Three top dividend stocks!
Baseball season is in full swing. Therefore, I thought I would serve you up a dividend stock triple play. Consequently, I want to highlight three top dividend stocks for your consideration.
Three top dividend stocks are one triple play. But, I want to serve you up one more. Each company’s stock represents a great combination of:
- Current dividend income
- Solid dividend growth potential
- Opportunity for capital appreciation in the share price
That is the kind of triple play I really like.
SOMETHING FOR EVERYONE
You may be new to dividend stock investing. Or, you may already have a mature dividend stock portfolio. In either case, these three stocks can get you started with your first purchases. Or, be core holdings in a larger portfolio to build up over time. That is the approach I have been taking.
THE BIG PICTURE
The broader U.S. stock market remains off it’s most recent record highs. Volatility has returned this year. Inflation and interest rates are on the rise. This environment has created some better values in dividend stocks than we have seen in the recent past. Lower stock prices mean higher dividend yields. And, greater potential for capital share price appreciation over the long run.
Each stock has risks and challenges. But I remain positive on each one.
THREE TOP DIVIDEND STOCKS
Let’s get on with the Dividends Diversify dividend stock triple play. Note they are all long term personal holdings of mine.
JOHNSON & JOHNSON (JNJ)
JNJ aspires to help billions of people live longer, healthier, happier lives through the development and sale of innovative health care products. It is well known, as the world’s population ages, people will need and demand greater health care services and products. The brand recognition, product diversity and complexity of JNJ’s business provides tremendous competitive advantages.
On the other hand, the company’s massive size may limit its growth potential. In addition, there is always the threat of government intervention and price controls in the health care industry. Finally, product quality and potential product liability can be a threat to the JNJ brand. But, the company has faced these types of challenges before and always seems to come out on top.
- Recent dividend yield: 3.0%
- Last dividend increase: 7.1%
- 5 year compound annual dividend growth: 6.4%
- Consecutive years of dividend increases: 56
- Years owned by Tom @ Dividends Diversify: 11
REALTY INCOME (O)
Realty Income is structured as a real estate investment trust (REIT). They make money through ownership of over 5,000 commercial properties that generate rental revenue from long-term net lease agreements. They call themselves “The Monthly Dividend Company”. This refers to their practice of paying shareholders dividends on a monthly basis. The company also has a track record of increasing it’s dividend each calendar quarter. However, the largest increase is normally announced in the first quarter of each year.
Realty Income has an impressive multi year track record. They have a disciplined approach to selecting and buying properties in attractive, strategic locations. By financing the property purchases with mostly equity and a manageable amount of debt, risk is kept in check. And, they grow through the acquisition of new properties. In addition, growth comes from contractual rent increases paid by their tenants.
The company’s stock is not with out risk. Rising interest rates provide competition for investor dollars. And, a higher cost of funds to purchase new properties. Furthermore, rising rates have dampened the stock price in recent months. In addition, their retail client brick and mortar customer base is susceptible to the competition from Amazon and other internet based retailers. Finally, there is a limited amount of real estate in the U.S. that meets their investment criteria. The limited supply may hinder future growth.
- Recent dividend yield: 5.0%
- Last dividend increase: 3.8%
- 5 year compound annual dividend growth: 3.9%
- Consecutive years of dividend increases: 25
- Years owned by Tom @ Dividends Diversify: 10
DOMINION ENERGY (D)
Dominion is one of the largest producers and transporters of electricity and natural gas in the United States utility sector. They also operate one of the largest natural gas storage systems. I am a big believer in investing in essential service companies. The steady demand for their products provides a great foundation for consistent dividend payments. Who doesn’t need natural gas and electricity to power their homes and businesses?
Rising interest rates, the uncertainty surrounding the proposed merger with SCANA and tax law changes impacting Dominion’s master limited partnership subsidiary have all led to an overhang on the company’s stock.
- Recent dividend yield: 5.2%
- Last dividend increase: 8.4%
- 5 year compound annual dividend growth: 8.2%
- Consecutive years of dividend increases: 15
- Years owned by Tom @ Dividends Diversify: 15
WRAP UP & PATH FORWARD
Each of these stocks are among my personal top 10 largest holdings. They are also members of the Dividends Deluxe model portfolio. So far this year, I have made multiple add on purchases to both Dominion and Realty Income shares as their stock prices have weakened. I have yet to add to JNJ this year, but feel it represents a solid long term value below $120 per share.
For a new dividend stock investor, equal weight positions in each stock will throw off an average dividend yield of 4.3% and projected annual dividend growth of about 6%. This is a powerful combination of current yield and dividend growth. These elements should lead to share price appreciation over the long term from these three top dividend stocks. Now that’s my kind of triple play!
Are you ready to play ball? Do you currently own or plan to initiate a position in any of these three top dividend stocks?
In addition, do you like to stay up to date on dividend stocks and dividend stock news? Check out one of my favorite websites to keep you on top of all things dividends: Dividend Hawk!
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Disclosure & Disclaimer