Top Dividend Stocks to Hold for Steady Income and Growth

on

2 Dividend Stocks to Hold for the Next 5 Years

Investing in dividend stocks can be a smart move for both beginners and seasoned investors. These stocks provide a steady income stream, and with the right picks, you can see beautiful growth over time. In this post, we're diving into two standout dividend stocks poised for growth in the coming years: ConocoPhillips (COP) and Kinder Morgan (KMI).

ConocoPhillips (COP)

Market Cap: $118B
Current Price: $95.46
Dividend Yield: 3.4%

ConocoPhillips is no stranger to the oil and gas industry, boasting a diverse and extensive portfolio. Here are some key points about why it's a strong pick for dividend growth:

  • Strong Cash Flow: The company has a cost of supply below $40 a barrel, which means it can generate cash flow even when prices dip. This foundation allows them to keep the dividends flowing.

  • Exciting Growth Phase: They've got major projects rolling out, including three new liquefied natural gas (LNG) export facilities in the pipeline and a hefty $7 billion investment in the Willow project in Alaska, set to kick off operations in 2029. This should boost their annual free cash flow by $7 billion by then.

  • Long-term Dividend Growth: The management team is aiming to grow dividends among the top 25% of S&P 500 companies. They've increased their payout annually for almost a decade! Plus, they’re looking to buy back a significant number of shares, which can further enhance shareholder value.

Kinder Morgan (KMI)

Current Price: $28.29
Dividend Yield: 4.2%

Kinder Morgan is one of the largest energy infrastructure companies in the U.S., managing an extensive network of pipelines. Here’s what makes it worth considering:

  • Steady Cash Flow: Kinder Morgan generates around 70% of its cash flow from reliable take-or-pay contracts, which basically guarantees payment regardless of the commodity demand.

  • Expanding Projects: They have a whopping $9.3 billion in growth projects lined up, triple what they had at the end of 2023. A big chunk of this is dedicated to expanding their natural gas pipeline network to meet surging demand.

  • Consistent Dividends: Kinder Morgan has paid out dividends for eight straight years, and their financial strength gives them room to keep growing those payouts.

Why Invest in These Stocks?

Both ConocoPhillips and Kinder Morgan are well-positioned to thrive amid evolving energy demands. With clear growth drivers, each company should be able to sustain and increase its dividend distributions for years to come. This means both could be excellent choices for anyone looking to secure a steady income from their investments while enjoying potential capital growth.

Final Thoughts

If you’re searching for solid investments to hold over the next five years, give ConocoPhillips and Kinder Morgan a closer look. Both companies show great promise for dividend growth, making them a compelling addition to any portfolio.

About the Author

Matt DiLallo has been an analyst for The Motley Fool since 2012. Specializing in dividend-paying stocks, especially in the energy sector, he brings valuable insights for those looking to grow their investment knowledge.

Happy investing!

Comments

Post a Comment