Retirees and other income investors are constantly searching for top companies that pay reliable and growing dividends.
Let’s take a look at three stocks that might be interesting picks for your income portfolio today.
Algonquin Power and Utilities (TSX: AQN) (NYSE: AQN)
Algonquin Power owns and operates US$9 billion in power generation, electric transmission, and natural gas distribution assets. The company is based in Canada, but most of the businesses are located in the United States. In fact, more than 90% of the company’s revenue is generated south of the border.
Algonquin Power has grown through aggressive acquisitions — a trend that’s expected to continue as the utilities sector consolidates. The company also has a number of organic developments with a focus on wind and solar projects.
Algonquin Power reported solid results through the first nine months of 2018 and steady growth should continue. The company raised the dividend by 10% in 2018 and another generous increase should be on the way in 2019.
Investors who buy today can pick up a yield of 4.9%.
Fortis is also a player in the North American utility sector with $50 billion in assets located across Canada, throughout the United States and in the Caribbean.
As with Algonquin Power, the company has grown over the years through acquisitions, and the larger deals in recent times have focused on the United States. Fortis spent US$4.5 billion in 2015 to buy Arizona-based UNS Energy. Two years later, it acquired Michigan-based ITC Holdings for US$11.3 billion. The integration of the business went well and the assets are performing as expected.
Fortis is currently working through a $17.3 billion capital program that should support ongoing dividend growth. Management plans to raise the distribution by an average rate of 6% per year through 2023. Fortis has increased the payout for 45 straight years.
The company reported solid results for 2018. Net earnings came in at $1.1 billion, or $2.59 per share, compared to $963 million, or $2.32 per share in 2017.
The existing dividend provides a yield of 3.8%.
Canadian Imperial Bank of Commerce (TSX: CM) (NYSE: CM)
Investors often skip CIBC when searching for a financial stock for their portfolios, but the company probably deserves more respect.
The bank has taken important steps to diversify its revenue stream, including the US$5 billion purchase of Chicago-based PrivateBancorp. Management has indicated that additional deals could be on the way south of the border, especially in the wealth management segment.
The company generates solid earnings dividend growth should continue at a healthy clip. At the current share price, the stock is below 10 times trailing earnings. That’s pretty cheap considering the strength of the Canadian and U.S. economies.
Investors who buy the stock today can pick up a yield of 4.9% and book a shot at some nice upside gains once sentiment improves in the overall banking sector.
The bottom line
Algonquin Power, Fortis, and CIBC all offer growing dividends with attractive yield and should be solid picks for a buy-and-hold income portfolio.
