How to go beyond set-and-forget.
Income investors often place a priority on low-risk stocks that dish out a steady stream of dividends, but don't set off a lot fireworks. But not all dividend payers have to be sleepy stocks that sell breakfast cereal or toothpaste. If you look around, there are companies that are both generous in their paydays and aggressive with their growth plans for the future. These stocks are a bit riskier, but they also may be interesting options for investors who don't want to simply "set it and forget it" in stocks that may offer a few percentage points in dividends but little in the way of revenue growth or share appreciation. Here are nine examples of growth stocks offering dividends that may be worth a look.
NextEra Energy Partners (ticker: NEP)
NextEra Energy Partners is an independent firm that owns and operates clean energy projects in the United States. This makes it the perfect example of a mix between income and growth, since NEP stock has the characteristics of utilities that many low-risk investors like but the upside of renewable energy operations as the global economy transitions away from fossil fuels. In both the current fiscal year and next year's revenue projections for NEP, Wall Street is expecting more than a 30% growth rate. That will help support its dividend, as well as its share price.
Current yield: 4%
TerraForm Power (TERP)
Another alternative energy utility that is on the rise, TERP operates clean power assets in the U.S. and Canada, as well as overseas in European markets like Spain and the U.K. and South American markets such as Chile and Uruguay. This adds an interesting layer of geographic diversification that could be attractive to some investors. TERP is also diversified across green power sources, including both wind and solar. In fiscal 2019, TerraForm is tracking 30% revenue growth with another 10% or so forecast for 2020 on top of that.
Current yield: 4.7%
TCF Financial Corp. (TCF)
TCF is a regional bank that offers traditional services including checking accounts, loans to consumers and businesses plus investment services. The $6 billion bank has approximately 500 branches, but the geography it services is quite impressive: TCF stretches from Ohio and Michigan up to South Dakota and Wisconsin and down to Colorado and Arizona. This lean but broad structure seems to be paying off. Revenue will more than double this fiscal year, and then increase more than 30% in 2020 if current forecasts hold.
Current yield: 3.2%
MPLX is not your typical master limited partnership that just operates a pipeline, charging end-users and passing on a piece of that fee to shareholders as dividends. Rather, this stock is a diversified and growth oriented MLP formed in 2012 with the express goal of developing and acquiring midstream energy infrastructure assets. Thanks to deal-making, along with a close relationship with Marathon Petroleum Corp. (MPC), revenue is projected to increase about 18% this year and 25% next year.
Current yield: 9.9%
National Storage Affiliates Trust (NSA)
A wholly different kind of storage and logistics company, NSA is focused on independent self-storage facilities. But its approach is similar in some ways -- snap up regional franchises of storage operators and consolidate operations to achieve both revenue growth and economies of scale. The strategy seems to be paying off, because in 2019, NSA's top line will increase 17% and in 2020 the stock will see another 11% in growth. And an added bonus for those worried about a downturn is that storage facilities tend to be in use more during rough times as people downsize or move around to save cash, so this "counter-cyclical" income play has defensive appeal as well as growth potential.
Current yield: 3.8%
Apollo Commercial Real Estate Finance (ARI)
New York-based ARI is structured as a real estate investment trust, or REIT, but interestingly enough doesn't own large any tracts of land. Instead, it originates, invests in and manages a portfolio of commercial mortgages and other related products. The approach is not that different than middle men on home mortgages who buy the rights to service your loan from another bank. The difference is that office buildings and industrial parks are much more expensive. ARI has been growing nicely lately thanks to an expanding American economy. This year, the REIT will see roughly 19% sales growth.
Current yield: 9.7%
Store Capital Corp. (STOR)
Another growth oriented income play that is structured as a REIT is Store Capital but is more of a traditional real estate player as it owns land and structures. What makes this stock unique is its net-lease model where tenants are responsible for the maintenance, upkeep and taxes -- and simply pass rent on to Store. Another interesting factor is that Store targets single-tenant properties instead of office parks or strip malls. There's risk in relying on only one customer to pay the bills, but there's also reliability if they stick. STOR stock seems to have struck the right balance as its fiscal 2019 revenue should increase more than 20%, with double-digit growth expected again in 2020 as well.
Current yield: 3.7%
Medical Properties Trust (MPW)
One growth area that is all but impossible to stop is the American health care sector. Medical costs spiral higher every year, and an aging population all but ensures that there will be plenty of demand for doctors and facilities. MPW cashes in on this trend by focusing on hospital operation around the nation in the net-lease model. Basically, Medical Properties Trust owns the facility and then hospital operators pay rent to maintain the sites and serve the patients. It's a great way to cut out some of the risk and liabilities of the sector while still capitalizing on the growth of health care spending.
Current yield: 5.3%
Simmons First National Corp. (SFNC)
It's tough out there for cutting-edge financial firms looking to fight competitors, find growth without taking on risk and navigate the regulatory environment in a way that doesn't cost in the long run. But as regional bank Simmons shows, savings accounts, credit cards and small-business loans can be pretty lucrative when you're serving regions the big guys are largely overlooking. With less than 200 branches and operations in the center of the U.S., from Arkansas to Colorado, there aren't a lot of big cities driving this $2.3 billion bank. But revenue should expand about 7% this fiscal year and accelerate to 19% in fiscal 2020 thanks to a slow-and-steady approach to these markets.
Current yield: 2.8%
Smart dividend stocks to buy with growth potential:
-- NextEra Energy Partners (NEP)
-- TerraForm Power (TERP)
-- TCF Financial Corp. (TCF)
-- MPLX (MPLX)
-- National Storage Affiliates Trust (NSA)
-- Apollo Commercial Real Estate Finance (ARI)
-- Store Capital Corp. (STOR)
-- Medical Properties Trust (MPW)
-- Simmons First National Corp. (SFNC)
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