34 High Yield Stocks for Income – October 2017 Update

In this list, we analyzed 34 of the highest paying dividend stocks in the market.

Almost all of these companies offer a high dividend yield close to 4% or higher, have increased their dividends for at least five consecutive years, and score average or better for Dividend Safety.

The list is sorted by dividend yield from low to high, and our analysis is updated monthly.

You will notice that each high dividend stock has a Dividend Safety Score and Dividend Growth Score.

We analyze 25+ years of dividend data and 10+ years of fundamental data to understand the safety and growth prospects of a dividend.

Our Dividend Safety Score answers the question, “Is the current dividend payment safe?”

We look at some of the most important financial factors such as current and historical EPS and FCF payout ratios, debt levels, free cash flow generation, industry cyclicality, ROIC trends, and more.

Dividend Safety Scores range from 0 to 100, and conservative dividend investors should stick with firms that score at least 60. Since tracking the data, companies cutting their dividends had an average Dividend Safety Score below 20 at the time of their dividend reduction announcements.

Our Dividend Growth Score answers the question, “How fast is the dividend likely to grow?” It considers many of the same fundamental factors as the Safety Score but places more weight on growth-centric metrics like sales and earnings growth and payout ratios. Scores of 50 are average, 75 or higher is very good, and 25 or lower is considered weak.

Here are 34 of the most interesting high dividend stocks as of 10/5/17:

34) Cisco Systems, Inc. (CSCO)

Dividend Yield: 3.5%    Forward P/E Ratio: 15.4 (as of 10/5/17)
Dividend Safety Score: 83   Dividend Growth Score: 66
Sector: Technology    Industry: Computer Networks
Dividend Growth Streak: 7 years

Cisco is a technological provider of services and integrated solutions to enable connected networks around the world. The company is the undisputed global leader in the area of telecommunications and networking hardware and software. Its main offerings essentially connect computing devices to networks or computer networks with each other.

The company operates through three geographic segments – Americas (60% of 2016 revenues); Europe, Middle East, and Africa (EMEA – 25%); and Asia Pacific, Japan, and China (APJC – 15%).

Cisco’s products and technologies can also be categorized into – switching; next-generation network (NGN) routing; collaboration; data center; wireless; service provider video; and security.

Revenues from products accounted for 76% of 2016 revenues while the remaining 24% came from services. The company has a globally diversified customer base ranging from public institutions and governments to businesses of all sizes and major telecom service providers.

Cisco maintains a dominant market share position in many of its core offerings. The company has come a long way from just from selling basic networking hardware to providing more comprehensive, higher-value solutions today. Most of its rivals do not have the same breadth of products and services, making them less of a factor in these high-margin deals.

Cisco is now especially focused on expanding in high growth areas such as cyber security, Internet of Things, next generation data center and cloud services. As these businesses grow, Cisco’s mix of recurring software and services revenue will expand, making the company more stable and profitable over time.

Cisco has a well-developed global sales network, an extensive technology base, diversified customers across all major geographies, and a reputed and trusted brand name.

The company is well positioned to benefit from the growing technology needs for an increasingly connected world, although it will likely continue facing functional and pricing pressures across many of its markets as they continue evolving.

Cisco has been increasing its dividends each year since it started making payouts in 2011. Income investors have enjoyed a 24.7% annual dividend growth rate over the past year three years, and Cisco last raised its dividend by about 12% earlier this year.

With a reasonably payout ratio near 40%, more cash than debt on its balance sheet, and expectations for continued earnings growth, Cisco shareholders can likely expect future dividend growth in the high single-digit to low double-digit range.

Read More: Cisco High Dividend Stock Analysis

33) Pfizer, Inc. (PFE)

Dividend Yield: 3.6%   Forward P/E Ratio: 14.0  (as of 10/5/17)
Dividend Safety Score: 63   Dividend Growth Score: 52
Sector: Medical   Industry: Pharma
Dividend Growth Streak: 7 years

Pfizer is one of the biggest global pharmaceuticals companies with revenues of about $50 billion. The company was incorporated in 1942 and currently produces a wide variety of biopharmaceutical and biotechnology products for the healthcare sector.

The company operates through three main business segments – Global Vaccines, Oncology and Consumer Healthcare (26% of revenues), which sells vaccines, and consumer and oncology products; Global Innovative Pharmaceutical segment (29%) focuses on discovering and commercializing new medicines; and its biggest segment Global Established Pharmaceutical segment (44%) sells legacy drug products.

Pfizer operates in the relatively recession-proof pharmaceuticals industry, which is immune from the vagaries of economic cycles.

The huge R&D expense and expertise required to develop new medicines is a big entry barrier, and patent laws allow pharmaceuticals companies to make monopolistic profits on a new product for long periods of times.

The healthcare sector has a bright future both in developed as well as developing countries. Faster population ageing in Japan, the U.S., and Europe is the major demand driver in developed nations, while rising healthcare spending in developing nations like India should increase demand for Pfizer’s products over time.

Though Pfizer cut its dividend in 2009, the company has rewarded investors with a 9.4% annual dividend growth rate over the last 20 years. It has continuously paid and increased dividends for more than 30 years with a decline in 2009 being the only blemish.

Pfizer’s dividend stream is quite safe today with the company consistently generating positive free cash flows and maintaining a healthy payout ratio near 50%.

The company’s drug pipeline is also being restocked through internal investment and several recent major acquisitions, which will help offset the generic competition to some of its blockbuster drugs.

Pfizer last increased its quarterly dividend in early February by 7%, which follows a similar pattern seen in the last five years.

The company should keep growing dividends in the mid to high single-digit range, roughly in line with Pfizer’s expected growth in earnings.

Read More: Pfizer High Dividend Stock Analysis

32) Valero Energy (VLO)

Dividend Yield: 3.6%   Forward P/E Ratio: 17.3  (as of 10/5/17)
Dividend Safety Score: 49   Dividend Growth Score: 63
Sector: Energy   Industry: Oil Refining & Marketing
Dividend Growth Streak: 7 years

Valero was incorporated in 1981 and is the world’s largest stand-alone refiner with more than a dozen petroleum refineries located across North America and the United Kingdom. The company’s refineries purchase crude oil and process it into a number of different products, including gasoline, diesel, jet fuel, petrochemicals, lubricants, and asphalt.

Valero sells its branded and unbranded products on a wholesale basis through a bulk marketing network and more than 7,000 outlets that carry its brand names. The company is also owns 11 ethanol plants and is the majority owner of Valero Energy Partners (VLP), a fee-based MLP that operates pipelines and logistics assets.

The refinery business is extremely expensive. A single refinery can cost several billion dollars, and they require permits and compliance with a variety of regulations. Refineries also need access to transportation systems, pipelines, and feedstock supply agreements. These factors have caused the industry to consolidate over time, and until 2012 no new refineries had been built in the U.S. in 30 years.

Despite the barriers to entry, refiners experience major swings in profitability and typically earn low margins thanks to their lack of pricing power and capital-intensive operations. Valero has somewhat of an advantage because of its size and ability to process more complex crudes compared to its competitors. However, its profitability will ultimately remain driven by the crack spread, which measures the difference between the purchase price of crude oil and the selling price of finished products such as gasoline. Many uncontrollable factors impact the crack spread, making this a rather complicated investment to study.

Turing to the dividend, investors should be aware that Valero did cut its payout in 2010. Despite the dividend cut, Valero’s payout has still managed to grow by 23.1% per year over the last decade, and its quarterly dividend has nearly tripled since 2014.

Valero last raised its payout by 17% in early 2017, and the company’s dividend growth potential remains strong thanks to its healthy cash flow generation and balance sheet. However, Valero is still a cyclical stock that can fluctuate significantly over short periods of time, depending on where refining margins head. Investors seeking less volatility might want to consider some of the other stocks on this list instead.

Read More: Valero High Dividend Stock Analysis

31) LyondellBasell Industries (LYB)

Dividend Yield: 3.6%    Forward P/E Ratio: 10.0 (as of 10/5/17)
Dividend Safety Score: 78    Dividend Growth Score: 87
Sector: Basic Materials    Industry: Diversified Chemicals
Dividend Growth Streak: 7 years

LyondellBasell is one of the largest chemical producers and refiners in the world. The company manufacturers various commodity chemicals, as well as a number of plastic resins used in many different types of consumer and industrial products.

While the company’s sales are volatile due to the cyclical prices of the various chemicals it produces, LyondellBasell’s cash flow has been much steadier. That’s because its profits are largely driven by the spread between input costs and its final products.

