High-Dividend-Yield Growth Stocks for the Next 10 Years
Investors looking to fortify their retirement portfolio over the next decade could do worse than looking at high yield dividend growth stocks with a long track record of providing investors with higher annual dividend yields and capital appreciation.
It’s impossible to see what the next decade holds for Wall Street. Before the financial crisis and stock market crash in 2008, most analysts were predicting the bull market would continue relentlessly.
With 2017 just around the corner, investors are faced with weak global economic prospects in China, Japan, and Europe. The U.S. economy is doing a little better, but not a lot. The bull market is getting old and stocks are widely seen as being overvalued. On top of that, it is widely expected that the Federal Reserve will raise its key lending rate before the end of the year. Who knows how all of that will impact the markets?
That’s where high-yield dividend growth stocks come in. Not only do they provide a dividend yield far in excess of anything the banks are offering, but they also consistently raise their dividends year after year, many for 60 years or more.
Moreover, most high-yield dividend growth stocks are big companies that dominate their sectors or have a strong foothold in a niche market. They have strong, reliable revenue streams, and, while not immune to a stock market crisis, are large enough that they can rebound quickly.
Combined, this translates into a company with 1) a long, storied history of increasing its dividend payout regardless of what the broader global economy is doing; 2) reliable, long-term capital appreciation; and 3) a record of outpacing the broader markets.
Buy a stock that doesn’t provide a dividend and your hopes are pinned on theoretical capital appreciation. That works when the markets are bullish, but not so well when they’re retracing. That’s why high-yield dividend growth stocks are an excellent long-term investing option, especially when you don’t know what the future holds.
The following high-yield dividend growth stocks are big companies with strong competitive advantages. They feature securities that should do well over the next decade, no matter what the economy throws at them.
Procter & Gamble Co
Headquarters: Cincinnati, Ohio
Share price: $88.66
Market capitalization: $237.2 billion
Forward P/E: 20.89
Annual sales: $65.3 billion
Dividend yield: 3.04%
Payout Ratio: 70.1%
Levered free cash flow: $7.67 billion.
Procter & Gamble Co (NYSE:PG) is home to dozens of billion-dollar brands. You can find the consumer product giant’s five billion customers in more than 180 countries. Some of the company’s biggest and most recognizable brands include “Tide,” “Bounty,” “Head & Shoulders,” “Duracell,” “Olay,” “Pampers,” “Gillette,” “Crest,” and “NyQuil.” (Source: “Company Strategy,” Procter & Gamble Co, last accessed October 17, 2016.)
Procter & Gamble is the epitome of a high-dividend yield growth company, having raised its annual dividend for the last 60 consecutive years. Whether the economy is doing well or poorly, Procter & Gamble continues to make money and increase its annual dividend.
stevepb/Pixabay
High annual dividend yields are part of the corporate culture at Procter & Gamble, and after 60 years, it’s something the company will want to build on. The company currently provides an annual dividend of 3.04% or $2.68 per share. (Source: “Splits & Dividend History,” Procter & Gamble Co, last accessed October 17, 2016.)
Since 2000, Procter & Gamble has increased its annual dividend 300%. Over the same time frame, the company’s share price has soared 136%.
StoneMor Partners L.P
Headquarters: Levittown, Pennsylvania
Share price: $24.80
Market capitalization: $878.64 million
Forward P/E: -56.35
Annual sales: $307.53 million
Dividend yield: 10.75%
Payout Ratio: –
Levered free cash flow: $11.56 million.
StoneMor Partners L.P. (NYSE:STON) is one of the country’s biggest owner/operators of cemeteries. The company’s portfolio consists of 317 cemeteries and 107 funeral homes across the U.S. and in Puerto Rico. Overall, the company owns 15,900 acres of land, which is the equivalent of a sales life of 237 years. (Source: “StoneMor Partners L.P. Boston IDEAS Investor Conference June – 2016,” StoneMor Partners L.P., last accessed October 17, 2016.)
As a point of interest, StoneMor is also the only “deathcare” company structured as a master limited partnership (MLP). MLPs are required by law to distribute most, if not all, of their available cash to unitholders. This results in higher yields for investors.
StoneMore currently provides an annual dividend of 10.75% or $2.64 per share. The company has increased its annual dividend for each of the last 11 years.
While there is no guarantees on Wall Street, StoneMor’s high dividend yield is relatively safe. In the company’s most recent quarter it paid out $0.66 per unit or total cash distribution of $23.21 million, which was easily covered by the company’s total distributable available cash of $30.28 million. (Source: “StoneMor Partners L.P. Reports Operating and Financial Results for Second Quarter 2016,” StoneMor Partners L.P., August 5, 2016.)
StoneMor is a great high-dividend-yield growth company to consider for the next decade. Over the last 10 years, the company’s quarterly dividend has increased 43%, from $0.46 in 2006 to $0.66 in 2016. During the same period, the company’s share price advanced approximately 240%.
Aidan Bartos/Unsplash
With roughly 10,000 baby boomers retiring each day, the graying of the U.S. population will be good for StoneMor for decades to come. That will make this a top high-dividend-yield growth stock for the next decade.
Automatic Data Processing
Headquarters: Roseland, New Jersey
Share price: $87.62
Market capitalization: $39.82 billion
Forward P/E: 21.58
Annual sales: $11.67 billion
Dividend yield: 2.44%
Payout Ratio: 64%
Levered free cash flow: $1.0 billion.
Automatic Data Processing (NASDAQ:ADP) is one of the largest payroll and tax filing processors in the world, serving more than 610,000 clients. The company’s Employer Services segment (payroll processing, tax benefits, and administration services) accounts for the majority of the company’s sales. ADP also provides accounting, auto collision estimates for insurers, employment background checks, desktop support, and business development training services. (Source: “Corporate Overview,” Automatic Data Processing, last accessed October 17, 2016.)
ADP pays an annual dividend of 2.44% or $2.12 per share. For long-term investors, the company has increased its annual dividend for the last 41 years. This bodes well for investors looking for high yield growth dividend stocks over the next decade…or longer. (Source: “Dividend History,” Automatic Data Processing, last accessed October 17, 2016.)
Since 2010, ADP’s annual dividend yield has increased 55.8%, from $1.36 to $2.12. The company’s share price have advanced 175% over the same period of time.
ADP has a strong international footprint in an industry that is, for all intents and purposes, recession-proof, as everyone has to pay taxes. No matter what the economy is doing, businesses will need to take advantage of every tax loophole available, and ADP is will be there to help. That’s good news for investors looking for the high-dividend-yield growth stocks for the next decade.