Dividend paying stocks are popular for a variety of reasons. Dividends offer investors with positive cash flow that they can utilize to meet their expenses by supplementing, or even replacing, their pay check. Companies that tend to pay dividends will often have more stable earnings and cash flow, and investors often benefit from these positive factors when choosing these investments. Many companies will increase their dividends year over year and help to provide a hedge against inflation.
Investing in companies that pay dividends is beneficial, but there are many companies out there that pay dividends that aren’t great companies to invest in, either because their stock is overvalued or because they are value traps. Here are three companies that pay great dividends and are good companies to invest in.
Verizon has moved beyond their traditional landline operation and is now focused on three major marketplace segments; mobile phones, FIOS internet and television broadcasting, and digital advertising. If you have ever been stuck behind someone using their Smartphone while walking you will know the addictive nature of these devices. In the United States, there are only three major companies that have significant cellphone services, and Verizon is one of the most attractive to invest in.
Verizon does have a lot of debt, particularly related to their acquisition of 100% of the stock of Verizon Wireless from Vodaphone, but pays a dividend of $0.59 per quarter, which has been increased for over a dozen years. Their service model is stable and their cash flow is immense.
In addition, the acquisition of AOL and Yahoo in 2016 and 2017 have allowed Verizon to significantly expand their revenue from digital advertising and helped them to build out a great competitive product that is intent to take on some of the biggest players in advertising.
Ventas is one of the largest health care Real Estate Investment companies in the business and have an extensive network of health care facilities and nursing homes. Ventas pays a dividend of $0.79 per quarter and has a history of increasing this dividend annually.
Ventas recently spun off some of their nursing homes into a separate REIT, and their dividend got decreased accordingly. However, their remaining properties have reliable and regular income earnings and Ventas has the resources to acquire additional properties and take advantage of the growing market for health care services, as the baby boomer generation continues to get older.
Many investors overlook companies like Ventas, as their earnings do not cover their dividends due to extensive non-cash items like depreciation on their properties. Ventas’ cash flow more than covers their significant dividend and the growth potential leaves the company with an attractive option for dividend investors.
Realty income calls themselves the monthly dividend company as they pay their dividend on a monthly basis, which many investors love. Realty income raises their dividend in small increments regularly and pays about $0.22 per share per month.
Realty income is in the commercial rent business, which is a bit precarious of an industry with the decline of many retailers. However, their varied holdings have helped to stabilize their business and provide them with regular cash flow which they pass along to investors.
Investbetter is a blog for all your latest investing news and tips!