There’s a lot to like about dividend-paying stocks. As long as the underlying companies are healthy and growing, they’re likely to keep paying out their dividends to shareholders — no matter whether the economy is booming or sluggish, no matter whether the stock itself is up or down.
Better still, such dividends tend to be increased over time, so if you’re collecting a total of, say, $700 in dividends this year, it might be $750 next year and $1,300 a decade later. That cash can help support you in retirement or it can be used to buy more shares of stock that can generate new dividend payments.
Here are three solid dividend payers to consider for your portfolio.
1. Digital Realty Trust
You don’t have to be a genius-level futurist to see that our modern world features a heck of a lot of electronic processing and transactions, and that that will likely increase over time — as, for example, our homes and cars become “smart” homes and “smart cars” — not to mention the rollout of 5G technology. All this processing, and all the data that’s stored in the cloud requires lots of data centers. If you’re now thinking that the data center business might be a good one to invest in, take a look at Digital Realty Trust (NYSE: DLR).
Digital Realty is a real estate investment trust (REIT), meaning it’s required by law to pay out at least 90% of taxable earnings to shareholders. A REIT is a company that has acquired a bunch of actual real estate, which it rents out to tenants. REITs tend to focus on one or more niches, such as industrial sites, shopping centers, apartments, office buildings, medical facilities, senior living sites, and storage units, among others. Digital Realty Trust has an especially attractive focus: data centers. Indeed, it recently had more than 290 facilities in 50 metropolitan regions in 26 countries.
Digital Realty Trust’s dividend recently yielded a solid 3.65%. It has been increased at an average annual rate of about 5.6% over the past five years, and the company boasts 17 years of consecutive dividend increases.
You may not know the name Enbridge (NYSE: ENB), but when you learn about it, you’ll be impressed. The energy company, based in Canada, is involved in liquids pipelines, natural gas pipelines, gas distribution and storage, and renewable energy. It notes that “We move about 30% of the crude oil produced in North America, we transport nearly 20% of the natural gas consumed in the U.S., and we operate North America’s third-largest natural gas utility by consumer count. Enbridge was an early investor in renewable energy, and we have a growing offshore wind portfolio.”
Another impressive aspect of Enbridge is its dividend, which recently yielded 6.6%. The company seems quite committed to its payouts, having paid dividends for more than 67 years and upping those payouts by an annual average of 10% over the past 27 years.
That dividend seems like it’s not going anywhere, as the company churns out a lot of cash, which can support further dividend increases and can also be deployed helping the company grow — via acquisitions, for example. It’s also been repurchasing shares, which rewards shareholders by leaving each remaining share more valuable.
Then there’s WM (NYSE: WM) — until recently known as Waste Management — which you might be quite familiar with, if your household is one of millions that have their waste and recyclables collected by the company. In its own words, WM is “North America’s largest comprehensive waste management environmental solutions provider” and “the largest recycler of post-consumer materials.” It’s involved in collecting, recycling, and disposing of waste for residential, commercial, industrial, and municipal customers across the U.S. and Canada.
WM is a surprisingly innovative trash specialist, too, transforming landfill gases into electricity at some facilities. Its huge fleet of trucks includes more than 10,000 natural gas trucks, “the largest heavy-duty natural gas truck fleet of its kind in North America.”
WM may appear to be in a boring business, but it’s a solid long-term grower, generating lots of cash for further dividend increases and share repurchases. (It also helps that waste removal is a dependable business — it’s not going away or being moved to the cloud.) In its first quarter, operating revenue was up 13%, with earnings per share rising 24%.
The stock’s dividend recently yielded about 1.8%, and it has increased that payout by an annual average of 9% over the past five years.
These are just three of many terrific dividend-paying stocks out there. With the market having headed south so sharply lately, lots of solid companies have higher-than-usual dividend yields. Whether you add some of these or other dividend payers to your portfolio, you can enjoy being paid cash just for holding them.
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Selena Maranjian has positions in Digital Realty Trust and Enbridge. The Motley Fool has positions in and recommends Digital Realty Trust and Enbridge. The Motley Fool recommends Waste Management. The Motley Fool has a disclosure policy.