Natural gas is a major raw material used in the company’s production process, and the final price of most of its chemicals is tied to the price of oil.

Therefore, when natural gas prices are low (as they have been for nearly a decade thanks to the U.S. fracking revolution) and oil prices are high, the company’s profits are robust. When oil prices decline, LyondellBassell’s input costs usually decline as well, which results in fairly stable margins.

Thanks to its massive scale, advanced manufacturing technologies, and cost-advantaged assets located in the natural gas-rich U.S., LyondellBassell has some of the best profitability in the industry.

As the U.S. plastics industry continues growing, thanks to the huge supply of cheap natural gas, LyondellBassell should continue benefiting over time while rewarding shareholders with higher dividends.

In fact, the company has paid steadily growing dividends since 2011. While most commodity chemical businesses are not safe dividend payers, LyondellBassell appears to be an exception.

The company maintains a conservative payout ratio, enjoys an investment-grade credit rating from S&P, consistently generates free cash flow, and is very committed to paying a safe dividend throughout a full economic cycle.

Dividend growth has been excellent as well. LyondellBassell’s dividend has grown by 18.5% annually over the past three years, and management last boosted the payout by 6% earlier this year.

Going forward, LYB’s dividend growth will likely continue at a mid-single-digit pace as industry conditions moderate a bit and management looks to maintain a safe payout ratio.

Read More: LyondellBassell High Dividend Stock Analysis

30) Garmin Ltd. (GRMN)

Dividend Yield: 3.7%   Forward P/E Ratio: 19.5  (as of 10/5/17)
Dividend Safety Score: 61   Dividend Growth Score: 48
Sector: Technology   Industry: Miscellaneous Electronic Products
Dividend Growth Streak: 7 years

Garmin is a leading Swiss manufacturer of global positioning system (GPS) navigation products. The company was founded in 1989 and provides GPS-enabled devices to the automotive, marine, aviation, sensors, and wearable segments.

Garmin operates through five major segments – Auto (30% of total revenues), Fitness (25%), Outdoor (17%), Aviation (15%), and Marine (12%).

The company also has a strong geographic diversification with the Americas accounting for 48% of total revenue, followed by EMEA (38%) and APAC regions (14%). Its Switzerland domicile entitles the company to low corporate income taxes as well.

Though the barriers to entry in the electronics industry are relatively low, Garmin has a strong competitive advantage through its ownership of the core GPS technology and related trademarks.

For example, it takes a lot of time and effort to build and maintain digital maps, and the company recently acquired the iconic map maker DeLorme to further strengthen its foothold in mapping systems.

The company is also vertically integrated as it designs, manufactures, markets, and sells its products itself, resulting in some cost efficiencies.

As the largest global player in the market for GPS devices, Garmin enjoys an edge over peers like Apple and Fitbit when it comes to GPS-enabled wearable devices, which is a rapidly-growing market.

While automotive GPS sales have been on the decline, there has been a growing global trend to monitor one’s health through new fitness devices, and Gamin has leveraged this theme to rapidly grow its wearable fitness products.

Garmin has been rolling out new wearable products in different styles to meet the demands of many different consumer classes and markets. Waterproof products, solid battery life, and plenty of meaningful data are the company’s value proposition.

With no debt and around $2 billion in cash and marketable securities, Garmin has one of the best balance sheets to support its dividend.

The company also generates excellent margins and has been a consistent free cash flow generator, further enhancing its ability to continue paying dividends.

Garmin has grown dividends at a high annual growth rate of 15.1% over the last ten years, but the dividend has remained flat since June 2015.

29) Crown Castle (CCI)

Dividend Yield: 3.7%   Forward P/E Ratio: 22.3  (as of 10/5/17)
Dividend Safety Score: 62   Dividend Growth Score: 46
Sector: Real Estate   Industry: Wireless Communications
Dividend Growth Streak: 3 years

Crown Castle is a real estate investment trust that is the biggest provider of shared wireless infrastructure in the United States. The company owns roughly 40,000 towers and more than 16,000 miles of fiber that supports small cell networks.

Large wireless carriers lease Crown Castle’s towers in order to provide effective wireless services to their customers. In fact, the big four wireless carriers amount to roughly 90% of Crown Castle’s total revenue.

One of the nice things about Crown Castle’s business is that more than 80% of its revenue is recurring, and the average remaining customer contract term is six years.

Demand for the company’s towers should rise as data usage continues moving higher, and there are no substitutes today for Crown Castle’s wireless infrastructure. This helped Crown Castle’s site rental revenues increase each year during the financial crisis.

All of these factors make for great cash flow visibility and help support the company’s dividend.

Speaking of dividends, Crown Castle began paying dividends in 2014. Management has since raised the company’s quarterly dividend payout from 35 cents per share to 95 cents, representing cumulative growth of 171%.

Crown Castle targets 7-8% long-term annual growth in dividends per share following its recently announced $7.1 billion acquisition of LTS Group, which will double its fiber optic footprint and expand its market presence in the Northeast. Compared to most REITs, Crown Castle’s incremental earnings growth doesn’t require much capital because it simply adds new tenants to its existing towers, resulting in higher returns and faster dividend growth.

Read More: Crown Castle High Dividend Stock Analysis

28) Public Storage (PSA)

Dividend Yield: 3.7%   Forward P/E Ratio: 20.9  (as of 10/5/17)
Dividend Safety Score: 91   Dividend Growth Score: 61
Sector: Real Estate   Industry: Storage
Dividend Growth Streak: 7 years

Public Storage has been in business since 1972 and is the largest public storage REIT in America with more than 2,500 storage rental properties.

The company’s self-storage facilities serve more than one million customers and generate predictable cash flows thanks to its month-to-month leases.

The short-term nature of its leases and the hassle customers must go through to switch storage unit providers make it easy for Public Storage to continuously raise rents and protect its profits from inflation.

Public Storage is also larger than its top three rivals combined, which helps it leverage all of its costs across the company to generate better profitability. Margins are also helped by the company’s focus on locations with favorable demographics.

Public Storage targets major metropolitan areas that are characterized by better incomes, greater population density, and faster growth rates. Many consumers value these locations more because access to their storage is easier and more convenient.

As a result, Public Storage enjoys 20%+ market share in many of these areas and benefits from the high visibility of its locations, which builds brand equity and recognition. Major metropolitan areas also have some barriers to entry because property costs are typically high and zoning restrictions are common.

Finally, the self-storage industry is also attractive because of its predictability. Demand will always exist for self-storage warehouses as long as people continue experiencing major life events (e.g. an unexpected move or divorce), and the low cost to maintain storage facilities results in excellent cash flow generation year after year.

Public Storage has paid uninterrupted dividends for more than 25 years and has raised its payout each year since 2010. The company’s dividend has increased by 13.8% per year over the last decade, and management last raised the dividend by 11% in October 2016.

Looking ahead, Public Storage seems likely to continue growing its dividend by 8-12% per year thanks to its relatively low market share in major markets and strong balance sheet, which provides cheap capital for future acquisitions.

Read More: Public Storage High Dividend Stock Analysis

27) ExxonMobil (XOM)

Dividend Yield: 3.8%   Forward P/E Ratio: 23.6  (as of 10/5/17)
Dividend Safety Score: 70   Dividend Growth Score: 27
Sector: Energy   Industry: Integrated Oil
Dividend Growth Streak: 35 years

ExxonMobil was founded in 1870 and is one of the world’s oldest oil companies. It’s also the world’s largest publicly traded integrated oil conglomerate, with nearly 30,000 oil & gas wells on six continents.

The company operates in three distinct business segments: upstream oil & gas production, downstream refining, and specialty chemicals.

ExxonMobil’s greatest strengths are its scale, diversification, and conservative management team. If Exxon were its own nation, its total liquids production would have made it the world’s 8th largest oil producer in the world in 2016.

Such scale helps Exxon achieve lower costs, which is essential in a commodity market. The company’s integrated business model also provides some cash flow diversification, helping it ride out energy cycles with somewhat less volatility than most of its rivals.

Exxon’s management team has a long track record of excellent capital allocation, which has helped the company enjoy higher returns on capital than all of its major peers.

Exxon has paid an uninterrupted quarterly dividend since 1882 and has increased its payout for more than 30 consecutive years. While Exxon’s dividend grew nearly 9% annually over the past decade, payout growth has slowed in recent years thanks to the crash in oil prices.

The company is still able to implement low single-digit dividend increases for now, and cash flow from operations and asset sales have exceeded dividends for three consecutive quarters. If energy prices remain depressed, Exxon will arguably be the last company still standing and paying dividends.

