5 Top-Tier Dividend Stocks for 2019

Matthew DiLallo, The Motley Fool

Updated Sun, Jan 13, 2019, 7:05 AM

One of the benefits of the market sell-off in 2018 is that dividend yields are higher to start the new year. Income-seeking investors now have an opportunity to lock in some attractive payouts from top-tier companies. Five that stand out as excellent options for the coming year are Enterprise Products Partners (NYSE: EPD), Brookfield Infrastructure Partners (NYSE: BIP), Magellan Midstream Partners (NYSE: MMP), Dominion Energy (NYSE: D), and ONEOK (NYSE: OKE).

Plenty of fuel in the tank

Midstream MLP Enterprise Products Partners declined about 7% last year even though the company delivered significant earnings and cash flow growth. Thanks to a combination of higher volumes of oil and gas flowing through its legacy pipeline and processing systems, as well as the impact of recently completed expansion projects, Enterprise's cash flow was up more than 30% through the third quarter of last year compared with the same period of 2017. That rising cash flow boosted the company's already strong financial metrics while also enabling it to continue paying its investors more money each quarter. They can expect even more growth in 2019, since the company finished $2.1 billion of expansions last year and is on pace to complete another $4.5 billion this year. That growing income stream will give Enterprise Products Partners the fuel to continue increasing its 6.4%-yielding payout each quarter.

$100 bills with the word dividend on a piece of paper.

Image source: Getty Images.

Shifting into a higher gear

Global infrastructure giant Brookfield Infrastructure Partners tumbled 22.9% last year, as earnings slipped after the company sold an electric transmission business in Chile. However, it used those proceeds to make six acquisitions, which Brookfield Infrastructure anticipates will boost earning 20% while enabling it to grow at a faster pace in the future. While it will take a few quarters before investors will feel the full impact of this shift, they're getting paid well to wait, considering Brookfield Infrastructure now yields 5.1%, though that payout will probably head higher, since the company is targeting an annual increase of between 5% to 9%.

More growing coming down the pipeline

Magellan Midstream Partners slumped 19.6% last year, even though the MLP was on pace to grow cash flow about 10% from 2017's total, slightly ahead of its initial guidance despite selling a stake in one of its pipelines. As a result of that sell-off, Magellan now yields an enticing 6.3%. That payout will undoubtedly head higher in 2019, given that Magellan has several expansion projects coming online that should boost its cash flow even further. Overall, the company aims to increase its distribution to investors at a 5% to 8% rate in both 2019 and 2020 while maintaining its top-tier financial profile.

Wheeling and dealing should pay big dividends during 2019

Dominion Energy slumped about 12% in 2018, in part over concerns about its merger with fellow utility SCANA as well as how it would fund its expansion efforts. However, the company has undertaken several transactions over the past few months to bolster its finances and finally closed the SCANA deal at the beginning of 2019. As a result of these deals, Dominion is set up to grow earnings per share at or above its 6% to 8% targeted rate through 2020. That gave the company the freedom to increase its dividend by 10% in 2019, boosting its already impressive 4.6%-yielding payout.

A hand putting another coin on a rising stack.

Image source: Getty Images.

Barely budged despite a great year

ONEOK was one of the few energy stocks that didn't lose value in the market meltdown last year, as it eked out a 1% gain. That paltry return, however, masked the pipeline giant's tremendous performance last year. For starters, cash flow was up 33.3% through the third quarter compared with the same period of 2017, putting the company on pace to exceed its full-year guidance. On top of that, ONEOK secured enough customer support to move forward with several needle-moving expansion projects. That puts the company on pace to continue increasing its 5.7%-yielding dividend at a double-digit annual pace for the next few years.

The fuel to deliver high-octane returns in 2019

Last year's sell-off in the markets took most of these high-yielding energy stocks down with it, and now investors can lock in some attractive yields in 2019. However, what makes these dividend stocks even more appealing is that they offer significant upside in addition to their payouts since not only are all expected to grow earnings at a healthy rate this year, but their stocks could also bounce back from last year's sell-off. That sets investors up to potentially earn significant total returns in 2019.

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Matthew DiLallo owns shares of Brookfield Infrastructure Partners and Enterprise Products Partners. The Motley Fool recommends Brookfield Infrastructure Partners, Enterprise Products Partners, Magellan Midstream Partners, and ONEOK. The Motley Fool has a disclosure policy.

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