Looking for cheap dividend stocks to add to your portfolio? There are several $200 investment alternatives. Be selective if you want to buy and hold for a long period, possibly forever. If so, you should learn about NextEra Energy (NYSE: NEE) and Enterprise Products Partners (NYSE: EPD). Here's why
1. NextEra Energy is now unpopular due to its dividend yield of 3.2%, which is slightly below the average utility, as measured by the Vanguard Utilities Index ETF. Don't disregard NextEra Energy because its yield is near its 10-year high, implying it's on sale today.
Next, the dividend growth rate, which has averaged 10% a year for a decade, is crucial. So management anticipates the dividend to grow at that rate until 2026. You'll want NextEra Energy in your portfolio if you want dividend income and growth.
Meanwhile, the company is dual-purpose. The tale revolves around NextEra Energy's regulated utility operations, particularly Florida Power & Light. In-migration to Florida has helped this slow-growing business develop its customer base
A fast-growing renewable power business driven by long-term purchase contracts is the other portion of the corporation. NextEra Energy, the smaller of the company's two divisions, wants to treble its clean energy capacity by 2026.
2. Enterprise Products Partners grows distribution and yield Enterprise Products Partners' MLP distribution yield is a massive 7%. Distribution has been raised annually for 25 years. Enterprise makes money by charging usage fees on energy infrastructure like pipelines. Demand for oil and natural gas is more essential than their price in Enterprise's enormous North American energy infrastructure network. This company is reliable in an unreliable industry.
NextEra's distribution growth won't be as quick as expected. Enterprise's distribution has increased at 7% annually for 25 years, although mid- to low-single-digits are more common now. That's probably all investors should expect in the future. Your return will likely be dominated by the high yield. That should be fine for dividend investors aiming to maximize portfolio income.
Strength of distribution will be more important. Enterprise performs nicely. Its balance sheet is investment-grade, distributable cash flow covered the distribution 1.7 times in 2023, and leverage is minimal compared to peers.
One for growth and yield NextEra Energy and Enterprise Products Partners are well-run companies you may hold for years, but they differ greatly. Both offer monthly income increases, but NextEra Energy is a dividend growth investment and Enterprise Products Partners a high-yield play. One or both will likely appeal to you.
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