Income investors should note that XOM is trading near its highest dividend yield in more than 20 years.

Read More: ExxonMobil High Dividend Stock Analysis

26) Philip Morris International (PM)

Dividend Yield: 3.8%   Forward P/E Ratio: 23.0  (as of 10/5/17)
Dividend Safety Score: 79   Dividend Growth Score: 17
Sector: Consumer Staples   Industry: Tobacco
Dividend Growth Streak: 10 years

Philip Morris International is one of the largest tobacco companies in the world, selling cigarettes in over 180 countries. The company was born in 2008 after Altria (MO) spun off its international operations to create this new entity.

Philip Morris sells cigarettes to more than 150 million consumers worldwide and owns six of the world’s top 15 international brands. Marlboro is both the company’s and the world’s number one brand.

The company’s competitive moat is derived from its ownership of the international rights of globally renowned cigarette brands such as Virginia Slims, Red & White, and Marlboro.

This has allowed the company to capture a nearly 30% share of the global market and enjoy significant pricing power. In fact, Philip Morris’ annual average pricing gain has been 6% since 2008.

Philip Morris has excellent geographic diversification as well, with Asia, the European Union, and EMEA each contributing between 25-35% of its total sales. This insulates the company from the imposition of strong anti-smoking laws in any single region.

The company’s sole focus on markets outside of the U.S. also helped protect its stock when the U.S. FDA recently announced plans to explore lowering the nicotine allowed in cigarettes to non-addictive levels.

Philip Morris has grown dividends every year since 2008, averaging 7.9% annual income growth over the last five years. However, dividend growth has slowed more recently to a low single-digit rate, including a 2.9% raise earlier this year.

Sales volumes are falling as the cigarette industry is in a secular decline, but earnings per share should still grow at a mid-single-digit annual rate thanks to a mix higher prices and lower costs.

Considering some of the growth headwinds facing the business and Philip Morris’ relatively high payout ratio, income investors should realistically expect annual dividend growth closer to 3-5% going forward.

Read More: Philip Morris International High Dividend Stock Analysis

25) Dominion Energy (D)

Dividend Yield: 3.9%   Forward P/E Ratio: 21.1  (as of 10/5/17)
Dividend Safety Score: 89Dividend Growth Score: 51
Sector: Utilities   Industry: Electric Power
Dividend Growth Streak: 14 years

Dominion was founded in 1909 and is one of the biggest producers and transporters of energy. The company provides electricity and natural gas to more than 5 million customers located primarily in the eastern United States.

Dominion Energy’s $6 billion acquisition of Questar, a Rockies-based integrated natural gas distribution company, gave Dominion better balance between its electric and gas operations while also improving the company’s scale and diversification by geography and regulatory jurisdiction.

It’s also worth noting that the company formed Dominion Midstream, a master limited partnership, in 2014 to create a portfolio of natural gas transportation, processing, and storage assets. This further enhances Dominion’s earnings growth profile relative to traditional regulated utility companies.

Approximately 90% of Dominion’s operations are regulated, allowing it to generate stable earnings and predictable returns on its invested capital. Utility companies also make for nice high yield retirement investments because they sell non-discretionary services and tend to fare relatively well during recessions (Dominion’s stock outperformed the S&P 500 by 15% in 2008).

While Dominion does not have the highest yield on this list, its dividend growth has been impressive. The company has raised its dividend every year since 2004, recording 7% annual dividend growth over the last decade.

At least mid-single-digit dividend growth seems likely over the coming years as Dominion executes on its large backlog of growth projects. In fact, management remains confident that it will be able to deliver payout growth in excess of 8% once its growth projects start reaching completion in 2018 and 2019.

For investors seeking exposure to a faster-growing regulated utility, Dominion is one to watch.

Read More: Dominion Energy High Dividend Stock Analysis

24) Brookfield Infrastructure Partners LP (BIP)

Dividend Yield: 4.0%   Forward P/E Ratio: 13.6  (as of 10/5/17)
Dividend Safety Score: 88   Dividend Growth Score: 64
Sector: Utilities   Industry: Electric Power – MLP
Dividend Growth Streak: 10 years

Brookfield Infrastructure Partners is one of the fastest-growing and most diverse utility companies in the world.

The limited partnership (a corporate structure similar to that of a MLP) owns 32 infrastructure assets, including electrical transmission lines, railroads, ports, natural gas pipelines, toll roads, telecom towers, and natural gas and electricity connections.

Brookfield Infrastructure Partners’ healthy diversification by business segment (no business unit is more than 20% of cash flow) and geography helps to ensure very stable cash flows to secure the safety and growth of its distribution (a tax deferred form of dividend).

That’s especially true since 91% of the company’s cash flow is secured by either long-term, fixed rate contracts (with annual inflation adjustments) or is derived in regulated industries.

The firm has successfully paid distributions since its inception in 2008 and has increased its distribution by 11.9% per year over the last five years.

Brookfield Infrastructure Partners intends to pay out 60-70% of its funds from operations (FFO) and targets annual distribution increases of 5-9% per year.

Given the strong growth runway ahead of BIP in the coming years as infrastructure investment continues around the world, income investors could likely even expect long-term distribution growth at the higher end of management’s target range.

Read More: Brookfield Infrastructure Partners High Dividend Stock Analysis

23) PPL Corporation (PPL)

Dividend Yield: 4.2%   Forward P/E Ratio: 17.4  (as of 10/5/17)
Dividend Safety Score: 83   Dividend Growth Score: 6
Sector: Utilities   Industry: Electric Power
Dividend Growth Streak: 16 years

PPL is a pure-play regulated utility company involved in the electricity distribution business in Pennsylvania, Kentucky, Virginia, and Tennessee, as well as the United Kingdom. It also has a natural gas transmission and power generation business in Kentucky.

The company has 10.5 million utility customers in the U.S. and U.K. and has more than 100 years of operating experience.

PPL’s transmission and distribution infrastructure are its growth drivers. Compared to the average U.S. utility, PPL receives a higher return on equity in the U.K. and from its transmission infrastructure in Kentucky and Pennsylvania.

Since most of the company’s revenues come from regulated operations, its earnings are highly secure and predictable. In fact, PPL’s sales dipped by just 5% during the financial crisis, and the company continued raising its dividend each year.

PPL also has good regulatory and geographic diversification with more than 50% of its earnings from the U.K., 27% from Kentucky, and 23% from Pennsylvania. The company could also be a beneficiary of a potential “cash repatriation holiday” under President Trump because it generates more than half of its earnings from the U.K.

PPL has grown dividends at an annual rate of 3.3% over the last decade. Its earnings per share are expected to grow at 5-6% per year through 2020, with PPL’s rate base also growing around 5% annually between 2017 and 2020.

As a result, PPL should have sufficient resources to increase the dividend by a planned 4% per year through the end of the decade, outpacing the rate of inflation to protect income investors’ purchasing power.

The company last increased its dividend by 4% in February 2017, in line with PPL’s commitment to raise dividends by 4% annually. This marks the company’s 16th consecutive annual dividend increase.

Read More: PPL High Dividend Stock Analysis

22) Target (TGT)

Dividend Yield: 4.2%   Forward P/E Ratio: 13.1  (as of 10/5/17)
Dividend Safety Score: 81   Dividend Growth Score: 45
Sector: Consumer Discretionary   Industry: Discount Retail
Dividend Growth Streak: 49 years

The first Target store opened in 1962, and the company now has approximately 1,800 locations across the country. Target’s store provide convenient one-stop shopping and competitive prices across a number of general merchandise categories such as personal care, beauty, electronics, apparel, food, furniture, appliances, and more.

Target’s scale provides it with an advantage because it can negotiate more favorable supply contracts with buyers and afford to offer a much broader selection of merchandise at lower prices compared to smaller rivals.

While brick-and-mortar retailers are facing a number of challenges, Target likely isn’t going away anytime soon. The company’s stores are in reasonable condition, it sells many essential merchandise items, and management is investing heavily in e-commerce in an effort to remain relevant with consumers.

Target continues taking costs out of its business and dialing back new store openings, which is helping its cash flow generation to continue paying and growing its dividend.

Target has paid dividends since 1967 and is a dividend aristocrat with 49 consecutive years of dividend increases. The company will be crowned a dividend king after this year.

Management has raised Target’s dividend by 18.1% per year over the last decade. However, dividend growth has slowed to a mid- to upper single-digit rate in recent years and seems likely to continue decelerating in light of the company’s struggles to grow.

