Many investors buy dividends for one reason: They want a reliable income stream.
Some stocks generate greater revenue streams, while others provide more reliability. If you are looking for both, check out these three dividend stocks.
You can just drool AbbVie‘s (NYSE: ABBV) yield of almost 5.2%. You will also almost certainly love the drugmaker’s dividend record. AbbVie is a dividend aristocrat – an expression of S&P 500 members who have increased their dividends for at least 25 consecutive years.
Could the threatening entry of biosimilar rivals to AbbVie’s best-selling drug Humira into the US market threaten the company’s dividends? I do not think so. First, Humira’s sales will not completely evaporate overnight when biosimilars hit the U.S. market in 2023. More importantly, AbbVie has plenty of other revenue-generating products.
Rinvoq and Skyrizi appear to be worthy successors to Humira. AbbVie’s blood cancer drugs Imbruvica and Venclexta will continue to be big winners. The company’s acquisition of Allergan earlier this year yielded several blockbuster franchises, most notably Botox. In addition, AbbVie’s pipeline includes several promising candidates who can increase its fortunes along the way.
It is unlikely that AbbVie will deliver staggering revenue and revenue growth with the upcoming challenges for Humira. However, investors should still be able to rely on solid returns from the company.
2. Brookfield Renewable Partners
Brookfield Renewable Partners (NYSE: BEP)on the other hand, are the kind of stocks that should yield large dividends along with solid revenue and earnings growth. The company’s dividend yield is currently north of 3.4%. Brookfield Renewable has increased its distribution by an average of 6% annually over the last two decades.
Growth should not be a problem for the company. Brookfield Renewable Partners is one of the world’s largest providers of renewable energy. It owns hydropower, solar and wind facilities on four continents. The company can currently generate 18 gigawatts of renewable energy, but has a development pipeline that can double its capacity.
Many countries have established aggressive carbon reduction targets, which benefit renewable energy companies such as Brookfield Renewable. It also helps that wind and solar are now the cheapest sources of power generation at costs even lower than natural gas.
There is an alternative to Brookfield Renewable Partners that you may also want to consider. Brookfield Renewable Corporation (NYSE: BEPC)is the same underlying business, but is organized as a traditional company rather than a limited partnership (LP). This corporate structure eliminates some tax issues related to investing in an LP.
3. Innovative industrial properties
If you want a good return plus great growth, Innovative industrial properties (NYSE: IIPR) could just be the ticket. Investment Medical Trust (REIT) for medical cannabis has a yield of over 3%. Its share has almost doubled so far in 2020.
IIP has a solid revenue stream generated from more than 60 medical cannabis properties. It typically buys a property from a medical cannabis operator and then rents the property back to the operator. As a REIT, the IIP must return at least 90% of its taxable income to shareholders in the form of dividends.
The company must be able to easily maintain its solid growth by completing multiple repayment transactions. IIPs tenants include several of the largest U.S. multistate cannabis operators. It will not be surprising if the company expands its relationships with some of these major customers in the near future.
IIP also has opportunities to expand into additional markets. The company currently owns properties in 16 states, but with the recent U.S. election, 35 states have now voted to legalize medical cannabis. IIP could be positioned to deliver even greater overall returns than both AbbVie and Brookfield Renewable over the next few years.