It’s no secret that we love dividends around here, but I don’t think I’ve ever put together a list pointing specifically to the “champions.” I’ve done kings and aristocrats, and I have to be honest that I prefer the title belt over the crown regarding the neat names we use. For our purposes, I will keep my head foremost on the Dividend Champions—which, by the way, are precisely like the Aristocrats in that they must have experienced 25 or more years of consecutive dividend increases; the difference is the Aristocrats are limited to the S&P 500 Index, whereas the Champions aren’t limited to any particular area of the market. What matters most is how they perform.
In addition to passive income, investors stock up on dividend companies to smooth out the effects of market volatility. It’s generally understood that even dividend firms with slower growth rates have generated dividend increases faster than inflation over the previous 30 years.
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From October 2007 to October 2008, while inflation was over 3%, dividend growers considerably outperformed other asset classes. Also, dividend-growing firms have returned 6.8% annually on average between September 2007 and September 2018, compared to 4.2% for equities that did not pay dividends. Historically, dividend equities have clearly outperformed the market during times of high inflation, so it stands to reason that their popularity soars during any period of sluggish economic development.
Companies like Coca-Cola (KO) and ExxonMobil (XOM) are two good examples of popular stocks known for showing yearly dividend increases for considerable lengths of time. I’ve talked enough about KO and XOM in my career thus far, however, and I anticipate I’ll mention them again. Today, I decided instead to dig in and see what best deserved my speaking on their behalf.
With that said, join me while I break down what makes these three tickers safe when considering market conditions. With healthy balance sheets to complement the lucrative payouts, analysts largely agree that we should buy and hold these dividend champs:
Enbridge Inc (ENB)
Enbridge Inc. (ENB) and its subsidiaries provide energy infrastructure. Liquid pipelines, gas distribution and storage, renewable electricity production, and energy services comprise ENB’s operations. Based in Calgary, ENB was founded in 1949. ENB sits about flat YTD but at the bottom of its 52-week range. ENB
has a market cap of roughly $80 billion, a 0.88 beta score, and TTM (trailing twelve-month) revenue of $41.1 billion at 94 cents per share, from which it made a profit of $2.3 billion with its 5.62% net margin. With a 10-day average trading volume of 2.19 million shares and $2.58 billion in levered free cash flow, ENB has a P/E (price to earnings) ratio of 17.8x, a forward P/E of 9.5x, a PEG of 1.36x, a P/S (price to
sales) of 2.04x, and a P/B (price to book) of 2.00x. ENB has a dividend yield of 6.77%, with a quarterly payout of 67 cents ($2.68/yr) per share, at a stunning payout ratio of 268.75%. Analysts have marked ENB with a median price target of $43, with a high of $48.04 and a low of $38.89, representing a potential 22.3% jump from its current price. Analysts concede: Buy ENB and hold.
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National Retail Properties Inc (NNN)
National Retail Properties Inc. (NNN)’s primary investment focus is high-quality retail assets with long-term net leases. With a total gross leasable area of around 35.0 million square feet and a weighted average remaining lease term of 10.4 years, NNN owns more than 3,400 properties across 48 states. NNN is down YTD by 5.65% and is considered undervalued at the time of writing, with a 10-day average trading volume of 891 thousand shares and a free cash flow of $455 million. NNN has a 0.88 beta, a $7.8 billion market cap, and a TTM revenue of $773 million at $1.89 per share, off of which the firm profited $334.6 million using its impressive net profit margin of 43.29%. NNN has a P/E ratio of 22.88x and a forward P/E of 22.52x. NNN has a dividend yield of 5.09%, with a quarterly payout of 55 cents ($2.20/yr) per share using a generous 114.29% payout ratio. Analysts have assigned NNN a median price target of $48, with a high of $54 and a low of $46. This suggests a potential pricing upside of around 25%, and the analysts have given NNN a second assignment in the form of a buy-and-hold rating.
Entergy Corp (ETR)
Entergy Corp (ETR) is a company that produces and sells energy in the U.S. ETR has two business segments: utilities and wholesale commodities. A modest outfit, ETR serves about 3 million utility consumers in Arkansas, Mississippi, Louisiana, and Texas. ETR was founded in 1913 in New Orleans, LA. ETR has a market cap of over $23 billion and an enterprise value of nearly $50 billion. ETR shows a TTM revenue of $13.8 billion, from which it made a profit of $1.1 billion via its 7.87% net profit margin. ETR, on its most recent earnings report, beat analysts’ EPS and revenue projections by 1.91% and 25.71%, respectively; the quarter prior saw margins of 7.30% and 23.48%, respectively. With a P/E ratio of 20.57x, ETR has a forward P/E of 16.45x, a P/S (price to sales) of 1.65x, and a P/B (price to book) of 1.8x. ETR has a dividend yield of 3.94%, with an impressive quarterly payout of $1.07 ($4.28/yr) per share and a dividend payout ratio of 76.35%. Analysts who provide 12-month pricing estimates give ETR a median price target of $121, with a high of $134 and a low of $105. This suggests a potential 23.4% increase over its current price, and the analysts have taken their typical stand: Although the priciest of the three, it’s on the low end of its range, and investors should consider ETR for its buy-and-hold rating.
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