.
The prevailing conditions for pipeline companies are favorable, making Enterprise Products Partners a significant stock to consider in this sector.
5. Energy Transfer
Energy Transfer is another appealing midstream MLP to consider for long-term investment. With a yield of 6.3%, the company targets an annual distribution growth of 3% to 5%. Possessing one of the largest midstream infrastructures in the U.S. and a robust presence in the Permian Basin, Energy Transfer is well-positioned to cater to increasing power demands from AI data centers. It also has a strong pipeline of lucrative growth projects, suggesting promising long-term growth potential within the sector. Plus, it’s one of the more affordable stocks out there right now, which could make it a savvy purchase at this time.