While the company’s dividend continues to look quite safe, my personal preference is to avoid businesses with questionable long-term growth prospects. America only needs so many big box stores, and e-commerce is structurally changing the brick-and-mortar world.

Read More: Target High Dividend Stock Analysis

21) Duke Energy Corporation (DUK)

Dividend Yield: 4.2%   Forward P/E Ratio: 18.4  (as of 10/5/17)
Dividend Safety Score: 87   Dividend Growth Score: 41
Sector: Utilities   Industry: Electric Power
Dividend Growth Streak: 13 years

Founded in the early 1900s, Duke Energy has become the largest electric utility in the country. The company’s operations span across the Southeast and Midwest to serve approximately 7.4 million electric customers and 1.5 million gas customers.

Regulated electric utilities account for 89% of Duke Energy’s earnings, but the company also has a fast-growing gas infrastructure and utilities business (8%) and a commercial portfolio of renewables (3%).

Management sold Duke Energy’s international energy business (which was 5% of earnings) last year to reduce its earnings volatility and focus the company completely on its core domestic operations.

Many utility companies are basically government regulated monopolies in the regions they operate in. Almost all of Duke’s utilities operate as sole suppliers within their service territories, for example.

The extremely high cost of building and maintaining power plants, transmission lines, and distribution networks makes it uneconomical to have more than one utility supplier in most regions.

However, the price regulated utilities can charge to customers is controlled by state commissions.

Fortunately, Duke Energy operates in geographic areas with generally favorable demographics and constructive regulatory frameworks.

The company’s customer base has consistently expanded by close to 1% per year, and Duke Energy has earned a stable and healthy return on equity between 9% and 11% in each of its regions.

With nearly all of its profits generated from core regulated operations, Duke Energy’s business is very safe and predictable with high entry barriers. The company’s recent acquisition of Piedmont Natural Gas will also help it continue shifting towards cleaner forms of electricity generation while also providing more opportunities for growth in natural gas infrastructure.

Duke Energy has paid quarterly dividends for more than 90 years and has increased its dividend each year since 2005.

The company has increased its dividend by about 2% per year over the last decade, but management recently doubled the dividend’s growth rate to 4% per year to reflect Duke Energy’s lower risk business mix and core earnings growth rate of 4-6% per year.

Assuming Duke Energy’s growth projects go as expected, investors should be safe to assume about 4% annual dividend growth the next few years.

Read More: Duke Energy High Dividend Stock Analysis

20) Altria Group (MO)

Dividend Yield: 4.2%   Forward P/E Ratio: 19.5  (as of 10/5/17)
Dividend Safety Score: 98   Dividend Growth Score: 46
Sector: Consumer Staples   Industry: Tobacco
Dividend Growth Streak: 47 years

Altria was founded in 1919 and is the largest tobacco company in America.

Smokeable products accounted for close to 90% of Altria’s operating income last year, with cigarettes under the Marlboro and Middleton brands representing the company’s largest product offerings.

Altria’s yield shot higher in July when its stock price collapsed nearly 20% following a shocking announcement by the U.S. FDA.

The FDA plans toregulate nicotine levels in cigarettes so that they are no longer addictive, which could accelerate the decline in smoking and crimp Altria’s profitability.

Investors can learn more about this big news and what it means for the company’s future and dividend safety here:

Smoking has been in decline for many years, but Altria has remained one of the best dividend growth stocks on Wall Street thanks to its strong brands, excellent pricing power, continuous cost cutting, and large scale.

In fact, Altria’s market share in U.S. cigarettes and smokeless tobacco is above 50%. Marlboro’s market share is even greater than the next 10 largest brands combined!

The company’s supply chain, distribution system, and marketing network are unmatched, and its high market share and strong brand recognition provide Altria with excellent pricing power, which more than offsets the steady decline in volumes from lower tobacco use.

Altria has increased its dividend for 47 straight years, recording annual dividend growth around 8% to 9% during the past five years.

Given management’s 80% payout ratio target and Altria’s potential for upper single-digit earnings growth, the company seems likely to continue rewarding dividend growth investors with mid-single-digit payout growth going forward, at least until more information is known about the FDA’s announcement.

Read More: Altria High Dividend Stock Analysis

19) TELUS Corporation (TU)

Dividend Yield: 4.4%   Forward P/E Ratio: 17.1  (as of 10/5/17)
Dividend Safety Score: 85   Dividend Growth Score: 52
Sector: Telecommunication   Industry: Diversified Communications
Dividend Growth Streak: 13 years

TELUS is a Canadian telecommunications company that was formed in 1990 by the government of Alberta. The company is the second largest telecom company in Canada and provides a wide range of services, including voice, entertainment, satellite, IPTV, and healthcare IT.

In total, TELUS provides services to 8.6 million wireless subscribers, 1.7 million internet subscribers, and 1 million TV customers. It also has 1.4 million residential network access lines.

Wireless services account for roughly 69% of total EBITDA, with wireline (residential network access lines, internet subscribers, TV subscribers) accounting for the remaining 31% (wireline voice, a declining market, is less than 15% of total revenue). Both segments are moderately growing overall.

The Canadian telecommunication sector is an oligopoly dominated by three big players – TELUS, Rogers Communication, and Bell. These three companies have strong pricing power and use their scale (i.e. massive subscriber bases and costly network infrastructure) to prevent new entrants coming into the market.

The capital-intensive telecom industry also has barriers to entry in the form of a costly, scarce resource – telecom spectrum. Additionally, telecom services are largely recession-resistant and enjoy sticky recurring revenue, providing very reliable cash flow (and dividends) every year.

TELUS has increased its dividend consecutively every year since 2004, growing its dividend by 11.9% annually over the past 10 years. Annual dividend growth has averaged more than 10% over the last five years as well.

The company has a target to increase dividends by 7% to 10% annually from 2017 to 2019 while maintaining a payout ratio between 65% and 75%, so solid dividend growth is expected to continue for shareholders.

Read More: Telus High Dividend Stock Analysis

18) National Retail Properties (NNN)

Dividend Yield: 4.5%   Forward P/E Ratio: 16.7  (as of 10/5/17)
Dividend Safety Score: 82   Dividend Growth Score: 16
Sector: Real Estate Industry: Retail REIT
Dividend Growth Streak: 28 years

National Retail Properties is a real estate investment trust that was founded in 1984. The REIT owns and develops properties and leases them under long-term contracts to retail tenants. It has more than 2,500 properties spread across 48 U.S. states which are leased to more than 400 diverse tenants across 37 lines of trade.

The REIT  originates single-tenant triple-net leases to customers across different sectors with convenience stores contributing to 17% of its annual rent, full-service restaurants (12%), limited service restaurants (8%), auto service (7%), family entertainment centers (6%), and health and fitness (6%).

Roughly 60% of National Retail Properties’ rent comes from its top 25 tenants, most of which have stable businesses with a weighted average rent coverage ratio of 3.6x.

In addition to its large customer base, National Retail Properties has a strong competitive advantage in the form of its geographically diversified and well-located properties. The company’s occupancy rate has never dipped below 96.4% over the last 13 years, for example.

National Retail’s average remaining lease term is 11.6 years and more than 60% of leases are not due for renewal in the next eight years, providing great cash flow visibility. Management also maintains a very conservative amount of financial leverage for a REIT, lessening its dependence on capital markets for growth financing.

National Retail Properties has paid higher dividends for the last 28 consecutive years and has increased its dividend by 2.1% per year over the last two decades.

Since REITs pay out most of their income as a dividend and are generally mature, capital-intensive businesses, dividend growth is often relatively low but reliable. National Retail’s dividend will likely continue growing at a 2-4% annual pace.

Read More: National Retail Properties High Dividend Stock Analysis

17) Realty Income Corporation (O)

Dividend Yield: 4.5%   Forward P/E Ratio: 19.1  (as of 10/5/17)
Dividend Safety Score: 85   Dividend Growth Score: 28
Sector: Real Estate   Industry: Retail REIT
Dividend Growth Streak: 24 years

Realty Income is a real estate investment trust that was incorporated in 1997 and is mainly engaged in the asset management of commercial properties in the U.S.

The company’s portfolio consists of more than 4,900 properties across 49 states, a large majority of which are single-tenant properties.

Realty Income has close to 250 commercial tenants (the largest is just 7% of rent) from over 50 different industries, providing the company with excellent cash flow diversification.

Real estate is all about “location, location, location” (especially in retail). A property’s location is its biggest value driver.

