These dividends are growing each year.
The lower interest rates fall around the world, the more appealing high-yield dividend stocks become to long-term investors. Unfortunately, many high-yielding dividend stocks may not be able to sustain those yields. When a company gets in financial trouble, a dividend cut can be the first way it tries to right the ship. However, a history of dividend hikes is one of the best signs a company has a healthy balance sheet. Here are eight stocks with dividend yields of at least 4% that have increased their dividends by an average of 10% annually over the past five years.
Energy Transfer (ticker: ET)
Energy Transfer owns more than 83,000 miles of natural gas and crude oil pipelines across the United States. Morningstar analyst Travis Miller says Energy Transfer's focus on liquid natural gas should benefit from a rise in LNG exports. After investing more than $8 billion annually from 2015 to 2018, Miller says Energy Transfer is set up for an extended period of cash flow growth. Energy Transfer has increased its dividend for 10 consecutive years and currently pays a 10.2% yield. Morningstar has a "buy" rating and $22 fair value estimate for ET stock.
Simon Property Group (SPG)
Simon is a retail real estate investment trust primarily focused on regional shopping malls. Morningstar analyst Kevin Brown says Simon has one of the top retail portfolios in the U.S., including Class A traditional malls and premium outlet malls in top markets. Despite losing market share to online shopping, Brown says U.S. brick-and-mortar retail sales should continue to grow for at least another decade. Simon Property has raised its dividend for nine straight years to its current 5.7% yield. Morningstar has a "buy" rating and $189 fair value estimate for SPG stock.
Magellan Midstream Partners (MMP)
Magellan is another high-yield crude oil pipeline MLP. Morningstar analyst Stephen Ellis says Magellan's refined products business got a boost from a 4.3% increase in tariffs, and the company recently raised its full-year distributable cash flow guidance to $1.26 billion. Ellis says a combination of high-quality assets, earnings stability and steady increases in distributions over time make Magellan a winning investment. Magellan has raised its dividend for nine consecutive years to its current yield of 6.7%. Morningstar has a "buy" rating and $72 fair value estimate for MMP stock.
Altria Group (MO)
Altria has more than a 50% share of the U.S. cigarette market, owns a 10% stake in alcohol company Anheuser-Busch InBev (BUD), owns a 35% stake in vaping leader Juul Labs and a 45% stake in cannabis producer Cronos Group (CRON). Morningstar analyst Philip Gorham says Altria's exclusive U.S. rights to the Philip Morris (PM) iQOS device could be a significant growth opportunity. Altria has raised its dividend for 10 straight years, and it now yields 6.9%. Morningstar has a "buy" rating and $56 fair value estimate for MO stock.
MPLX is yet another high-yield oil MLP that specializes in transporting products in the Midwest and U.S. Gulf Coast regions. MPLX acquired nearly $12 billion in assets in 2017, which Ellis says has helped boost earnings by $1.5 billion. Ellis says MPLX is establishing a massive presence in the northeastern U.S., a region he predicts will be a major natural gas liquids hub. MPLX has hiked its payout for five straight years, and the stock's current yield is 11.6%. Morningstar has a "buy" rating and $39.50 fair value estimate for MPLX stock.
AbbVie is a global pharmaceutical business that was spun off from Abbott Laboratories (ABT) in 2013. Morningstar analyst Damien Conover says AbbVie shares are undervalued given its solid core business and its strong pipeline of immunology drugs. New drug launches will help offset the significant pressure AbbVie will face from similar competitors to Humira that are on track to hit the market by 2024. AbbVie and parent company Abbott have raised their dividends each of the past 46 years. AbbVie's current yield is 5.5%. Morningstar has a "buy" rating and $102 fair value estimate for ABBV stock.
Carnival Corp. (CCL)
Carnival is the world's largest cruise ship operator and holds nearly half the global market share. Morningstar analyst Jaime Katz says valuations throughout the cruise group are depressed and Carnival is no exception. Katz says Carnival is the most efficient operator in its peer group and an aging baby boomer generation should boost demand over the next decade. Asia is also a major potential international growth source. Carnival has raised its dividend for four consecutive years and now pays a 4.6% yield. Morningstar has a "buy" rating and $58 fair value estimate for CCL stock.
Kohl's Corp. (KSS)
Kohl's navigated a difficult U.S. retail environment relatively well in recent years and loyal investors have been rewarded with regular dividend hikes along the way. Morningstar analyst David Swartz says growth will be difficult to come by for Kohl's in the next several years, but Kohl's is fighting back against e-commerce competition by expanding its online presence and increasing promotions. Kohl's has a streak of eight consecutive years of dividend hikes, which have brought the stock's current yield up to 5.7%. Morningstar has a "buy" rating and $75 fair value estimate for KSS stock.
High-yield stocks with growing dividends:
-- Energy Transfer (ET)
-- Simon Property Group (SPG)
-- Magellan Midstream Partners (MMP)
-- Altria Group (MO)
-- MPLX (MPLX)
-- AbbVie (ABBV)
-- Carnival Corp. (CCL)
-- Kohl's Corp. (KSS)
More From US News & World Report