The Best High-Yield Dividend Growth Stocks For Long-Term Investing

seekingalpha04-18

Dividend growth stocks provide passive income compounding through per-share dividend growth and reinvestment of dividends.These stocks often generate substantial long-term total returns due to the ...

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overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nThe Best High-Yield Dividend Growth Stocks For Long-Term Investing\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-04-18 20:15 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4684317-the-best-high-yield-dividend-growth-stocks-for-long-term-investing><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Dividend growth stocks provide passive income compounding through per-share dividend growth and reinvestment of dividends.These stocks often generate substantial long-term total returns due to the ...</p>\n\n<a href=\"https://seekingalpha.com/article/4684317-the-best-high-yield-dividend-growth-stocks-for-long-term-investing\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"EPD","symbol_name":"Enterprise Products Partners L.P","start_time":0,"source_url":"https://seekingalpha.com/article/4684317-the-best-high-yield-dividend-growth-stocks-for-long-term-investing","article_id":"2428598105","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1412168091/image_1412168091.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2428598105","pubTimestamp":1713442500,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Dividend growth stocks provide passive income compounding through per-share dividend growth and reinvestment of dividends.These stocks often generate substantial long-term total returns due to the inc","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"EPD":"Enterprise Products Partners L.P","VIG.AU":"VICTOR GROUP HOLDINGS LTD","SCHD":"Schwab US Dividend Equity ETF","BK4585":"ETF&股票定投概念","BK4588":"碎股","BK7043":"互联网服务与基础架构","LU1150488218.USD":"First Eagle Amundi Income Builder AU2-MD USD","BK4144":"石油与天然气的储存和运输","BK4080":"零售业房地产投资信托","BK4590":"PTP","EPD.AU":"Empired Ltd","LU1150488135.SGD":"First Eagle Amundi Income Builder AHS-MD SGD-H","VIG":"股利增长指数ETF-Vanguard","BK4231":"零售房地产信托","O":"Realty Income Corp","BK4561":"索罗斯持仓"},"translate_title":"长期投资的最佳高收益股息成长股","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"O":1,"VIG.AU":1,"VIG":1,"US7Y.BOND":1,"US6M.BOND":1,"US5Y.BOND":1,"US3Y.BOND":1,"US30Y.BOND":1,"US2Y.BOND":1,"US12M.BOND":1,"US10Y.BOND":1,"SCHD":1,"EPD.AU":1,"EPD":1},"content_text":"Dividend growth stocks provide passive income compounding through per-share dividend growth and reinvestment of dividends.These stocks often generate substantial long-term total returns due to the increasing dividend per share payout.We share six traits of the best high-yield dividend growth stocks for long-term investing.We also share several stocks that have each of these six traits.   takasuu Dividend growth stocks make for very attractive long-term investments because they provide highly compelling passive income compounding. They do this through the exponential process of dividend growth through a two-tiered effect:  They grow the investor's passive income stream organically through per-share dividend growth.  They grow the investor's passive income stream inorganically by giving the investor the option of reinvesting their dividends to buy additional shares, further accelerating the dividend growth process.  In addition to growing the passive income stream, dividend growth stocks often also generate substantial long-term total returns since the ever-rising dividend per share payout tends to have an upward effect on the stock price since investors can see that there is proof that the stock's intrinsic value (i.e., ability to generate cash flow for shareholders) is increasing over time. In this article, we will share six traits that make for the very best high-yielding dividend growth stocks for long-term investing and share some of our top picks of the moment. #1. Durable And Defensive Business Model This one goes without saying: if a business does not have a high probability of being here in five or even ten years, it isn't likely going to be a very good long-term investment. As a result, investors should insist on investing in businesses that have durable moats that will protect them from technological disruption and/or excessive competition. Additionally, while these businesses do not have to be recession-proof, they should not be too cyclical either, since during severe economic downturns, cyclical businesses can begin to run up losses, forcing even the most prudently run and competitively positioned businesses to cut their dividends. Moreover, these highly economically sensitive/cyclical business models are often much more challenging to properly value. While it may make sense to hold a few cyclical businesses in your portfolio for diversification purposes, it is generally not a good idea to have the lion's share of your portfolio invested in them. #2. Strong Balance Sheet Another trait of the best dividend growth stocks for long-term investing is that they have strong balance sheets. This trait gives dividend growth stocks numerous competitive advantages over the long term:  They are well positioned to take advantage of market crashes to buy back their own stock and/or to make opportunistic acquisitions at bargain prices, thereby adding significant shareholder value. They are less sensitive to rapid rises in interest rates, such as we have experienced over the past two years. They are better positioned to withstand industry or macro-level headwinds, thereby making their dividends safer.  #3. Well-Covered Dividend Another important trait of the best long-term dividend growth investments is that they have fairly low payout ratios. The reason why this is so important is that it not only means that the company is less likely to cut its dividend and has a greater capacity to grow its payout, but it also means that they can retain more cash flow and therefore have greater capacity to allocate capital to growth projects/buybacks, strengthen their balance sheet, and/or invest in improving their competitive positioning. #4. Management Commitment To Dividend Growth Management commitment to dividend growth - particularly when it is backed up by a lengthy history of doing just that - is also important because it shows that: (1) The company is likely going to \"force the issue\" with Mr. Market to reward shareholders with stock price appreciation that generally tracks the long-term dividend growth of the stock. (2) Management is likely going to be quite disciplined in allocating shareholder capital moving forward, since it will be paying out a considerable and consistently increasing amount of cash on a per-share basis moving forward. As a result, management will be hesitant about issuing additional shares without a very good reason for doing so (since this will further increase the dividend payout burden) and will also be selective in what growth opportunities and/or stock buybacks it invests in since it will need to allocate a considerable portion of earnings towards dividends. This generally leads to higher returns on invested capital over time, thereby improving shareholder returns as well. #5. Significant Growth Runway Another important trait of a great long-term dividend growth stock investment is that it needs to have a significant growth runway. This is important because if the business does not have much growth ahead of it, unless it is generating a double-digit yield, to begin with, it is unlikely to deliver much in the way of long-term annualized total returns. Moreover, it is unlikely to be able to sustain much in the way of dividend growth as well, because once it stops growing, it will not have much wiggle room to continue growing its dividend other than to buy back stock along with paying out a dividend. #6. Attractive Valuation Last, but not least, a dividend growth stock must be purchased at an attractive valuation for it to be a great long-term investment. This is because even if a business has exceptional quality, if the cash flows generated are too few, it is unlikely going to deliver exceptional long-term total returns, barring significant market irrationality. Some Great High-Yielding Dividend Growth Stocks For Long-Term Investing Three dividend growth stocks that check all of these boxes right now are:   Brookfield Infrastructure Partners (BIP, BIPC): its diversified and highly contracted investments across mission-critical businesses in the infrastructure sector (which is enjoying an $18 Trillion Tailwind right now) give it a durable and defensive business model, its BBB+ credit rating with significant liquidity and well-laddered maturities give it a strong balance sheet, its adjusted funds from operations, or AFFO, payout ratio is expected to be just 64% this year, it has a 15-year distribution growth streak and plans to continue growing its distribution at a high-single digits pace for years to come, it is investing aggressively in data infrastructure in particular, which has a very long and robust growth runway, and it is currently trading at one of its most attractive valuations in years with a forward yield of 6.5% and a P/AFFO ratio of just 9.9x compared to its three-year average of 15.4x despite management forecasting 10%+ annualized AFFO per unit growth.  Realty Income (O): its large and diversified portfolio of triple net lease real estate properties with lengthy lease terms, 40% investment grade tenant exposure, and significant e-commerce and recession resistance give it a durable and defensive business model, an A- credit rating with significant liquidity, very little secured debt, and well-laddered debt maturities give it a strong balance sheet, its AFFO payout ratio is expected to be a conservative 75% this year, it has a 29-year dividend growth streak and a strong commitment to growing its dividend year-after-year moving forward, it continues to have a proven growth model that combines contractual rent hikes with accretive acquisitions with plenty of additional properties available to acquire, and it has a very attractive valuation presently with a 6.2% dividend yield and a 10% discount to NAV.  Enterprise Products Partners (EPD): its high-quality portfolio of mostly contracted midstream infrastructure assets earns it a \"Wide Moat\" rating from analysts at Morningstar and a durable and defensive business model that consistently posts 10%+ returns on invested capital even during sharp economic and energy price downturns. Moreover, the A- credit rating and low leverage ratio of 3.0x give it an exceptional balance sheet. Its distribution is quite secure and likely to continue growing for the foreseeable future due to its 59% expected distributable cash flow payout ratio in 2024, 25-year distribution growth streak, and management commitment to continuing to grow the distribution for years to come. Moreover, it has a substantial growth pipeline that should continue to fuel per unit cash flow growth for the foreseeable future. Last, but not least, its valuation remains attractive given its 5.6% expected DCF per unit CAGR through 2028, 7.5% NTM distribution yield, and 9.33x EV/EBITDA (which is well below its historical average of 12.4x).  Investor Takeaway  Dividend growth investors can generate attractive long-term passive income growth and total return results by simply investing in a low-cost dividend growth ETF like Schwab U.S. Dividend Equity ETF (SCHD), Vanguard Dividend Appreciation Index Fund ETF Shares (VIG), and several others as we detailed in our recent article, If I Could Only Own 4 Dividend Funds, It Would Be These. However, if an investor is interested in generating alpha and higher than a 2-4% dividend yield, picking great individual dividend growth stocks like BIP, O, EPD, and several others that exhibit the qualities described in this article is an even better approach.","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.22.4","shortVersion":"4.22.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2428598105"}