Realty Income’s strategy of purchasing freestanding, single-tenant properties in key locations has given it a strong competitive advantage. A consistently high occupancy ratio (>96%) indicates the success of its portfolio strategy.

The company’s revenues are predictable and secure with all its properties rented out under long-term leases to a well-diversified customer base spread across different industries and states.

The cash flows are also stable as customers mostly belong to the non-discretionary service industry, with 40% of the revenue also coming from customers with investment-grade credit ratings.

REITs have to pay out 90% of their income under law as dividends, which imply that they have to rely on debt and equity issuance to fund growth.

However, with a conservative capital structure, Realty Income has plenty of room to raise money and buy more properties to fuel growth.

Turning to the dividend, Realty Income has great record, growing dividends by 5.3% per year over the last 20 years and paying consecutive monthly dividends for nearly 50 years.

High dividend stock investors can likely expect future dividend growth of 3-5% per year going forward, similar to the company’s earnings growth trajectory.

Read More: Realty Income High Dividend Stock Analysis

16) Verizon Communications Inc. (VZ)

Dividend Yield: 4.7%   Forward P/E Ratio: 13.2  (as of 10/5/17)
Dividend Safety Score: 84   Dividend Growth Score: 20
Sector: Utilities   Industry: Diversified Communications Services
Dividend Growth Streak: 11 years

Verizon is the largest wireless services provider in the country and provides 4G LTE coverage to over 98% of the country’s population.

Verizon has more than 114 million wireless retail connections, 7 million Fios (fiber-optic network) internet subscribers, and 5.8 million Fios video subscribers. In 2016, Verizon was the most profitable company in the telecommunications industry worldwide.

Verizon’s business can be broadly classified into two categories – wireless operations (86% of EBITDA) and wireline operations (14%). The company is also expanding into fast-growing areas such as the Internet of Things and managed security.

Verizon’s moat is in the form of a large subscriber base and valuable telecom spectrum. The company’s leading investments in its network have helped it consistently score the highest in wireless reliability, speed, and network performance compared to its peers AT&T, Sprint, and T-Mobile.

While the industry is intensely competitive, Verizon’s advanced network technologies and leading network coverage help it maintain its huge subscriber base. Verizon’s revenue stream is also regular and reliable since it is engaged in providing a non-discretionary service.

There is also little room for new entrants because the telecom industry is very mature. Spectrum licenses are extremely expensive and infrequently available, and there are only so many wireless subscribers in the market to fund these costs. Moreover, huge spending is required to develop new technologies. Verizon has been at forefront of developing 5G wireless technology.

Verizon has also made acquisitions to strengthen its wireless offering (bought Vodafone’s remaining 45% stake in Verizon Wireless in 2014) and branch into mobile advertising solutions (acquired AOL in 2015 and looking to buy Yahoo! today).

While growth is a challenge, the company’s high dividend remains in good shape. Verizon and its predecessors have paid uninterrupted dividends for more than 30 years while increasing dividends for 11 consecutive years.

Management also recently announced a $10 billion cost savings plan which it believes will fund the company’s dividend through cash savings in 2022.

Verizon’s dividend has grown by 4.5% per year over the last decade, but annual dividend growth has decelerated to closer to 2% more recently. Going forward, Verizon’s dividend will likely continue growing by 2% to 3% per year.

Read More: Verizon’s Dividend Safety

15) Southern Company (SO)

Dividend Yield: 4.7%   Forward P/E Ratio: 16.7  (as of 10/5/17)
Dividend Safety Score: 82   Dividend Growth Score: 18
Sector: Utilities   Industry: Electric Power
Dividend Growth Streak: 17 years

Southern Company is one of the largest producers of electricity in the U.S. and has been in business for more than 100 years. The Atlanta-based company has more than 100 years of experience and provides service to more than 9 million customers, split about equally between electric and gas.

Southern Company owns electric utilities in the southeastern U.S. and has natural gas distribution utilities in seven states. Since about 90% of Southern Company’s earnings come from regulated subsidiaries, its cash flows are safe, regular, and reliable.

Regulated utility businesses also require huge amount of investment in the construction of power plants, transmission lines and distribution networks. This creates high barriers to entry and low business risks because people will continue buying electricity even during a recession.

Additionally, Southern Company enjoys a favorable regulatory framework in the Southeast region and operates in four of the top eight friendly states in the U.S. This helps ensure that the company will earn a fair return on its large investments.

The company’s $8 billion acquisition of AGL Resources in 2016 has further diversified Southern Company’s operating assets (natural gas capacity), areas of operations (Midwest region), and regulatory risk. The combined entity has a more balanced electric and gas customer mix and bigger geographical footprint, which further reduces its risk profile while providing new growth opportunities.

With that said, income investors need to be aware that Southern Company is facing a number of challenges with several multibillion dollar projects. Most recently, the company announced it was ceasing its “clean coal” plant in Mississippi after cost overruns and regulatory pushback.

Its Vogtle nuclear plant in Georgia also faces additional costs and delays after a major supplier (Toshiba’s Westinghouse) declared bankruptcy. While Toshiba will provide Southern Company with a few billion dollars, there is still plenty of risk.

Fortunately, the U.S. Department of Energy announced the Vogtle project will receive an additional $3.7 billion in loan guarantees. The project is expected to be completed by 2022.

Investors favor utility stocks because of their safe and regular dividend payouts. Southern Company has paid uninterrupted quarterly dividends for more than 65 consecutive years and grown its dividend at a 3.7% annual rate over the past decade.

Following the AGL acquisition, Southern Company is expected to grow earnings per share around 4-5% per year. This implies that the utility should be able to keep increasing its dividend by 3-4% annually. The company’s 17-year dividend growth streak will likely continue for many years to come.

Read More: Southern Company High Dividend Stock Analysis

14) National Health Investors, Inc. (NHI)

Dividend Yield: 4.9%   Forward P/E Ratio: 14.8  (as of 10/5/17)
Dividend Safety Score: 80   Dividend Growth Score: 67
Sector: Real Estate   Industry: Healthcare REIT
Dividend Growth Streak: 15 years

National Health Investors is a self-managed real estate investment trust that was incorporated in 1991. It is engaged in the ownership and financing of healthcare properties such as assisted living facilities, senior living campuses, skilled nursing facilities, specialty hospitals, entrance-fee communities and medical office buildings

The REIT owns a diversified portfolio of over 200 properties, of which approximately 60% are senior housing properties while the rest primarily consist of skilled nursing facilities. National Health rents these properties to 32 healthcare operators under long-term leases with annual escalators that make the cash flow more secure and predictable.

National Health Investors has a business model which is almost immune to the vagaries of the economic cycle, given that its operators provide essential healthcare services. The rapidly growing aging provides a lot of fuel for long-term growth, too. In fact, the 75+ year-old population is expected to double over the next 20 years.

The REIT has increased its dividend for 15 consecutive years and has delivered 6.5% annual dividend growth over the past decade. Income investors can likely expect mid-single-digit dividend growth to continue..

13) Ventas, Inc. (VTR)

Dividend Yield: 4.9%   Forward P/E Ratio: 15.3  (as of 10/5/17)
Dividend Safety Score: 73   Dividend Growth Score: 30
Sector: Real Estate   Industry: Healthcare
Dividend Growth Streak: 7 years

Ventas is a healthcare real estate investment trust. It invests in properties located in the United States, Canada, and the United Kingdom and is one of the largest healthcare REITs in the United States. Ventas earns approximately half of its revenue from triple-net leases, which are not long-term in nature and also have a price escalator factor to protect profits.

After spinning off its skilled nursing facility properties into a separate REIT (Care Capital Properties) in 2015, Ventas owns a quality portfolio of approximately 1,300 properties, including seniors housing (54% of net operating income), medical offices (20%), specialty hospitals (7%), life science (6%), and acute care hospitals (5%).

With an aging population, the demand for healthcare and senior living services will continue to be robust. The company’s properties should benefit as healthcare spending is expected to grow 5.8% annually through 2024.

Ventas also has strong potential for growth in U.S. because less than 15% of U.S. medical assets are owned by medical REITs today. Compared to other industries, healthcare REITs control a relatively small percentage of real estate assets in this $1 trillion market and should have opportunities for continued consolidation.

With a diversified portfolio of healthcare properties, one of the strongest balance sheets of any REIT, and favorable demographic trends behind it, Ventas is well-positioned to continue growing through acquisitions while paying safe, steadily increasing dividends.

Ventas has paid uninterrupted dividends since going public in 1999 and increased its dividend by 8% per year since 2001.

