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Top 4 S&P 500 dividend payers

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There are hundreds of dividend paying stocks in the S&P 500. They come in all shapes and sizes. Some pay dearly dividend yields, while others have a long history of steadily increasing their payments. However, a handful of companies offer the best of both worlds.

Four dividend-paying stocks that stand out for their combination of yield and dividend growth history are Chevron (NYSE: CVX), Consolidated Edison (NYSE: ED), Federal Real Estate Investment Trust (NYSE: FRT), and Real estate income (NYSE: O).

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A big oil dividend

Chevron has increased its dividend for a remarkable 34 consecutive years, calling it Dividend Aristocrat. The fuel company has been able to overcome the volatility of this sector to generate consistent dividend growth. Among the keys to its success are its integrated operations and strong balance sheet. Chevron produces petroleum and natural gas, manufactures transportation fuels, lubricants and petrochemicals, and operates other energy assets. This diversification allows it to generate more stable cash flow to support its dividend, which currently earns 4.6%. That’s well above the S&P 500 average of around 1.3%.

Chevron’s oil business faces uncertainty as the global economy seeks to reduce carbon emissions. This leads Chevron to ramp up its investments in low-carbon opportunities by tripling its spending plan to $ 10 billion through 2028 on things like renewable fuels, hydrogen, and carbon capture. He believes these investments will pay dividends down the road. They will help the company reduce its carbon intensity and be part of the global solution to climate change while continuing to provide the economy with the energy it desperately needs.

A powerful dividend

Consolidated Edison has been an outstanding dividend paying stock over the years. Focus on New York City utility has increased his payment for 47 consecutive years. It is currently reporting 4%, an attractive level in the current low interest rate environment.

The company is a leader in the field of clean energy. It is the second largest solar energy producer in North America and owns a large-scale wind business. Meanwhile, it is investing heavily to improve the long-term sustainability of its operations. It plans to invest $ 12.7 billion through 2023, with a third of that money going to green projects and the rest to improving the safety and reliability of its assets. These investments should allow Consolidated Edison to continue to grow its cash flow, which should support future dividend increases.

King of the hill

Federal Realty has treated its investors like royalty over the years. The property investment fund (REIT) increased their payment for 53 consecutive years. This is the longest streak in the REIT industry and qualifies it as King of dividends. The Federal Realty payment is currently earning 3.4%.

The Retail REIT has steadily increased its dividend over the years by focusing on increasing its cash flow per share. It has achieved this in particular by focusing on owning high quality commercial properties in key coastal markets. They tend to benefit from long-term population growth and sustained demand from retailers. It will also selectively acquire properties and invest in development and redevelopment projects, including adding new types of assets to its locations, such as apartments. These investments have allowed the REIT to steadily increase its cash flow to support steady increases in dividends.

A reliable dividend

Realty Income lives up to its name. The FPI, which pays a monthly dividend, has increased its payout 113 times since listing on the New York Stock Exchange in 1994, including in each of the last 96 consecutive quarters. Overall, he has given investors a raise for 26 straight years, calling him a dividend aristocrat. Retail REIT is currently earning 4%.

Realty Income has increased its payments over the years by regularly acquiring net leased independent properties from high quality tenants. These leases require the tenant to pay building insurance, property taxes and maintenance of coverages, which allows them to generate regular cash flow. During this time, he is focused on leasing to quality tenants in sustainable industries, such as convenience stores, grocery stores, home improvement stores and drugstores. It also has a growing portfolio of industrial real estate. Realty Income complements all of this with a top notch financial profile, giving it the flexibility to continue to grow its portfolio, cash flow and dividends.

Premium dividend-paying stocks

While hundreds of S&P 500 companies pay dividends, Chevron, Consolidated Edison, Federal Realty, and Realty Income stand out for their combination of performance and growth history. All four appear to have the means to continue to grow their attractive dividends in the future. This puts them at the top of the crowded field of dividend-paying stocks in the S&P 500.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.