Dividend stocks are a great way to combine both income and future share-price appreciation. But not just any high-yield stock will get the job done. It pays to look not just at yield but also for signs of potential growth. Below, you'll find out how Duke Energy (NYSE:DUK), Occidental Petroleum (NYSE:OXY), and Realty Income (NYSE:O) have not only managed to give investors yields of 4% or more but also provided ongoing growth to longtime investors.
Duke gives investors electric results
Utilities are a traditional favorite among dividend investors, but Duke Energy is anything but a staid, boring utility stock. The company has grown substantially over the years, taking advantage of strong economic conditions in the southeastern U.S. and expanding its footprint through acquisitions and other strategic moves. Recent interest rate fluctuations have played havoc with utility stock share prices, but Duke has weathered those ups and downs before, and its long-term 35-year average annual return of 11.5% points to the utility's ability to remain strong.
Duke Energy's current yield is 4.6%, and the company has done a good job of giving dividend investors reliable increases in their payments over time. For 12 straight years, Duke has raised its dividend each year, producing a total increase of more than 70% in that timeframe. As long as populations in the southeast keep climbing, Duke will have an opportunity to serve more customers and potentially create new growth opportunities far into the future.
Occidental Petroleum gets through tough times
The energy industry has been hammered hard, and Occidental Petroleum hasn't been immune to the impacts of the plunge in crude oil prices. However, the company has held up far better than many of its peers in the industry, falling just a third from its 2014 peak. Part of the reason is that unlike most other major oil companies, Occidental Petroleum has an above-average presence in the enhanced oil recovery project space, which doesn't suffer from production declines at the same pace and therefore provides more stability compared to its peers. Yet Occidental also has plenty of good prospects in the Permian Basin that could power future growth.
Occidental Petroleum also yields 4.6%, and its track record of dividend increases goes back 13 years. During that span, Occidental's dividend has jumped more than sixfold, and even though recent increases haven't been as fast, the company has nevertheless found ways to keep its payout climbing even under tough industry conditions. If oil recovers further, then Occidental will be in a good position to reclaim its losses from recent years.
Tapping the monthly dividend potential of real estate
Realty Income is a well-known real estate investment trust that takes pride in doing what relatively few companies do: paying dividends on a monthly basis. The company has more than 4,700 properties under long-term net lease agreements, with nearly 250 commercial tenants spanning 49 states. Most of the company's properties are used for retail, which carries some risks for those who fear that shopping malls could become a thing of the past. However, 20 years' worth of average annual returns in excess of 15% shows just how strong a business model Realty Income has.
Realty Income has a dividend yield of 4.4%, and it has given its shareholders 23 straight years of rising dividend payments. The company boasts 556 consecutive monthly dividend payments over its history, and increases have come in 76 straight quarters. That's a track record that few other stocks can match, and it shows the success that Realty Income has had in choosing properties in markets with growth potential -- despite the ups and downs of the real estate market.
Focusing solely on yield will get you in trouble with dividend stocks. But by looking not just at yield but also at long-term growth, you can find the stocks that have a demonstrated ability to keep climbing through good times and bad.
Dan Caplinger has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.