As dividend investors, we want to own stocks with high and safe yields, and the best stocks to own are those that can also grow their payouts over time. With this in mind, let’s take a look at two high-yielding stocks that raised their dividends last week, so you can determine if you should invest in one of them today.
1. Brookfield Infrastructure Partners L.P.
Brookfield Infrastructure Partners L.P. (TSX:BIP.UN)(NYSE:BIP) is one of the world’s largest owners and operators of high-quality, long-life infrastructure assets. Its portfolio includes rail tracks, ports, toll roads, electricity transmission lines, pipelines, natural gas storage facilities, and communications towers that are located across North and South America, Europe, and Australia.
In its second-quarter earnings report on August 3, Brookfield announced a 3.5% increase to its quarterly distribution to US$0.59 per share, representing US$2.36 per share on an annualized basis, and this brings its stock’s yield to about 4.8% at today’s levels. The first quarterly payment at this increased rate will come on September 30 to shareholders of record at the close of business on August 31.
Investors must also make the following two notes about Brookfield’s distribution.
First, its two distribution hikes in 2016, including its 7.5% hike in February and the one noted above, have it on pace for 2016 to mark the seventh consecutive year in which it has raised its annual distribution.
Second, it has a long-term distribution-growth target of 5-9% annually, and I think its consistent growth of funds from operations, including its 4.1% year-over-year increase to $3.59 per share in fiscal 2015 and its 12.2% year-over-year increase to $2.02 per share in the first half of fiscal 2016, and its ongoing acquisition activity, including its acquisition of Niska Gas Storage Partners LLC and its acquisition of a 57% stake in a portfolio of toll roads in Peru, will allow it to achieve this target for many years into the future.
2. Pattern Energy Group Inc.
Pattern Energy Group Inc. (TSX:PEG)(NASDAQ:PEGI) is one of the world’s largest independent generators of wind power. Its portfolio consists of 17 wind-power facilities, including one it has agreed to acquire, with a total owned interest of 2,554 megawatts in the United States, Canada, and Chile.
In its second-quarter earnings report on August 5, Pattern announced a 2.6% increase to its quarterly dividend to US$0.40 per share, representing US$1.60 per share on an annualized basis, and this brings its stock’s yield to about 6.5% at today’s levels. The first quarterly payment at this increased rate will come on October 31 to shareholders of record at the close of business on September 30.
Investors must also make the following three notes about Pattern’s dividend.
First, it has now raised its dividend for 10 consecutive quarters.
Second, its seven dividend hikes since the start of 2015, including its 2.4% hike in May of this year and the one noted above, have it on pace for 2016 to mark the third consecutive year in which it has raised its annual dividend payment.
Third, it has a dividend-payout target of 80% of its cash available for distribution, so I think its very strong growth, including its 48.8% year-over-year increase to US$92.45 million in fiscal 2015 and its 105.1% year-over-year increase to US$76.52 million in the first half of fiscal 2016, and the additional growth that will come from its growing portfolio of capacity, including its acquisition of 272 megawatts in the Broadview Wind project in New Mexico, will allow its streak of quarterly and annual dividend increases to continue for many years to come.
