These dividend stocks can produce a lot of income in the future.
Dividend stocks have historically been fantastic long-term investments. The best ones provide an attractive and growing income stream along with stable stock price appreciation. That can add to a strong total come back
Chevron (CVX -0.30%), Income Realty (O 1.17%)and Verizon (See 0.32%) have a great dividend paying record. Even better, they currently trade at lower values, who has them offers a high dividend yield. With upside catalysts ahead, they look like screaming buys right now.
A high octane dividend stock
Actions of Chevron they have dropped more than 10% in the past year. The decrease is due to delays in the closing of the acquisition of the needle Hess and lower oil prices. Therefore, Chevron currently offers a dividend yield of about 4.4%. It is much higher than the main rival ExxonMobil (3.2% dividend yield). While Exxon is the top dog in the oil patchChevron is a very strong one No. 2.
Chevron can thrive at lower oil prices. The company tested its business for a negative scenario where Brent crude oil (the global reference price) has an average of $50 in 2025 to 2027. The oil giant can produce enough cash to finance its capital program high yield and a growing dividend (which it has done for more than three decades) with room to spare. That excess and their elite budget will be provide with the ability to buy back stocks at the low end of their range of $10 to $20 billion a year.
Crude oil prices are currently well above that level (at least $70). That’s his upside scenario for the next few years. Under that pricing environment, Chevron could generate enough cash to buy back shares at the upper end of its annual target range without using up its balance sheet flexibility. Meanwhile, its acquisition of Hess, which Exxon is fighting to stop, will significantly increase and extend its free cash flow growth outlook. It could double the company’s cash flow to $70 a barrel by 2027. With strong Negative protection and ample upside potential, Chevron looks very attractive these days.
As consistent as they come
Realty Income’s stock price currently sits nearly 20% below its peak from a few years ago, primarily due to the impact of higher interest rates on the commercial real estate market. Therefore, this real estate investment trust (REIT) offers very attractive dividend that yields almost 5%.
The REIT has done a tremendous job growing its dividend over the years. It has raised its payout 127 times since going public in 1994, including for the past 108 quarters. in a row. It has grown its payout at a compound annual rate of 4.3% over the past 30 years.
Realty Income is in an excellent position to continue to increase its dividend in the future. The REIT expects to grow its funds from operations at an annual rate of 4% to 5%, driven by rental growth and accretive acquisitions. It has a massive investment opportunity ($5.4 trillion addressable market in the US and $8.5 trillion in Europe). With interest rates finally starting to drop, the REIT could increase its acquisition volume in the future.
A ridiculously cheap dividend stock
Currently, Verizon has an annual dividend yield of 6.2%. what is one of the highest in the S&P 500. That big-time performance is due to the company’s stock valuation. Verizon trades at a price to earnings (PE) ratio. of less than 10 sometimes It is a discount of more than 50% at the S&P 500 23.8 times forward earnings multiple.
The telecommunications giant has been an excellent dividend-growth stock over the years. It delivered its 18th consecutive annual dividend increase last month. It is the longest current dividend growth streak in the US telecommunications sector.
Verizon is taking a notable step to accelerate its growth by acquiring Border communications. The $20 billion deal yields at least $500 million in annual savings. Meanwhile, it will increase the scale of its fiber network and extend its reach. In addition, the company has invested heavily in expanding its 5G network to enhance its growth. These investments increase their cash flow, giving them the money to continue to increase their dividend and strengthen their balance sheet, and eventually. start buy back their stock on the cheap.
Primary income shares
Chevron, Realty Income, and Verizon have consistently increased their dividends over the years. That should continue into the future, especially given the upside catalysts ahead. Add in their high yields and lower valuations, and this trio looks like screaming buys for those looking for investments with strong total-the return potential.
Matt DiLallo has positions in Chevron, Realty Income, and Verizon Communications. The Motley Fool has positions and recommends Chevron and Realty Income. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy.