3 Phenomenal Dividend Stocks to Buy in September and Hold Forever

3 Phenomenal Dividend Stocks to Buy in September and Hold Forever


For dependable income, consider Dividend King Black Hills, boasting a historically robust yield and a well-established dividend history. Brookfield Renewable possesses the resources needed to sustain dividend growth. NextEra Energy Partners is primarily focused on increasing dividends gradually over time. Here are 10 stocks we favor more than NextEra Energy Partners.

These companies should continue generating growing dividend income for their shareholders in the decades to come.

Certain companies have a talent for consistently distributing dividends. They have established robust businesses that generate a consistent stream of cash flow, enabling them to provide appealing dividends while simultaneously investing in the expansion of their operations.

Black Hills (BKH -0.47%), Brookfield Renewable (BEPC -0.93%) (BEP -0.94%), and NextEra Energy Partners (NEP -1.56%) are particularly noteworthy to several contributors at Fool.com due to their outstanding track records of dividend payments. These contributors anticipate that these three companies will continue to increase their dividends for many years to come, potentially offering long-term investors a consistent source of passive income throughout their lifetime.

This boring utility is a Dividend King

Reuben Gregg Brewer (Black Hills): When it comes to dividends, the highest accomplishment is achieving the status of a Dividend King, a distinction earned by consistently increasing dividends for over 50 years. This achievement serves as evidence of both business excellence and an unwavering dedication to delivering value to shareholders. Black Hills, a regulated utility company, proudly holds the esteemed title of a Dividend King.

What’s even more appealing is that the electric and natural gas utility currently offers a dividend yield close to its 10-year high, sitting at approximately 4.5%. This indicates that Black Hills appears to be reasonably valued at the moment. Admittedly, dividend-paying utilities often compete with alternative income options such as Certificates of Deposit (CDs), where you might find a safe CD offering a similar income level. However, when you factor in the consistent dividend hikes, which you won’t receive with a CD, Black Hills emerges as the more favorable choice.

Furthermore, consider the company’s service area, which spans across Arkansas, Colorado, Iowa, Kansas, Montana, Nebraska, South Dakota, and Wyoming. Notably, it has been experiencing a faster rate of customer growth compared to the average population growth in the United States. This is a positive sign for a utility because it implies that the company’s business is expanding. Such growth indicates a strengthening revenue stream and an increased likelihood of regulatory approval for the company’s investment and rate plans, making it an even more attractive investment opportunity.

Black Hills is unlikely to transform into a high-growth stock, so don’t anticipate it becoming a topic of discussion at social gatherings or investment conversations. However, if you’re comfortable with a slow and consistent approach, this dependable dividend stock has the potential to become a foundational investment that you hold for the long term.

A powerful dividend stock

Matt DiLallo (Brookfield Renewable): Brookfield Renewable boasts an impressive history of dividend payments. Since going public in 2011, this renewable energy powerhouse has consistently increased its dividend by a minimum of 5% annually. Furthermore, its predecessors have achieved a compound annual dividend growth rate of 6% over the past two decades.

The prospect for additional dividend growth is promising. The company anticipates that four key factors will drive double-digit growth per share in terms of funds from operations (FFO) over the next several years:

As mentioned in the slide, the company has already successfully locked in and funded annual growth of at least 8% during that period. This positions it well to execute its strategy of increasing the dividend, which presently offers an appealing yield of 4.8%, by a range of 5% to 9% per year. Moreover, the company possesses the financial capability and promising investment prospects to potentially push that growth rate into double digits.

Mergers and acquisitions stand as significant catalysts for Brookfield Renewable, and it has demonstrated its capacity to secure impactful deals this year. Earlier this year, the company, along with its partners, unveiled a momentous transaction to acquire Australian utility Origin Energy. This acquisition will expand the company’s operations into Australia and demonstrate its leadership in large-scale decarbonization investments by replacing Origin’s coal power plant with new renewable energy and storage facilities. Additionally, Brookfield entered into an agreement to acquire Duke Energy’s commercial renewable energy business this year, augmenting its income-generating operating portfolio and development pipeline.

In the next three decades, the global economy requires investments amounting to trillions of dollars to achieve decarbonization. This presents Brookfield Renewable with abundant prospects for ongoing expansion. The company is well-positioned to offer its investors a steadily increasing income stream in the years to come.

These dividends should keep growing

Neha Chamaria (NextEra Energy Partners): NextEra Energy Partners possesses nearly all the attributes one desires in a dividend stock. It boasts a robust dividend track record, provides an attractive yield of 6.5%, and maintains a commitment to annual dividend growth, supported by consistent cash flow expansion. The significance of the latter aspect cannot be understated, as dividend growth has significantly contributed to the stock’s overall returns in the past and is expected to continue doing so.

In fact, NextEra’s core business objective alone could be reason enough for an income-oriented investor to consider holding the stock indefinitely. The company’s stated aim is to acquire ownership stakes in contracted clean energy projects either from its parent, NextEra Energy’s clean energy division, or from external parties. This strategy is designed to facilitate the continuous growth of cash distributions to its common unit holders over time.

In simpler terms, NextEra Energy Partners acquires clean energy assets capable of generating stable cash flows, enabling the company to progressively increase its payouts over the long term. As a master limited partnership, NextEra Energy Partners typically excels at providing consistent cash distributions.

Presently, NextEra Energy Partners has set its sights on achieving annual dividend growth in the range of 12% to 15% between 2022 and 2026, and it has already established a plan to attain this objective. In addition to potential acquisitions from its parent company, NextEra Energy Partners is actively pursuing third-party acquisitions to expand its asset portfolio and cash flow capabilities. The company perceives a substantial 300-gigawatt investment opportunity stemming from potential third-party acquisitions and industry growth through 2026.

A yearly dividend increase in the double digits presents a highly persuasive case for investing in NextEra Energy Partners’ stock, particularly considering that these enhanced dividends will be supported by the growth of cash flows. As NextEra Energy Partners advances toward its goal of becoming a fully renewable energy company, I firmly believe that it stands among the top dividend stocks available for purchase today, offering the potential for long-term ownership.

Should you invest $1,000 in NextEra Energy Partners right now?

Before making an investment in NextEra Energy Partners, please take into account the following:

The Motley Fool Stock Advisor analyst team has recently pinpointed what they consider to be the top 10 stocks for investors to consider at this moment, and NextEra Energy Partners did not make the list. These 10 selected stocks are expected to potentially yield substantial returns in the years ahead.

Stock Advisor offers investors a straightforward roadmap to success, which includes guidance on constructing a diversified portfolio, regular analyst updates, and two fresh stock recommendations each month. Since 2002, the Stock Advisor service has outperformed the S&P 500’s return by more than triple.*


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