Investing in stocks that consistently grow dividends is a smart strategy for those seeking reliable passive income. When a company regularly raises its dividend payments, it’s a strong signal that it is financially healthy.
Against this background, Altria (MO) and Enbridge (ENB) stand out for their solid history of uninterrupted dividend growth, spanning over 25 years. Moreover, these stocks offer a high yield of over 6%. While these companies have already demonstrated a remarkable track record of consistent dividend growth, their solid financial foundations and expanding earnings suggest that they are well-equipped to continue raising dividends in the future, too.
Here’s a closer look at why these high-yield dividend stocks are excellent choices for building a reliable income stream.
Dividend Stock #1. Altria (MO)
Altria (MO) is a top pick for investors seeking stable income and high yields. Known for its strong track record of rewarding shareholders, this leading tobacco company consistently enhances shareholder value through generous dividend payments.
It’s worth noting that Altria has recently boosted its quarterly dividend by 4.1%, increasing it from $0.98 to $1.02 per share. This marks the 59th time in the past 55 years that the company has raised its dividend, a testament to its commitment to returning higher cash to investors.
Altria’s dominance in the tobacco market allows it to continually grow its earnings, supporting its ability to pay and increase dividends. Beyond tobacco, the company is expanding into the smoke-free product space, targeting significant growth in this area by 2028. This includes a projected 35% rise in U.S. smoke-free volumes and a goal to double its smoke-free net revenues to $5 billion, which should boost overall growth.
Altria anticipates mid-single-digit growth in adjusted earnings per share (EPS) through 2028, which will likely drive further dividend increases over the same period. The company is also focused on deleveraging its balance sheet and targets a debt-to-consolidated EBITDA ratio of approximately 2.0x. Further, it plans to enter the non-nicotine market with at least five new products by 2028.
In summary, Altria stock offers visibility over its earnings and dividend growth rate, which is positive.
While analysts currently rate Altria as a “Hold,” its high yield of about 7.5% and consistent payouts make it an appealing choice for income investors.
Dividend Stock #2: Enbridge (ENB)
Enbridge (ENB), a leading North American energy infrastructure company, has an impressive 29-year streak of dividend growth. Even in challenging market conditions, Enbridge continues to reward shareholders with rising dividends, reflecting its robust business model and management’s commitment to returning higher cash to its shareholders.
Enbridge’s strength lies in its diversified portfolio, which encompasses both conventional and lower-carbon energy assets. This strategic mix helps mitigate risk across various commodity cycles and generates resilient cash flows, which support Enbridge's ability to consistently increase dividends irrespective of market fluctuations.
Furthermore, Enbridge’s assets are strategically located between key supply areas and high-demand markets, which drive steady demand for its services. Moreover, long-term contracts, regulated tolling frameworks, and power purchase agreements enable Enbridge to generate predictable earnings and cash flows.
Enbridge’s solid asset base and a robust pipeline of development projects bode well for future growth. Further, the company’s recent acquisition of three U.S. gas utilities will lower its business risk profile and enable it to generate predictable cash flows by expanding its rate base. These initiatives, coupled with ongoing operational efficiencies, are expected to drive long-term growth.
Enbridge forecasts an average annual increase of approximately 5% in adjusted EBITDA, distributable cash flow (DCF) per share, and adjusted EPS, reinforcing its capacity to sustain and enhance shareholder returns.
Wall Street analysts have a “Moderate Buy” consensus rating on Enbridge stock. Meanwhile, its solid dividend payment and growth history, visibility over future earnings growth, and high yield of about 6.5% make Enbridge a top stock for generating stress-free income.
Bottom Line
Altria and Enbridge are both standout choices for income-focused investors. Both companies have been increasing their dividends over decades, supported by solid financial performance. Further, with high yields and visibility over future payouts, these companies are ideal investments for those seeking stable dividend income.
On the date of publication, Amit Singh did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
