A Goldmine of Income: 3 Must-Have Dividend Stocks

Chris MacDonald

Sun, Aug 13, 2023, 6:42 AM 3 min read

For investors seeking passive income and a comfortable retirement, strategic planning and these must-have dividend stocks are key. While passive income provides portfolio support, wise investors should avoid overpaying. Cheap dividend stocks offer surprising deals, especially in the post-pandemic context. Despite AI’s popularity, considering targeting affordable high-dividend stocks may be a smarter investment decision.

Not all dividend stocks are the same – some have unsustainable yields or lack appealing growth stimulants for investors. However, there are plenty with long-term growth upside and sustainable distributions that are worth buying right now.

These top must-have dividend stocks ensure stability and consistent earnings, supporting your financial goals.

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Realty Income (O)

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Realty Income (NYSE:O) excels as a reliable REIT with over 12,000 properties, focusing on sectors like food and pharmacies. It boasts consistent monthly dividends since the early 2000s, offering a strong 5% yield and potential 15% upside. With stable tenants like Walgreens (NASDAQ:WBA) and a history of market-beating performance, O stock is appealing for stable, long-term investors.

Realty Income has maintained monthly dividends since the early 2000s. Despite retail challenges and rising rates, the stock’s low price offers a compelling 5% yield. It’s poised for over 5% dividend income and potential 15% upside according to analysts.

With a decade of market-beating performance, Realty Income is a solid choice for long-term profitability. The company’s rare high dividend yield is enhanced by consistent increases for 25+ years and over 50 years of payments. Diversification reduces risks, making it an attractive pick for REIT investors seeking income.

Enbridge (ENB)

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Canadian energy transportation company, Enbridge (NYSE:ENB), is a notable blue-chip dividend stock with a 7.2% yield. It’s garnered attention due to potential undervaluation, with a 13.68% drop in the past year against a $45.11 price target set by analysts.

Enbridge prioritizes shareholder returns, saving $1.2 billion since 2017, enhancing sustainability and yielding 6.8%. Its BBB+ credit rating ensures stability in the energy sector. Moreover, its historical resilience and strategic debt utilization for capital expenditures contribute to its stability. The company’s focus on natural gas aligns with transitional energy needs, making it a potential opportunity for investors to enhance their cost basis.

The company stands out among oil stocks with its vast North American pipeline network. Despite recent stock dips, its crucial role in energy infrastructure and moderate buy consensus suggest 18% upside potential.

Devon Energy (DVN)

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Devon Energy (NYSE:DVN) faces a 13% share price decline this year, primarily due to repeated dividend cuts driven by declining cash flow. The company’s Q2 report revealed its fourth dividend reduction, with a new quarterly payment of 49 cents per share, down 32%. This move has frustrated investors, leading to selling of DVN stock as Q2 earnings dropped to a two-year low of $690 million and free cash flow decreased by 50% year-over-year to $326 million.

Devon Energy achieved record Q2 oil production at 323,000 barrels per day, with Q3 projections up to 330,000 barrels. Stock buybacks of 3.8 million shares in Q2 and 39.6 million since late 2021 enhanced shareholder value. Retiring $242 million debt in Q2 lowered the net debt-to-EBITDA ratio to 0.7x.

A stronger balance sheet yields a 4.6% dividend. Absence of a predicted U.S. recession supports oil and gas demand. Devon’s CEO envisions a positive 2024 outlook, focusing on steady activity and increased cash flow for shareholder returns.

On the date of publication, Chris MacDonald has a LONG position in ENB. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.