While the company’s most recent dividend increase was small as a result of its Care Capital Properties spinoff, which reduced cash flow per share, long-term investors can likely expect continued 5% to 6% annual dividend growth over the coming years.

Read More: Ventas High Dividend Stock Analysis

12) EQT Midstream Partners, LP (EQM)

Dividend Yield: 4.9%   Forward P/E Ratio: 13.5  (as of 10/5/17)
Dividend Safety Score: 68   Dividend Growth Score: 57
Sector: Energy   Industry: Oil & Gas Production & Pipeline – MLP
Dividend Growth Streak: 6 years

EQT Midstream Partners is a growth-oriented limited partnership formed by EQT Corporation that owns and develops midstream oil and gas assets in the Appalachian Basin. The company provides natural gas transmission, storage, and gathering services in Pennsylvania, West Virginia, and Ohio.

EQT Midstream Partners provides midstream services to EQT Corporation and third parties through two primary segments. Its transmission and storage system (48% of revenues) serves as a header system transmission pipeline. Its gathering system (52%) delivers natural gas from wells to transmission pipelines.

The company owns a 950 mile FERC-regulated interstate pipeline network, 1,800 miles of high- and low-pressure gathering lines, and 43 Bcf of gas storage capacity to deliver its midstream energy services.

The partnership’s cash flows are highly stable and recurring in nature as most of its services are secured under long-term contracts (16-year weighted average transmission contract life) with firm reservation and usage fees. This insulates the company from commodity price risk. For example, its Marcellus gathering units in Pennsylvania and West Virginia have 10-year demand based fixed-fee contracts.

EQT Midstream’s assets are also strategically positioned in the rapidly developing natural gas Marcellus and Utica shale plays. Its sponsor and main customer EQT is a prominent Marcellus producer that is growing sales volumes at a double-digit clip.

The principal business objective for EQT Midstream Partners is to increase the quarterly cash distributions, and the partnership has been quite successful on this front with 25.3% annual distribution growth over the last three years.

EQT Midstream Partners targets annual distribution growth of 20% in 2017 and 15%-20% beginning in 2018. With a 1.5x coverage ratio over the last year and a BBB- credit rating from SP, the partnership’s distribution looks safe as long as management’s growth projects deliver their expected returns and capital markets remain accessible.

11) AT&T (T)

Dividend Yield: 5.0%   Forward P/E Ratio: 13.4  (as of 10/5/17)
Dividend Safety Score: 79   Dividend Growth Score: 14
Sector: Telecommunication   Industry: Diversified Communications
Dividend Growth Streak: 33 years

AT&T is the world’s largest telecom company with $164 billion revenue last year. The multinational communications and digital entertainment conglomerate is headquartered in Texas and was founded in 1875. AT&T provides mobile and fixed telephone services, data and internet services, and also pay-TV services through DirecTV.

The company operates through four divisions – Business Solutions (44% of sales), Entertainment (32%), Consumer Mobility (20%), and International (4%). Business Solutions accounts for just over half of the company’s total segment profit and includes wireless and voice services.

AT&T has a strong competitive advantage being the second largest wireless solution provider in the U.S. The wireless industry is mature and has significant entry barriers owing to costly infrastructure and spectrum requirements.

Moreover, large companies like AT&T and Verizon enjoy strong brand recognition and have huge subscriber bases they can leverage to keep prices low enough to further discourage new entrants. The company is expected to roll out 5G wireless services this year to further strengthen its market position.

Unlike Verizon, AT&T has aggressively expanded its business outside of wireless services in recent years (wireless operations previously accounted for about 75% of the company’s income). AT&T acquired DirecTV for $49 billion in 2015 to become the largest pay-TV provider in the world and is focused on cost synergies and bundling its services to drive earnings higher.

The company also announced plans to acquire media giant Time Warner, which would account for 15% of AT&T’s total revenues and add a new business for AT&T – content. Over 100 million customers subscribe to AT&T’s TV, mobile, and broadband services, so AT&T’s bundled subscription packages could be further differentiated with the increased content flexibility provided by Time Warner.

AT&T is the only telecom company that is also a dividend aristocrat. The telecom giant has not only been paying dividends for 33 consecutive years but has also increased payments during this period.

AT&T’s dividend has grown by 3.7% per year over the last 10 years and will likely grow by 2-3% per year going forward as the company digests its large deals and restores improves the health of its balance sheet.

Read More: AT&T High Dividend Stock Analysis

10) Magellan Midstream Partners, L.P. (MMP)

Dividend Yield: 5.0%   Forward P/E Ratio: 18.2  (as of 10/5/17)
Dividend Safety Score: 78   Dividend Growth Score: 78
Sector: Energy   Industry: Oil & Gas Production MLP
Dividend Growth Streak: 17 years

Magellan Midstream Partners engages in the transportation, storage, and distribution of crude oil and refined petroleum products. Unlike most MLPs, the partnership enjoys an investment-grade credit rating and has no incentive distribution rights, retaining all of its cash flow.

The company’s refined products business accounts for 58% of total operating profits, with crude oil (32%) and marine storage (10%) making up the remainder. Magellan enjoys primarily fee-based revenue that comes from an attractive portfolio of energy infrastructure assets.

Magellan’s cash flow is largely recurring in nature and offers a cushion to the partnership from oil and gas price weakness because profits are primarily driven by throughput volume and tariffs.

Magellan Midstream Partners also owns the longest refined petroleum products pipeline system in the U.S. and has access to roughly half of the country’s refining capacity, providing numerous growth opportunities.

The partnership also has 100 million barrels of storage capacity for petroleum products. Magellan’s strategic advantage lies in the massive transportation and storage infrastructure, which has been built over the years in strategic locations and prevents most new competition from challenging it.

Magellan Midstream Partners has a strong track record of distribution growth, too. The partnership successfully increased its cash distributions even during periods characterized by unfavorable commodity prices, proving its resilience even in tough times.

The partnership has grown its dividend consistently for more than 15 years in a row following its IPO. Magellan’s dividend increased by 11% per year over the last decade, and management targets 8% annual distribution growth over the next few years

Magellan Midstream Partners is a good choice for long-term investors who are risk averse but want some of the high income provided by MLPs. The partnership focuses on expansion opportunities in a disciplined manner, which seems likely to continue fueling upper single-digits dividend growth.

Read More: Magellan Midstream Partners High Dividend Stock Analysis

9) Welltower Inc. (HCN)

Dividend Yield: 5.1%   Forward P/E Ratio: 16.3  (as of 10/5/17)
Dividend Safety Score: 83   Dividend Growth Score: 28
Sector: Real Estate   Industry: Healthcare REIT
Dividend Growth Streak: 14 years

Welltower is one of the largest medical REITs in America. The company was founded in 1970, and Welltower is involved in practically every aspect of patient care, from hospitals and long-term skilled nursing facilities to senior assisted living communities and medical office buildings.

Welltower’s business segments are long term post-acute care (20% of operating income), outpatient medical (16%), and senior housing (64%). The company owns a diversified portfolio of approximately 1,500 properties located primarily in major cities across the U.S., Canada, and the U.K.

Welltower makes money renting out its high-quality portfolio of medical properties under long-term contracts to a diverse group of partners, such as Brookdale Senior Living (BKD) and Genesis Healthcare (GEN), which are the companies actually caring for patients.

Thanks to its long-term contracts and the essential services provided by its tenants, Welltower has a recession-proof business that generates secure and predictable cash flow (sales grew each year during the financial crisis).

An aging American population is the key to Welltower’s growth. In fact, America is expected to see its 75+ year old population double over the next two decades. With an increasing aging population and growing health awareness amongst people, aggregate health expenditures are anticipated to continue rising for the foreseeable future.

REITs are very popular with income investors because they are required to pay out almost all of their taxable earnings as dividends. Welltower is no exception and has been distributing uninterrupted dividends since making its first payment in 1971.

The company has even increased its dividend in most years throughout its history, growing its dividend by 3.9% annually over the past five years and by 2.5% per year over the last two decades.

Welltower’s dividend has increased every year since 2004, and continued low to mid-single-digit dividend growth is likely to continue for many years to come, matching growth in Welltower’s underlying cash flow.

Read More: Welltower High Dividend Stock Analysis

8) Tanger Factory Outlet Centers (SKT)

Dividend Yield: 5.5%    Forward P/E Ratio: 10.4 (as of 10/5/17)
Dividend Safety Score: 72   Dividend Growth Score: 37
Sector: Real Estate    Industry: Retail REIT
Dividend Growth Streak: 24 years

Founded in 1981, Tanger Factory Outlet Centers is a REIT that develops, owns (including 50% stakes), and operates more than 40 upscale outlet shopping centers.

