Even if the broader market extends the bull market it’s currently in, that doesn’t mean you can’t find good dividend stocks. You just have to be more selective. If you’re a long-term investor looking for buy-and-hold income stocks, you need to dive deep Chevron (NYSE: CVX), NextEra Energy (NYSE: NO)and Dividend King Stanley Black & Decker (NYSE: SWK). Here’s a quick look at each.
1. Chevron has an industry leading base
Chevron is one of the largest integrated energy companies in the world. The activities range from oil production to transport and processing. And it has a globally diversified portfolio. That diversification helps mitigate the energy sector’s inherent volatility. However, there are other companies that have similar activities including ExxonMobil (NYSE:XOM). What sets Chevron apart is its financial strength.
A look at Chevron’s balance sheet shows that its debt-to-equity ratio of 0.12 times is lower than that of its closest peers. That’s important because Chevron takes on leverage during energy downturns so it can continue to support its business and its dividend. Simply put, it has more leeway to do that than the competition. It’s worth noting that the company has increased its dividend annually for 36 consecutive years and has a fairly generous dividend yield of 4.1%. By comparison, the company with the next strongest balance sheet, Exxon, offers just a 3.1% yield.
2. NextEra Energy is like buying two companies in one
NextEra Energy is one of the largest regulated utilities in the United States. And it is one of the largest producers of solar and wind energy in the world. The company’s regulated assets, including Florida Power & Light, provide a strong, but relatively slow-growing base. The clean energy side is the growth platform. Together they have allowed the utility to increase its dividend by 10% annually over the past decade, which is huge dividend growth for a utility. Management expects this level of dividend growth to continue at least until 2026.
The interesting thing is: both core activities are advantaged. Florida Power & Light has long benefited from migration to the Sunshine State. More customers means more revenue and more opportunities for regulatory-approved capital investments. And renewable energy still has a long way to growth as the world slowly transitions away from carbon fuels. This side of the business has a capacity of 36 gigawatts, with plans to expand that by another 32 to 41 gigawatts by 2026. This combination of companies has allowed NextEra Energy to increase its dividend annually for 29 years, and this dividend growth stock currently has a historically attractive dividend yield of 3.2%.
3. Stanley Black & Decker is out of favor for now
Stanley Black & Decker is a Dividend King with 56 annual dividend increases under its belt. However, the past few years have been very difficult for the company, with adjusted earnings falling from a record $10.48 per share in 2021 to just $1.45 in 2023. Management has been working on a turnaround, making this stock the best suited to more aggressive investors. What’s notable, however, is that shares are down about 55% from their 2021 highs.
That decline has pushed the dividend yield, which is currently around 3.2%, to a record high. The big story is that the efforts in cost savings, streamlining and debt reduction will start to bear fruit in 2024. The company expects adjusted profits to finally start rising again. The current business outlook calls for an adjusted profit margin of $3.50 per share to $4.50 per share in 2024. Coupled with that is a steady improvement in the company’s margins. There’s still time to jump aboard this restorative Dividend King if you act now.
There are bull market options for all types of dividend investors
Chevron, NextEra Energy, and Stanley Black & Decker are just three examples of attractive dividend stocks you can find today. The interesting thing about this trio is that they offer different things for different types of investors. Chevron is a high-yield rock in a stormy industry. NextEra Energy is a dividend growth machine in a generally slow-growing sector. And Stanley Black & Decker is a fallen angel who looks like he’ll soon earn his wings back.
Should You Invest $1,000 in NextEra Energy Now?
Consider the following before purchasing shares in NextEra Energy:
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Reuben Gregg Brewer holds positions at Stanley Black & Decker. The Motley Fool holds positions in and recommends Chevron and NextEra Energy. The Motley Fool has a disclosure policy.
Bull Market Buys: 3 Dividend Stocks to Own for the Long Run was originally published by The Motley Fool
