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Enterprise Products Partners has managed to increase its dividend for 27 years running.
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Verizon has also extended its dividend growth streak, now at 19 consecutive years.
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These companies are notable for generating significant cash, which fuels both business growth and dividends.
Dividend stocks are often seen as smart investments. Over the past five decades, they have outperformed stocks that don’t pay dividends by more than double, as per Ned Davis Research and The Hartford Fund. The highest returns are usually linked to companies that regularly increase their payouts.
Enterprise Products Partners (NYSE:EPD) and Verizon (NYSE:VZ) show a strong history of raising dividends. Given their potential for future growth, now might be a good time to consider these high-yield stocks.
Enterprise Products Partners has consistently increased its dividend every year since it went public, maintaining a nearly 4% rise annually. It currently offers a yield of about 6.9%, which is quite a bit higher than the S&P 500 average of 1.2%.
The energy midstream firm boasts a solid financial background. In the latest quarter, it generated $1.8 billion in distributable cash flow and comfortably covered its dividend at a rate of 1.5 times. This also allowed the company to retain $635 million in cash, alongside returning $80 million to shareholders by buying back some of its common units. Capital is also being reinvested into growth projects.
Looking ahead, Enterprise is in the final phases of a significant expansion, having started this multi-year process in 2022. This year alone, it plans to invest $4.5 billion in major projects, with an additional $2.2 billion to $2.5 billion slated for 2026, which should enhance its capacity and cash flow.
With lower capital expenditures and rising cash flows, Enterprise Products Partners is expected to generate even more free cash flow moving into 2026. This should lead to higher payouts or increased share buybacks, especially since they’ve raised their repurchase authorization from $2 billion to $5 billion.
Verizon recently announced an approximate 2% dividend increase, continuing its streak since 2019, and it currently holds a dividend yield of about 6.7%.
Verizon’s profits from mobile and broadband services are clearly sustainable, supported by recurring cash flows. In just the first three quarters this year, the company generated $28 billion in operational cash flow, easily covering its capital expenses and dividends while leaving $7.2 billion for further financial maneuvering.
This excess cash has been used to bolster Verizon’s already strong balance sheet, resulting in a leverage ratio of 2.2 times—down from 2.5 a year earlier—supporting its solid bond ratings.
Verizon’s robust balance sheet gives it the flexibility to pursue acquisitions, such as the all-cash $20 billion deal for Frontier Communications. This move significantly enhances its fiber network and strengthens its mobile and broadband capabilities.
Though Verizon is already reaping considerable cash flow, the company feels there’s more potential to tap into. This ambition has prompted a transformation focused on cost reduction and customer loyalty through enhancements in service. The objective is to deepen relationships with existing customers by increasing subscriptions for both mobile and broadband services, which would also boost free cash flow in 2026, facilitating ongoing dividend increases.
Both Enterprise Products Partners and Verizon are delivering high-yield dividends, supported by consistent cash flow growth and strong financial health. They have the flexibility to invest in expansion while still rewarding investors with substantial dividends, making them solid high-yield stock options right now.
Before deciding to buy shares of Verizon Communications, keep in mind that some analysts believe there might be even better opportunities to invest in other stocks.
Enterprise Products Partners and Verizon Communications have strong prospects ahead and maintain sound growth strategies to keep attracting investor interest.
