If you’re a long-term income investor looking for dividend stocks to add to your portfolio, now is the time to consider Enterprise Product Partners(NYSE:EPD), Bank of Nova Scotia(NYSE: BNS)and/or PepsiCo(NASDAQ:PEP). If you already have these, you may even want to double your investment. Here’s a look at each and why now is a tempting time to buy.
The average distribution return over the organization’s history is roughly 6.2%. The current yield of approximately 6.7% is slightly above the historical average. This indicates that you are getting a fair or slightly discounted price, using the yield as a rough valuation measure. But the real key here is that Enterprise’s distribution has increased every year for 27 consecutive years; This is approximately the mid-current duration. master limited partnership (MLP) exists.
What you get when you buy is one of the largest owners and operators of energy infrastructure. pipelinesin North America. These are vital assets that customers pay a fee to use, generating highly reliable cash flows no matter what happens in energy prices. Although yield will likely account for the majority of your return over time, conservative income investors should view Enterprise as a very interesting opportunity. An investment-grade balance sheet adds to safety, as does the fact that the distribution is covered by distribution cash flow approximately 1.7 times.
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Bank of Nova Scotia is a turnaround story, but the risk is very low. You can still get an attractive 4.6% dividend yield from this Canadian banking giant. Interestingly, the bank has been paying dividends continuously since 1833; this is a series that has ended over the last 200 years. This isn’t a late-night dividend stock.
But even good companies go through tough times. Currently, Bank of Nova Scotia, also known as Scotiabank, is revitalizing its business to increase its profitability and growth prospects. This includes moving away from less profitable operations in Central and South America and refocusing on Mexico and the United States. The good news is that the company’s Canadian banking foundation remains strong, so there’s a foothold there to keep the business going as the revamp continues.
If you’re a dividend enthusiast, you shouldn’t overlook this Canadian bank, as its yield is nearly double the 2.4% average of a major US bank. Yes, there is more risk due to the business overhaul, but the added risk is probably more than offset by this higher return.
If you’re a truly picky dividend investor who only looks at the cream, PepsiCo, the Dividend King, may be your best bet. It has increased its dividend every year for over fifty years, which is not something that happens by chance. Such a win requires a strong business plan that is well executed in good times and bad. The company is one of the largest manufacturers of consumer staples on the planet, with a leading position in beverages, snacks and packaged foods.
PepsiCo competes with all competitors in distribution, brand management skills and innovation. Still, these aren’t the best of times for the company, with its business lagging behind some of its peers. Therefore, the dividend yield of 3.8% is near the highest levels in the company’s history, indicating that the stock is on the discount shelf. But if you think decades ahead, it is a high-return investment opportunity. Given Dividend King’s strong operating history, it seems highly likely that it will weather the current headwinds and get back on track. To that end, it has already acquired a pair of target brands that will better align its portfolio with current consumer trends.
If you don’t have Enterprise, Scotiabank or PepsiCo, now is the time to do a deep dive. You may find that you’ve added one or more to your portfolio. If you have these, now might be a good time to consider doubling down. Large dividend stocks don’t go on sale very often, and it pays to take advantage of the opportunity.
Before buying shares in Enterprise Products Partners, consider:
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Reuben Gregg Brewing Company He has positions at the Bank of Nova Scotia and PepsiCo. The Motley Fool recommends Bank Of Nova Scotia and Enterprise Products Partners. The Motley Fool has a feature disclosure policy.