Tanger’s 3,100 store locations can be found across 22 coastal states in the U.S. and Canada and leased out to more than 500 high-end retailers. No tenant accounts for more than 7% of total rental revenues, and Tanger has historically had no trouble filling its locations with an occupancy rate above 95% since 1981.

With more than three decades of experience in the outlet industry, Tanger has developed a strong brand and established long-standing relationships with many of its tenants. Its tenant base is also diverse and comprises of well-known brands such as Banana Republic Factory Store, Barneys New York, Brooks Brothers, Calvin Klein, Coach, Gap Outlet, Giorgio Armani, Hugo Boss Factory Store, and others.

Its outlet centers house popular brands together at one place, which is quite convenient for customers and enables greater foot traffic (more than 188 million shoppers visiting its centres last year). Tanger’s industry experience, extensive development expertise, and strong retail relationships are its key competitive advantages.

While many mall-based retailers are struggling in the age of Amazon, Tanger’s exclusive focus on premium outlet centers, where high-end retailers offer deeply discounted clearance items, remains a differentiating factor. The company has also invested heavily to turn its malls into more of experience centers, embracing the latest in technology and luxury.

As a result, the company has thus far been able to maintain one of the industry’s bset occupancy rates while continuing to raise rent on expiring leases and realize same-center net operating income growth each quarter.

Tanger has been increasing dividends for 24 consecutive years and last raised its payout by 5.4%. Its dividend has grown by 9.8% annually over the last five years and will likely increase by 4% to 6% per year going forward.

Read More: Tanger Factor Outlet Centers High Dividend Stock Analysis

7) Brookfield Renewable Partners (BEP)

Dividend Yield: 5.6%   Forward P/E Ratio: 17.6  (as of 10/5/17)
Dividend Safety Score: 52   Dividend Growth Score: 81
Sector: Utilities   Industry: Renewables
Dividend Growth Streak: 4 years

Brookfield Renewable Partners is the renewable energy arm of Brookfield Asset Management (62.5% ownership), which is a major global infrastructure company operating in the Americas and Europe. Brookfield Renewable Partners business model is based on owning and operating renewable energy power plants.

Brookfield Renewable Partners has over 100 years of experience in power generation.

Its global footprint extends to North America (65% of its operating portfolio), Brazil and Colombia (each 15%), and Europe (5%).

The company has renewable energy capacity of more than 10,000 MW distributed across hydroelectricity (88%), wind energy (11%), solar and biomass energy.

Brookfield Renewable Partners’ competitive edge is its large portfolio of assets located across politically stable countries.

About 90% of the company’s cash flow is contracted for the next 16 years, making for generally safe and predictable business results.

With growing interest in cleaner, more sustainable forms of power, many countries are increasing their use of renewable energy.

The potential for growth in the renewable energy space is exponential, with 80% of all U.S. power expected to come from green sources by 2050.

Brookfield Renewable Partners could also potentially double its total generating capacity with the acquisition of TerraForm Power and TerraForm Global – two of SunEdison’s YieldCos.

YieldCos offer strong income growth potential, and Brookfield Renewable Partners is no exception. The partnership expects to distribute 70%-90% of its funds from operations and has an investment objective is to deliver long-term total returns of 12-15% annually, including distribution growth of 5-9% per year.

6) Iron Mountain Incorporated (IRM)

Dividend Yield: 5.6%   Forward P/E Ratio: 18.0  (as of 10/5/17)
Dividend Safety Score: 65   Dividend Growth Score: 32
Sector: Real Estate   Industry: Business Services REIT
Dividend Growth Streak: 6 years

Founded in 1951, Iron Mountain is a real estate investment trust that stores and protects all sorts of information for more than 230,000 customers. From business documents and electronic files to medical data and fine art, Iron Mountain’s services cover a very wide range.

Records & Information Management accounts for 75% of revenue, followed by Data Management (15%) and Shredding (10%). Storage accounts for 81% of the company’s gross profits.

The company has a real estate network of more than 85 million square feet spanning across 1,440 facilities (leased and owned) in 46 countries. Developed markets represent 85% of its total revenues with the balance from emerging markets. Storage rental revenues accounts for about 60% of total revenues, while service revenue is almost 40%.

A diversified customer base (95% are Fortune 1000 companies) and non-cyclical, recurring revenue are the company’s key competitive advantages. Iron Mountain also enjoys long-term customer relationships with typical lifespans averaging almost 50 years.

Operating storage facilities for businesses requires little maintenance capex and generally results in high customer retention rates. In fact, roughly 50% of boxes that were stored 15 years ago still remain in storage. These factors have helped Iron Mountain consistently generate positive free cash flow over the last decade.

For growth, the company is expanding in emerging markets in Europe, Asia, and Africa. It is in an advantageous position to invest in these markets because most of these countries have just started outsourcing records management and are early in the growth cycle. Management hopes these regions can account for 20% of total sales by 2020.

Turning to the dividend, Iron Mountain has grown its payout by 16.4% per year over the last five years.

Iron Mountain expects revenue growth of 8% to 10% and AFFO growth of 8% to 15% in 2017. The company plans to increase its dividend by about 13% in 2017, 7% in 2018, and 4% annually thereafter.

Read More: Iron Mountain High Dividend Stock Analysis

5) Main Street Capital Corporation (MAIN)

Dividend Yield: 5.7%   Forward P/E Ratio: 17.2  (as of 10/5/17)
Dividend Safety Score: 57   Dividend Growth Score: 33
Sector: Finance   Industry: SBIC & Commercial – BDC
Dividend Growth Streak: 6 years

Founded in Texas during the mid-1990s, Main Street Capital is an investment firm that provides long-term debt and equity to lower middle market companies (businesses with annual EBITDA between $3 million and $20 million) and debt to middle market companies.

The company provides financial services to support management buyouts, recapitalizations, growth financing, and acquisitions.

Main Street Capital has $3.5 billion of capital under management and its portfolio consists of 197 companies, with an average investment size of $9 million. The company’s investment portfolio comprises of lower middle market companies (45%), middle market (32%), private loan (17%) and other investments (6%).

Its investments are relatively safe with more than 89% of its debt investments secured through a first priority lien. The overall investment portfolio is diversified across geographies, industries, end markets, transaction type, etc., helping insulate Main Street Capital from distress in any single company or industry sector.

The firm’s other key competitive advantage is its low cost of borrowing. Main Street Capital owns licenses for three small business investment company (SBIC) funds, which provides access to $350 million of low cost, fixed rate (4.1% p.a.) government-backed leverage.

The company maintains a BBB investment grade rating from S&P as well, and its internally managed operating structure further reduces its costs.

Main Street Capital is also not required to return its investors’ capital by a specific date, thus allowing more flexibility and potential for higher investment returns.

Since its October 2007 IPO, Main Street has consistently paid monthly dividends to its investors. Impressively, Main Street has never cut its dividend or paid a return of capital distribution.

The company has increased dividend at 9.9% annual rate over the last five years and most recently increased its monthly dividend by 3%.

The company’s regular dividend will likely continue growing at a low single-digit pace, but management frequently issues supplementary semi-annual dividends to further boost income growth.

Read More: Main Street High Dividend Stock Analysis

4) W.P. Carey (WPC)

Dividend Yield: 5.9%   Forward P/E Ratio: 14.9  (as of 10/5/17)
Dividend Safety Score: 59   Dividend Growth Score: 28
Sector: Real Estate Industry: Diversified REIT
Dividend Growth Streak: 20 years

W.P. Carey is a leading internally-managed net lease REIT that was founded in 1973 and converted to a REIT structure in 2012. It is one of the oldest REITs in the world and is regarded as the pioneer in the leaseback model of triple net REITs, which is generally viewed as a lower-risk business model.

W.P. Carey has over 900 properties leased to more than 200 customers in the U.S. (64% of assets) and Europe (36%). The company’s owns a mix of properties, including office (30%), industrial (25%), warehouse (17%), retail (16%), and self-storage (5%) space. These properties are leased out to a wide variety of sectors such as retail (20%), consumer services (10%), sovereign and public finance (6%), automotive (6%), and healthcare (4%).

