Investing in dividend growth stocks is a popular strategy for those seeking a dependable income stream and potential capital appreciation. As we step into June 2024, identifying the right stocks with a solid history of reliable dividend growth can be fairly challenging. In fact, all major indices are hovering near all-time highs. However, several names still present highly compelling opportunities.
The three dividend following growth stocks not only boast an established track record of dividend increases but also keep trading at attractive levels. These picks have consistently increased their payouts year after year for decades. And this makes them ideal candidates for those looking to strengthen their portfolios with reliable income-producing assets.
Enterprise Products Partners L.P.
Enterprise Products Partners L.P. (NYSE:EPD) stands as one of the most reputable dividend-growth names in the Master Limited Partnerships (MLPs) space. The company has raised its dividend (or, in this case, distributions as an MLP) for 25 successive years, boasting the longest such streak among MLPs.
Moving forward, EPD stock remains well-positioned to sustain this track record due to the strengths of its business model. The partnership runs a vast network of pipelines, storage facilities and processing plants. EPD focuses on transporting, processing and storing natural gas, natural gas liquids (NGLs), crude oil, refined products and petrochemicals.
Also, the company has a pivotal role in the energy supply chain. It ensures efficient and reliable logistics of energy resources from production sites to end users. So, the partnership tends to generate predictable cash flow. This has enabled management to constantly increase distributions, even during some incredibly challenging periods for the sector, such as the Covid-19 pandemic. Besides its strong growth prospects, EPD stock is currently attached to a hefty yield of 7.2% as well.
Sanofi (SNY)
Paris-based healthcare titan Sanofi (NASDAQ:SNY) boasts an impressive track record. It has consistently increased its dividend for 29 consecutive years. Therefore, it rightfully claims its position in the spotlight as a top choice for investors seeking reliable dividend growth among European equities.
Sanofi’s remarkable dividend growth streak is fueled by its position as a major pharma player. It benefits from steady demand for its wide range of products. Those include prescription medications to vaccines and consumer healthcare items. For instance, its long-acting insulin Lantus, breakthrough treatment Dupixent, and oral medication Aubagio cater to vital medical needs, ensuring a steady flow of revenue.
However, it’s important to note that Sanofi’s dividend exhibits some less-than-ideal traits. One of them is that payouts occur annually, which may not align with some investors’ preferences for more frequent distributions. Further, dividend growth has been slow over the years, with its 10-year compound annual growth rate (CAGR) standing at just 3%. Lastly, there are foreign exchange risks attached, given dividends are declared in euros.
Nonetheless, Sanofi remains a promising option for investors seeking a steady dividend growth stock with favorable valuation metrics.
Sonoco Products (SON)
Sonoco Products (NYSE:SON) has increased its dividend every year for more than four decades. It boasts an outstanding track record of 41 consecutive years of dividend growth. The company has adeptly navigated numerous recessions and economic downturns. And, it has consistently grown shareholder returns along the way.
Also, Sonoco Products’ lasting success hinges on the resilient qualities of its business model. The plan has allowed it to thrive during various economic landscapes. In particular, SON’s packaging products remain in high demand across various economic landscapes due to their critical usage in consumer staples. It serves customers in the food and beverages, healthcare, and household products industries, all of which maintain stable demand regardless of market conditions.
Despite the market experiencing a massive wave of innovation, particularly regarding artificial intelligence (AI), SON’s products fulfill tangible, irreplaceable needs, ensuring sustained demand that won’t go away anytime soon. This should ensure the company’s continued success and dividend growth for several more decades to come.
On the date of publication, Nikolaos Sismanis did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.