These 3 dividend stocks are practically slot machines

What’s the last thing in the world income-seeking investors want? Inconsistency. If you can’t count on safe and consistent dividends from the stocks you buy, you need to look for better alternatives.

The best way to ensure consistency in dividend payments is to select stocks from companies whose business models are designed for the long term. Here are three of those dividend-paying stocks that are practically slots.

Image source: Getty Images.

1. Brookfield infrastructure

Inflation appears to be a significant risk for income investors. If a business doesn’t steadily increase its dividend to keep up with inflation, your money won’t go that far. But you have nothing to fear on this front with Brookfield infrastructure (NYSE: BIP) (NYSE: BIPC). It is one of the most inflation resistant dividend stocks on the market.

As the name suggests, Brookfield Infrastructure owns infrastructure assets. The company’s portfolio includes cell phone towers, data centers, gas pipelines, railways, ports, toll roads and utilities. Many of these companies have incorporated inflation indexes into their contracts with their clients. Almost all of Brookfield Infrastructure’s assets generate stable and reliable cash flow each quarter.

The distribution of Brookfield Infrastructure (equivalent to a dividend) currently yields almost 3.5%. The company has increased its distribution by a compound annual growth rate of 10% since 2009.

In addition to attractive distribution, Brookfield Infrastructure also offers investors strong growth prospects. With an infrastructure super cycle underway, the company should be able to continue to outperform the market.

2. Eastern government properties

Let’s put dividend-paying stocks aside for a moment. US Treasuries are considered by many to be one of the safest investments. Why? They are supported by the US government. Eastern Government Properties (NYSE: DEA) is a slot machine for a similar reason.

Easterly isn’t as secure as Treasuries, but you won’t find many dividend-paying stocks with less risk. The company is a real estate investment trust (REIT) that leases properties to the US government. It currently owns 88 properties owned by federal agencies, including the Drug Enforcement Administration, the Federal Bureau of Investigation, and the Veterans Administration.

As a REIT, Easterly must remit at least 90% of its taxable income to shareholders as dividends. Its dividend yield currently stands at almost 5%.

The business has more growth opportunities than you might think. Easterly expects the U.S. government to increase the number of properties it rents in the future due to budget constraints. The federal real estate market is highly fragmented and has strong barriers to entry. Easterly is in a good position to add more properties to her portfolio.

3. Innovative industrial properties

There is another REIT that is also a great choice for income investors looking for growth potential. Innovative industrial properties (NYSE: IIPR) focuses on buying properties from medical cannabis operators and then leasing those properties to operators.

It has been a lucrative business model for IIP. Over the past five years, the company’s turnover has grown by more than 4,000%. Revenue has climbed approximately 2,750% over the same period.

With this type of growth, you would expect the IIP share price to have risen quite a bit as well. And you’d be right: the stock has climbed more than 1,300% more in the past five years and is up almost 50% so far in 2021. IIP is expected to grow more significantly as time goes on. as the American cannabis industry grows.

The company’s dividend yield of just over 2% may not look very good. However, the return is low only because IIP stocks generated such large gains. Since the end of 2016, IIP’s dividend has multiplied by 10. Slot machine? Absoutely.

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 motley! Challenging 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.

Source link

About Ferdinand Caldwell

Check Also

2 stocks to buy with dividends above 3%

The dividend yield on the S&P 500 is currently around 1.3%. This is its lowest …