Two High-Dividend Stocks Worth Maintaining in Your Portfolio for a Decade's Duration
Investing in dividend stocks can be quite profitable in the long run. They provide constant dividend income and also drive up their share prices as they enhance their profit margins. This dual effect can result in substantial total returns, which can significantly increase your wealth over time. For instance, a stock offering a 10% annual total return could double your investment every seven years.
Brookfield Renewable (BEPC 0.64%) and (BEP -0.17%) are excellent picks for those seeking a high dividend yield. They also boast robust growth prospects, making them lucrative income stocks to hold for a decade.
Prominent growth prospects till 2034
Over the past two decades, Brookfield Renewable has boosted its dividend at an average annual rate of 6%. Known as a leading global producer of renewable energy, it offers a dividend yield exceeding 4.5%. This is significantly higher than the dividend yield of the S&P 500 which is currently at a 20-year low of 1.2%.
Brookfield Renewable anticipates increasing its payout annually by 5% to 9% in the long run. It projects an annual growth rate of more than 10% for its funds from operations (FFO) per share over the next decade. This growth is visible and secure through 2029 and even beyond.
The upcoming development projects will contribute around half of this growth. Currently, Brookfield has 200 GW of projects in various stages of development, significantly more than its current operating capacity (37 GW). It plans to commission around 10 GW of capacity annually in the coming years.
In addition to this, Brookfield is expected to benefit from rising power prices due to inflation-linked rate increases on its existing contracts and securing higher market prices as legacy agreements expire. It also plans to continue with accretive acquisitions, currently evaluating over $100 billion worth of investment opportunities.
Visible growth till 2029
Enbridge currently offers a dividend yield over 6%. This Canadian pipeline and utility company has increased its dividend for 29 consecutive years, with an annual growth rate of 10%. Although the growth rate has slowed down in recent years (raising the payout by 3.1% last year), it is expected to increase further in the future.
Enbridge has a secured capital project backlog of CAD 27 billion ($19.4 billion). This includes oil terminal capacity additions, natural gas pipeline projects, gas utility expansions, and renewable energy projects. Enbridge has in-service dates for these projects till 2029, providing it with clear visibility into its future earnings growth.
Enbridge has substantial additional funding capacity after paying the dividend and funding its secured projects. This will give it the flexibility to approve additional projects and make bolt-on acquisitions as opportunities arise. Enbridge also has several potential capital projects in development to enhance and extend its growth profile.
Enbridge expects to enhance its EBITDA annually by around 7% to 9% through 2026, fueled by expansion projects and three gas utility acquisitions made this year. Meanwhile, its cash flow per share will increase by around 3% annually during this period, slightly affected by some tax legislation-related headwinds. However, cash flow per share growth will accelerate after 2026, likely growing by around 5% annually, matching its expected medium-term EBITDA growth rate. This should support dividend growth at a similar pace.
High yields and potential for total returns
Brookfield Renewable and Enbridge provide high dividend yields, which they aim to continue boosting. They also have solid growth prospects. By combining these yields with their growth rates, they could yield double-digit total returns in the coming years. This makes them excellent dividend stocks to invest in over the next decade.
Given the text provided, here are two sentences that contain the words 'money', 'investing', 'finance' and follow from the context:
Investing in high dividend yield stocks like Brookfield Renewable and Enbridge can significantly increase your financial wealth over time due to their consistent dividend income and strong growth potential.
Effective finance management, including careful selection of investments like dividend stocks, can help individuals grow their money faster and secure their financial future.
