The following is an excerpt from 10 Dividend Stocks That Will Deliver Double-Digit Returns Every Year.
Today we’re going to take a look at 10 dividend stocks that look like solid bets to generate double-digit total returns every year, or at least every year on average.
A 10% annual return is obviously not get-rich-quick money. But at that rate, you’re still doubling your money every seven years, and that’s not too shabby.
Claiming a stock will deliver a double-digit return every year is a bold statement. After all, the “Siegel constant,” named after Wharton Professor Jeremy Siegel, says the stock market as a whole delivers total returns of around 7% per year after inflation. So, a stock that delivered a double-digit return every year would be one that consistently beat the market.
You know the old refrain: Past performance is no guarantee of future results. I can’t promise you that every stock on the list will deliver a double-digit return, particularly if we have weakness in the broad market. But I can tell you this: Based on current prices and dividend yields, these stocks are definitely priced well enough to make double-digit returns possible, which is better than what I can say for the vast majority of other stocks.
You’ll notice some common themes among this list of dividend stocks to buy. They all pay dividends, and most a long history of raising those dividends. Also, tech stocks or other companies I see as being at risk of disruption are also mostly left off the list.
Here’s a look at the picks:
Energy Transfer Equity LP (ETE)
I’ll start with one of my favorite long-term holdings, pipeline giant Energy Transfer Equity LP (ETE).
Let’s start with the dividend. At current prices, ETE yields 6.1%. Dividend growth has been a little tepid of late, as the company overextended itself during the go-go years of the 2010s energy boom and is in the process of slowly deleveraging by retaining more of its cash. But this is a company that, as recently as a couple years ago, was improving its dividend at a 30% annual clip.
With a dividend yield of more than 6%, ETE doesn’t have to hit any home runs to generate a double-digit annual return. Even being the tortoise rather than the hare, 4% share price appreciation should be doable, and I expect it to be much better than that.
New wells in the Texas Permian Basin are profitable at prices as low as $20 per barrel. That tells me that domestic oil and gas exploration is here to stay, and midstream operators like ETE are going to be major beneficiaries.
I’ll admit I’m partial to Energy Transfer, as it was my winning pick in last year’s Best Stocks contest with a 53% return. I can’t say I expect every year to be like that. And in fact, ETE’s massive run last year was only made possible because of the beating the stock took the previous year.
But at today’s prices, ETE is definitely priced to deliver double-digit returns annually for a long time to come.
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Disclaimer: This material is provided for informational purposes only, as of the date hereof, and is subject to change without notice. This material may not be suitable for all investors and is not intended to be an offer, or the solicitation of any offer, to buy or sell any securities nor is it intended to be investment advice. You should speak to a financial advisor before attempting to implement any of the strategies discussed in this material. There is risk in any investment in traded securities, and all investment strategies discussed in this material have the possibility of loss. Past performance is no guarantee of future results. The author of the material or a related party will often have an interest in the securities discussed. Please see Full Disclaimer for a full
Charles Lewis Sizemore, CFA, is chief investment officer of the investment firm Sizemore Capital Management and the author of the Sizemore Insights blog.
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