To put it mildly, 2020 is a horrible year for dividend stocks. Hundreds of companies need to reduce their payments as a precaution due to the uncertainties surrounding COVID-19. Investors are left with income with fewer options.
However, as 2020 exposes weaker dividend payers, it shines a focus on those who are best able to keep them growing amid the pandemic. Two top choices that will stand for investors with little cash left over are the confidence to invest in real estate apartments (REIT) Camden Property Trust (NYSE: CPT) and giant energy infrastructure TC Energy (NYSE: TRP).
Both companies have sold little this year, despite their dividends continuing to grow, which will help boost their yield. Add that to their top financial profiles and growth prospects, and these dividend stocks should make a solid profit over the years. They make a great way to put $ 1,000 (or any other small amount) to work.
An inexpensive way to become an owner
Camden Property Trust is one of many REITs dedicated to owning apartment communities. Currently, REIT owns more than 56,000 apartments in 14 major US markets. It is differentiated by geography, according to the type of property and market location.
That mix has been beneficial this year as COVID-19 put pressure on high-cost markets by pushing renters into the suburbs, leaving Camden less exposed than other REITs focused on urban areas. That is why its stock price declined by only about 10%, compared to more than 20% decline of the average apartment-focused apartment.
Camden can easily overcome the current headwinds facing the sector, thanks to the top-tier balance sheet. This is one of eight REITs with A-rated credit. It also has a lot of cushion on the dividend, as the payout ratio averages less than 80% this year, which is a much higher than reasonable level for a REIT. That strong financial profile enabled its increase in payments this year, extending its succession by more than a decade.
With so many new communities under construction and so much financial flexibility to achieve acquisitions, Camden should have no problem continuing to grow his portfolio, cash flow, and 3.5% dividend. This combination of yield, growth, and safety makes Camden a great way to satisfy investors with the passive income benefit of being a landlord without the associated high costs and headaches of buying and managing a building. apartment.
A well fueled dividend
TC Energy is one of the largest pipeline operators in North America. What is unique about those pipelines is that they are almost inevitably subject to fluctuations in energy and quantity prices, thanks to contractual protections and regulations. As a result, TC Energy continued to generate very stable cash flows to support this dividend, rising to a 5.5% yield due to a 17% share price decline and an 8.7% increase. of dividend to start the year.
Despite all the volatility in the energy market, TC Energy has plenty of fuel to continue its dividend growth. The company has an extensive contract pipeline that ensures expansion opportunities underway, including new oil and gas pipeline projects and a lifetime extension of a nuclear power plant. Those projects support the company’s vision that it can increase its dividend by another 8% to 10% next year and grow it to a 5% to 7% post-2021 rate. Further complement to this perspective is the low dividend repayment ratio of nearly 40% of cash flow and industry leading credit rating.
Meanwhile, as a growing number of its peers, TC Energy is beginning to pivot more towards the clean power industry – it recently named the president of its power and storage division as the new CEO – that it should continue to grow in the coming decades. With a leading financial profile and a lot of growth down the pipeline, TC Energy is a lower risk way to collect an energy-powered dividend.
Great on all-inclusive dividend stocks
While 2020 is challenging for dividend investors, not all payments will go down, as both Camden Property and TC Energy continue to increase theirs. Add that to their top financial profiles, visible growth prospects, and lower share prices, and the duo looks great dividend stocks for investors with little cash spare.