Three stocks in this excellent category of routine dividend growth are utility Consolidated Edison (ED), Canadian energy company Enbridge (ENB), and real estate investment trust Realty Income (O). Let’s discuss these world-class stocks right now.
Consolidated Edison is reaching an important dividend marker. The utility that gives electricity to the NY City area has boosted its payout for 47 straight years. That puts it only three years away from joining a top group of dividend heavyweights.
Consolidated Edison seems to be on track to get that rare honor. The company expects to increase its earnings per share by between 4% and 6% yearly over the next five years. Underlying that forecast is the recovery and expansion of the New York City market and the company’s solar energy business, where it is the second-largest solar energy creator in North America and seventh largest globally. Consolidated has plenty financial ability to fund the capital projects needed to keep growing its earnings, thanks to its investment-grade numbers and relatively conservative dividend ratio. It should stay a world-class dividend asset for years.
Enbridge has boosted its dividend in every year of the past 26. But even more impressive, it has an excellent dividend growth rate. The company has increased its payout at a 10% compound rate during the past 26 years.
That’s a stellar track record, especially in the rough energy industry. The company’s heavy dividend growth has delivered the ability to generate great returns of 15% annually over the past 25 years, well ahead of the S&P 500 and its peers.
Enbridge should continue growing its dividend in the years to come. The company has a multi-billion-dollar expansion program happening now that should deliver 5% to 7% per share growth through 2023.
Beyond that, it keeps moving its investments into infrastructure that supports low carbon sources. Enbridge also has good financial flexibility to pay for this growth thanks to its investment-level numbers and conservative payout ratio.
Realty Income has been perfect over the years. The REIT has given out 610 consecutive monthly dividends since it began over half a century ago. And since 1994, the REIT has boosted its payout 110 times, including in each of the past 94 quarters.
Overall, Realty Income has enlarged its payout at a 4.4% compound rate since its IPO. That has helped it create a 15.2% yearly average return as a company.
Realty Income should not have a problem continuing this trend. It has one of the best balance sheets in the industry as it’s one of only eight REITs with A-rated credit. And with its conservative dividend ratio, it has the financial flexibility to keep buying new properties, which drives its growth and payout.