As the U.S. Fed hints at potential interest rate cuts due to cooling inflation, the era of high yields on debt-based investment instruments may be drawing to a close. For investors, this shift suggests exploring alternative income sources offering high and reliable yields. Dividend stocks, with their potential for reliable payouts, are a compelling option.
Investors can buy shares of companies that consistently grow their dividends and have a resilient earnings base. Based on these parameters, Enterprise Products Partners (EPD), Altria (MO), and Enbridge (ENB) are notable dividend growers to buy in August 2024. These companies have been consistently paying and increasing their dividends for years. Moreover, they have the potential to grow their dividends further. Let’s take a closer look.
#1. Enterprise Products Partners (EPD)
Investors looking to buy dependable, high-yield dividend stock should consider Enterprise Products Partners (EPD). This company operates in the midstream segment of the energy sector, providing services like transporting, storing, and processing natural gas (NGU24), crude oil (CLU24), refined products, and petrochemicals.
One key advantage of investing in midstream energy companies is their relatively stable earnings base. Unlike companies directly affected by commodity price fluctuations, EPD benefits from long-term contracts and fee-based earnings. This durability of EPD’s business model helps it generate consistent and growing earnings and increase its payouts.
The company has increased its dividends for 26 years. Moreover, its dividends grew at an impressive compound annual growth rate (CAGR) of 7%. This track record highlights EPD's commitment to enhancing shareholders’ value through higher dividend payments.
Looking forward, EPD is working on $6.7 billion worth of major capital projects, which should support future cash flow growth and lead to even higher returns for shareholders. Additionally, the company's strategic acquisitions are expected to boost its capacity to deliver more cash to investors. EPD's focus on reducing debt and strengthening its balance sheet also sets the stage for continued growth.
Analysts share a largely optimistic outlook about EPD stock. Out of 16 analysts covering the stock, 12 have given it a “Strong Buy” rating, two suggest a “Moderate Buy,” and two maintain a “Hold.”
EPD's average price target is $33.29, implying an 18% upside potential from the current market price. Moreover, EPD stock offers a high yield of 7.5%.
#2. Altria (MO)
Altria (MO) stands out as a top choice for investors seeking high yield and recurring income. The leading tobacco company is famous for delivering substantial dividend payouts. The company’s core tobacco business consistently generates reliable earnings, ensuring it can sustain its generous dividends.
For example, this tobacco company has raised its dividend 58 times over the past 54 years, and in the first half of 2024 alone, it distributed $3.4 billion in dividends. Investors can expect another dividend increase in August, with the current yield already sitting at an impressive 7.8%.
The company is strategically expanding into the smoke-free product market, positioning itself for future growth. This move is expected to boost Altria's revenue, profitability, and cash distributions, making it an even more attractive investment for those seeking long-term income.
Altria projects mid-single-digit earnings growth through 2028. Its growing earnings base will support even higher dividend payouts. Also, the company's strong balance sheet, focus on reducing debt, and efforts to expand its smoke-free product offerings in the U.S. further enhance its growth prospects.
Analyst sentiment on Altria is mixed. Four out of 11 analysts covering MO recommend a “Strong Buy,” five have a "Hold," and two suggest a "Strong Sell."
Analysts’ average price target on MO is $49.56, roughly in line with its current trading price.
#3. Enbridge (ENB)
Enbridge (ENB) is a leading transporter and exporter of crude oil and other liquid hydrocarbons in North America. This energy infrastructure company’s assets are near top supply basins and demand markets. This positioning helps Enbridge to generate steady cash flows and consistently grow its dividend.
In addition, the energy company benefits from its long-term contracts, regulated pricing models, and power purchase agreements.
Thanks to its stable business model and growing cash flows, Enbridge has been paying dividends for about 69 years. Moreover, it increased its dividends for 29 consecutive years. Currently, Enbridge’s stock offers a high dividend yield of 6.8%.
Enbridge’s diversified portfolio, encompassing conventional and lower-carbon energies, multi-billion capital projects, and disciplined capital allocation, positions the company well to generate resilient distributable cash flows across various commodity cycles and boost its shareholders’ value.
Among the 15 analysts covering Enbridge stock, six have a “Strong Buy,” two suggest a “Moderate Buy,” five recommend a “Hold,” and two maintain a “Strong Sell” rating.
The average price target is $39.47, not far from the stock's current price.
On the date of publication, Sneha Nahata 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.
