Certain companies truly shine in their capacity to deliver dividends. These high-yielding distributions provide investors with substantial and dependable income streams, making them highly attractive for income-focused portfolios. Additionally, some of these firms boast impressively lengthy histories of consistently raising their dividend payouts.
Enterprise Products Partners (EPD 0.46%) and NNN REIT (NNN 0.10%) represent premier income-generating opportunities. With their current share prices, each offers a yield exceeding 5.5%—significantly higher than the S&P 500’s average dividend yield of 1.3%. Moreover, both companies have a proven track record of increasing their payouts annually for over 25 years. As more hikes are anticipated, these stocks present an excellent opportunity for income-focused investors who wish to secure consistent returns.
Enterprise Products Partners: A Powerhouse for Sustainable Growth
Currently, Enterprise Products Partners’ distribution yields an impressive 6.3%. This means that for every $100 invested in the company, investors can expect to receive $6.30 in passive income annually, with the potential for these payments to grow each year. The master limited partnership (MLP) distributes a Schedule K-1 Federal Tax Form instead of a traditional 1099-DIV Form, and it has successfully increased its payouts for 26 consecutive years, establishing one of the longest dividend growth streaks in the energy sector.
Despite fluctuations in oil and natural gas prices, Enterprise Products Partners maintains solid cash flows. The company operates a comprehensive portfolio of essential energy midstream infrastructure, including pipelines, processing plants, storage terminals, and export facilities, all of which generate consistent earnings. These earnings are supported by long-term, fee-based contracts and government-regulated rate structures, ensuring a reliable income stream. Currently, the company has sufficient stable cash flow to comfortably cover its distributions by a factor of 1.7 times.
Enterprise Products Partners strategically utilizes its retained cash to finance ongoing expansion efforts. The MLP is currently engaged in $7.6 billion worth of significant projects that are under construction and are expected to contribute positively to its cash flow in the upcoming years. Furthermore, the company has additional projects in development aimed at driving long-term growth. For instance, it is collaborating with a subsidiary of oil titan Occidental Petroleum to create a carbon dioxide transportation network that will support one of its carbon capture and sequestration hubs, showcasing the company’s commitment to securing high-return projects.
Additionally, the MLP actively pursues acquisitions when favorable opportunities arise. A recent example includes its acquisition of Pinon Midstream for $950 million, which is expected to enhance its cash flow per share this year while also bolstering its long-term growth trajectory. Enterprise Products Partners boasts a robust balance sheet and the highest credit rating within the midstream sector, providing it with exceptional financial flexibility to pursue further acquisitions as they become available.
The increasing income derived from both organic expansion projects and strategic acquisitions should empower Enterprise Products Partners to consistently enhance its attractive distributions.
NNN REIT: A Simple Yet Effective Strategy for Continual Dividend Growth
Currently, NNN REIT offers a dividend yield of 5.5%. At this yield, every $100 invested in NNN REIT’s stock would yield $5.50 in annual income for its shareholders. However, the real estate investment trust (REIT) is well-positioned to continue increasing these dividend payments moving forward.
Last year marked a significant achievement for the REIT, as it extended its streak of payout increases to an impressive 35 consecutive years. Only two other REITs and fewer than 80 publicly traded companies have reached such a milestone, highlighting NNN REIT’s reliability.
The REIT’s portfolio delivers consistent cash flow. It specializes in investing exclusively in single-tenant retail properties that are leased under net lease agreements. These net leases ensure that tenants are responsible for nearly all operating expenses associated with their properties, such as routine maintenance, real estate taxes, and building insurance, providing landlords with steady income.
NNN REIT maintains a conservative dividend payout ratio, distributing less than 70% of its core funds from operations (FFO). This prudent approach allows the company to retain a significant amount of cash for reinvestment into additional income-generating retail properties. The REIT anticipates generating approximately $200 million in free cash flow by 2025. Furthermore, its conservative balance sheet enhances its financial flexibility to pursue new investments. In addition, NNN REIT regularly recycles capital by divesting non-core properties to fund new investments with higher anticipated returns.
The landlord typically collaborates with retailers to facilitate their expansion efforts. It frequently acquires properties from existing tenants through sale-leaseback transactions, providing retailers with additional capital to open new stores. This strategy, in turn, offers NNN REIT further investment opportunities. Over 70% of NNN REIT’s investment activity since 2007 has stemmed from companies with which it already has established relationships. This growing portfolio positions NNN REIT well to continue increasing its high-yielding payouts.
Exceptional Dividend Stocks for Long-Term Investors
Enterprise Products Partners and NNN REIT have established themselves as leaders in the realm of consistent dividend growth. Their impressive records of increasing dividends suggest that they are poised to maintain these streaks due to their stable cash flows, prudent financial management, and promising growth prospects. As a result, these stocks represent a worry-free option for investors seeking reliable income.
Matt DiLallo holds positions in Enterprise Products Partners. The Motley Fool endorses Enterprise Products Partners and Occidental Petroleum. The Motley Fool adheres to a disclosure policy.
