Income-seeking investors have lots of reliable options when it comes to dividend stocks. Because there are so many choices, some excellent ones can get overlooked.
Three such companies are sleepy utility PPL (NYSE: PPL), Canadian midstream operator Pembina Pipeline (NYSE: PBA), and master limited partnership (MLP) Phillips 66 Partners (NYSE: PSXP). Here's why investors will want to get to know these fantastic dividend stocks.
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As steady as they come
PPL operates several regulated electric and gas utilities in Pennsylvania, Kentucky, and the UK. It has been an excellent dividend stock over the years. It has not only paid its investors in each of the past 294 consecutive quarters but also increased its payout every year since 2011. Those steady raises have helped boost the utility's yield up to a well above average 5.6%.
That trend should continue over the next several years. PPL currently plans to invest $15 billion through 2023 to expand its operations. Those investments have the company on track to grow its earnings per share at a 5% to 6% annual rate through at least 2020, which should support steady dividend growth. As a result, PPL has the potential to generate total shareholder returns in the 10% to 12% annual range. That's why investors won't want to continue overlooking the company.
Get paid each month
Pembina Pipeline operates a diversified portfolio of midstream infrastructure in the U.S. and Canada. Because those assets generate steady cash flow, Pembina has been able to pay its investors a consistent dividend. What sets its payout apart from most companies is that Pembina cuts its investors a check each month as opposed to quarterly. Meanwhile, it has steadily increased its monthly dividend every year for the past decade, growing it at a 4.5% compound annual rate.
More dividend growth is coming down the pipeline. Pembina has already announced plans to boost its payout by 5% as a result of the acquisition of Kinder Morgan Canada and another pipeline from U.S. energy infrastructure giant Kinder Morgan. In addition to the boost from that deal, Pembina has $5.5 billion Canadian ($4.2 billion) of expansion projects currently under construction, which will grow its cash flow over the next several years. On top of that, it has another CA$10 billion ($7.6 billion) of projects under development, which should give it plenty of fuel to keep growing its 4.7%-yielding dividend in the coming years.
High-octane income growth
Phillips 66 Partners is an MLP focused mainly on owning oil and natural gas liquids infrastructure. The company has grown at a fast rate over the years by acquiring assets from its parent, refiner Phillips 66. That strategy enabled the MLP to increase its distribution to investors in all 23 quarters since its initial public offering in 2013, growing it at a jaw-dropping 30% compound annual rate through the end of 2018. While Phillip 66 Partners' growth rate has slowed this year, it's last increase was still a healthy 14% above the prior year's level.
Phillips 66 Partners should have plenty of fuel to continue growing its payout at an above-average pace in the coming years. While it has acquired most of Phillips 66's midstream assets, the MLP has shifted its growth engine to run on organic expansion projects. It currently has several under construction, including a large-scale pipeline that will move oil from the Permian Basin to the Gulf Coast. As these projects come online, they'll supply Phillips 66 Partners with more cash flow that it can use to grow its 6.3%-yielding dividend.
Great options for a growing income stream
This trio of energy companies likely aren't the first ones that come to mind when investors are considering adding another income stock to their portfolio. However, as their history shows, each has done an amazing job of paying dividends. Better yet, all three have plenty of fuel to grow their already attractive payouts in the coming years. That makes them ideal options for income-focused investors to consider.
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This article was originally published on Fool.com