Dividend investments make great long-term holdings for many reasons. There’s the buy-and-forget aspect as well as the joy in receiving a recurring income, but one of the often overlooked reasons is the opportunity for growth itself. Many of the great dividend investments on the market offer compelling growth plays that should be taken into consideration.
Here are several compelling options to consider.
Telus Corporation (TSX:T)(NYSE:TU) is one of several incredible Dividend Aristocrats that should be a core holding to nearly every portfolio. As one of the largest telecoms in the country, Telus benefits from having a strong subscriber base through its wireless segment as well as a steadily growing TV and Internet segment. Unlike some of its Big Three peers that have a media segment to augment their earnings, Telus is a pure-play telecom, which lets the company focus on its core subscription services.
In terms of earnings, in the most recent quarter, Telus realized some of the best subscriber growth in over five years, with 112,000 new wireless subscribers and 52,000 new internet and TV subscribers. Revenue also came in 6% higher than the same period last year, while earnings saw a respectable 3.3% gain over the prior period.
Where Telus really shines as an investment is through its dividend, which has provided nearly 10% annual growth going back over a decade. That’s an incredible level of growth, and Telus still provides annual or better hikes to its quarterly dividend, which currently provides a decent 4.51% yield, handily making Telus one of the best picks on the market for long-term income-seekers.
Enbridge (TSX:ENB)(NYSE:ENB) is another interesting, albeit somewhat misleading option to consider. The reason I say misleading stems from the changing opinions over the stock over the past few years. At root was an expensive, albeit growth-accretive acquisition that stretched Enbridge considerably, forcing the company to engage in cost-cutting programs to rein in costs. As Enbridge became financially stronger, its stock price remained at a significant discount, ballooning what was already an impressive dividend to even higher yields and culminating in the broad retreat we saw across the market during the holiday season last year.
Since then, Enbridge has rallied along with the market, gaining over 7% year-to-date and registering an impressive 21% gain over the trailing 12-month period. Despite those gains, Enbridge remains a great pick for income-seeking investors.
Of particular interest to investors should be Enbridge’s pipeline business model, which, not unlike a lucrative utility investment, provides a steady stream of recurring and stable revenue for the company. Finally, there’s the quarterly dividend from Enbridge, which comes as a result of having that steady stream of revenue. Enbridge currently offers an appetizing 6.00% yield, which has also been subject to annual hikes going back several years.
Restaurant Brands International (TSX:QSR)(NYSE:QSR) represents an intriguing option for dividend-seeking investors who are also looking for some growth potential. Restaurant Brands is the name behind the trio of quick-service restaurants Burger King, Tim Hortons and more recently, Popeyes. Since the company was established through the merger of Tim Hortons and Burger King, Restaurant brands has realized phenomenal growth both in price and dividends.
Since the combined company was listed just over four years ago, the stock price has soared nearly 110%, while the dividend has seen more than a dozen upticks in that short four-year period, culminating in the current respectable yield of 3.16%.
Part of the appeal of Restaurant Brands comes not just from its growing dividend, but also from the expertise and potential of each of the brands to provide a boost to company earnings. By example, Restaurant Brands was able to take the highly successful master-franchise model that was a key factor in Burger King expanding to dozens of countries around the world and apply it to Tim Hortons, which was arguably struggling for years to expand outside of Canada and the U.S. That same model is now being applied to Popeyes with great success.
Turning to the existing network of stores, Restaurant Brands is now turning toward offering delivery service – something that 7,000 Burger King locations worldwide and 3,000 locations within the U.S. alone already offer. Coupled with a rapidly growing dividend, that domestic and international growth potential make Restaurant Brands a compelling option for nearly any portfolio.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Demetris Afxentiou has no position in any of the stocks mentioned. The Motley Fool owns shares of RESTAURANT BRANDS INTERNATIONAL INC. Enbridge is a recommendation of Stock Advisor Canada.