Unlike most of its REIT peers, W.P. Carey operates as a hybrid of a traditional equity REIT as well as a private equity fund, which results in lumpy growth in revenue, cash flow, and dividends. Management sells properties when they become overvalued and reinvests the proceeds into more attractively priced assets. The company also operates a fast-growing investment management division, although this segment is less than 10% of total cash flow.

W.P. Carey has a solid business model with the portfolio nicely diversified by geography, property type, and industry. As a result, the company is protected from unfavorable developments in any single industry, tenant, property type, or region.

Like National Retail Properties, W.P. Carey also enters into triple net leases with customers for long periods (generally 20-25 years), leading to stable and predictable cash flows. The tenant is responsible for maintenance, taxes, and insurance in triple net lease contracts, thus saving the REIT from operating expenses.

With an occupancy rate of 99.1%, an average lease term of 9.4 years, and about 60% of its leases contracted until at least 2024, W.P. Carey enjoys a very predictable stream of cash flow to support its high dividend.

W.P. Carey has increased its dividend every year since the company went public in 1998 and is a Dividend Achiever. The company’s dividend has increased by 8% per year over the last decade, but dividend growth has decreased to a low single-digit pace more recently.

The deceleration is likely due to the REIT anticipating an eventual increase in interest rates, so most of the marginal cash flow is going to strengthen the balance sheet so that management can continue to grow the business into the future in an era of more costly debt.

While shareholders may have to accept relatively slow dividend growth in the next few years, that doesn’t necessarily mean that W.P. Carey isn’t a good long-term high-yield, dividend growth investment.

As the company has a history of purchasing the assets it manages but does not own, W.P. Carey can likely continue growing its dividend at a rate of 4% to 5% per year over the next decade.

Read More: W.P. Carey High Dividend Stock Analysis

3) Spectra Energy Partners, L.P. (SEP)

Dividend Yield: 6.4%   Forward P/E Ratio: 14.2  (as of 10/5/17)
Dividend Safety Score: 69   Dividend Growth Score: 46
Sector: Energy   Industry: Oil & Gas Production MLP
Dividend Growth Streak: 11 years

Spectra Energy Partners is a midstream oil and gas infrastructure master limited partnership that transports natural gas, crude oil, and liquids through more than 15,000 miles of interstate pipeline systems in the U.S and Canada. It also owns 170 billion cubic feet of natural gas storage and 5.6 million barrels of crude oil storage capacity.

The MLP’s business is categorized into U.S. Transmission, Liquids, and Other. The U.S. Transmission business (92% of total EBITDA) consists of transmission, storage, and processing of natural gas in the northeastern and southeastern U.S.

The Liquids segment (8% of total EBITDA) provides transportation and storage of crude oil for customers in the central U.S. and Canada.

More than 90% of revenues come from reservation fees (for reserving capacity on pipelines and in storage facilities) while the rest is from the actual usage of the company’s assets by customers.

The company has a safe and secure business model with long-term contracts with large oil and gas majors (average terms are eight years) and a hard-to-replicate pipeline asset network. The competitive moat of the company is large as it takes a substantial amount of capital to build a pipeline grid that, once built, practically gives the owner a monopoly over that sector.

The MLP’s cash flows are all fee based and long term in nature, making them more or less immune to swings in oil and gas prices. The partnership also has strong growth potential as natural gas demand is rapidly increasing in North America driven by the low prices due to the shale gas revolution.

Spectra Energy Partners has increased dividends each year since 2007 and recorded an annual dividend growth rate of 7.3% over the last five years. Going forward, the partnership’s dividend will likely continue growing at a mid-single-digit rate and maintain distributable cash flow coverage within management’s target range of 1.05 to 1.15 times.

2) Enterprise Products Partners L.P. (EPD)

Dividend Yield: 6.5%   Forward P/E Ratio: 19.4  (as of 10/5/17)
Dividend Safety Score: 60   Dividend Growth Score: 36
Sector: Energy   Industry: Oil & Gas Production MLP
Dividend Growth Streak: 20 years

Enterprise Products Partners is one of the largest integrated midstream energy companies in North American. It owns 49,000 miles of pipelines, 25 natural gas processing plants, 22 NGL and propylene fractionators, 14 billion cubic feet of natural gas storage capacity, and 250 million barrels of other storage capacity. The partnership also has a marine transportation business.

Natural gas liquids (NGLs) transportation and processing provides the bulk of Enterprise Products Partners’ gross profit. The partnership is doubling down in this area because the shale gas boom has resulted in such an abundance of NGLs (which are used to make plastics) that there is a large, growing export market for refined NGL products in Asia and Europe.

Crude oil pipelines & services (17%) and petrochemical & refined products and services (13%) are other important business units.

Overall, the company has a strong business model with long-term transportation contracts and a base of blue chip customers. The partnership has business relations with major oil, natural gas, and petrochemical companies such as BP, Chevron, ConocoPhillips, Dow Chemical, ExxonMobil, and Shell.

About three-fourths of the firm’s customers have an investment grade credit rating, which makes them better able to continue honoring their contracts even during periods of depressed energy prices.

The partnership also has a large, integrated network of diversified assets in strategic locations. It takes substantial amounts of time and capital to build a grid of pipelines, which results in high barriers to entry.

Enterprise Products Partners’ cash flows are also fee based and long term in nature, thus making them less vulnerable to energy price volatility. With no incentive distribution rights, a solid BBB+ credit rating, and average distribution coverage of 1.2 times, Enterprise Products Partners is one of the most conservative MLPs in the sector.

The company has raised its dividend every year since going public in 1998 and has increased its dividend by 5.9% per year over the last decade. Going forward, income investors can likely expect annual dividend growth of approximately 5%.

Read More: Enterprise Products Partners High Dividend Stock Analysis

1) Omega Healthcare Investors Inc (OHI)

Dividend Yield: 8.1%   Forward P/E Ratio: 9.4  (as of 10/5/17)
Dividend Safety Score: 67   Dividend Growth Score: 20
Sector: Real Estate   Industry: Healthcare REIT
Dividend Growth Streak: 15 years

Omega Healthcare Investors is a triple-net real estate investment trust that provides financing and capital to skilled nursing facilities (SNFs) and assisted living facilities (ALFs) in the U.S. and U.K.

The company’s $9.2 billion real estate portfolio consists of more than 980 operating facilities, located across 42 states, and operated by 79 third-party operators. About 85% of its properties are SNFs with the remainder accounted for by ALFs. The REIT owns about 83% of its assets with the balance coming from mortgages (7%) and direct financing leases (7%).

Omega Healthcare’s key competitive advantages are the significant scale of its operations and its diversification across locations and customers. Omega is the largest SNF-focused REIT in the U.S. and further increased its lead after purchasing Aviv for $3.9 billion in 2015. It also operates in the healthcare industry, which provides non-discretionary essential services.

The company’s revenues are regular and secure as the occupancy rate has consistently remained in excess of 80%, and approximately 90% of portfolio expirations occur after 2021.

Omega’s revenue stream is also reasonably well diversified with the largest tenant accounting for just less than 10% of rent, and no state contributes more than 10% of its total rent.

Due to the rapidly growing senior population, the secular demand for Omega’s operators should continue to increase. In fact, aging demographics are expected to drive SNF occupancy beyond capacity in less than 10 years without efforts to reduce lengths of stay and increased utilization of alternative care sites.

However, many of the company’s operators receive revenues through reimbursement of Medicare and Medicaid for their services. Changes in government healthcare policies could create pressure on some of these operators or the SNF industry as a whole.

For now, Omega Healthcare’s dividend remains safe. The company has increased its dividend for 18 consecutive quarters and raised its dividend payment every year since 2003.

Omega’s dividend has grown by 9.4% per year over the last decade and by 8.3% annually over the last three years.

As long as the regulatory environment remains stable and capital is accessible to fund growth, Omega can likely continue delivering mid-single-digit dividend growth over the coming years.

Read More: Omega Healthcare High Dividend Stock Analysis

Brian Bollinger
Simply Safe Dividends

Simply Safe Dividends provides a monthly newsletter and a comprehensive, easy-to-use suite of online research tools to help dividend investors increase current income, make better investment decisions, and avoid risk. Whether you are looking to find safe dividend stocks for retirement, track your dividend portfolio’s income, or receive guidance on potential stocks to buy, Simply Safe Dividends has you covered. Our service is rooted in integrity and filled with objective analysis. We are your one-stop shop for safe dividend investing. Brian Bollinger, CPA, runs Simply Safe Dividends and previously worked as an equity research analyst at a multibillion-dollar investment firm. Check us out today, with your free 10-day trial (no credit card required).

Source: Simply Safe Dividends