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These 3 Dividend Stocks Give You High Yields and Growth

By Dan Caplinger - Oct 13, 2019 at 10:31AM

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You can find the best of both worlds with these companies.

Dividend stock investors like to see a couple of things with the stocks they choose. Ideally, a great dividend stock will pay healthy levels of current income to shareholders, and they'll also have strong prospects to deliver even larger dividends in the future.

Finding that perfect combination can be tricky, but if you look hard enough, you can find some promising companies that fit the bill. Wynn Resorts (WYNN -0.60%), Citizens Financial Group (CFG -0.20%), and Kinder Morgan (KMI -0.64%) all have dividend yields that are well above the average in the stock market, but they've also delivered recent payout growth that signals their confidence for the future.

Betting on big dividends

Wynn Resorts has done a good job on the dividend front lately, but it hasn't always gone so smoothly for the casino giant's shareholders. In 2015, Wynn slashed its dividend by two-thirds to $0.50 per share, reeling in the wake of a big slowdown in the key Asian gambling market of Macao. Since then, though, the casino resort company has delivered increases of $0.25 per share in mid-2018 as well as this past May. That brought the quarterly payout up to $1 per share, giving Wynn a current yield of 3.8%.

Wynn Encore resort, with grass and pillars against a darkening blue sky.

Image source: Wynn Resorts.

Wynn has many opportunities right now, and with them, there's a lot of uncertainty. The recently opened Boston Harbor project in Massachusetts has been the focus of a lot of attention for the casino company lately, but potentially even more important is whether Japan will finally open up bids for Wynn and its competitors to build resorts in the island nation. Yet even as global economic conditions remain uncertain, Wynn has seen reasonable performance in Macao and other key markets. That could help support a continued recovery for the dividend in the years to come -- especially if newer business opportunities also bear fruit.

Bank on dividend success

Citizens Financial Group has been a friend to dividend investors for quite a while, and the pace of its dividend growth has been impressive. The bank has given shareholders six dividend increases since early 2016, including a 23% increase in January 2019 and another 12.5% boost in July. That's brought its current quarterly payment to $0.36 per share, giving Citizens a yield that exceeds 4%.

With a presence emphasizing New England and mid-Atlantic regions but also including states in the Midwest, Citizens has worked hard to put deposits to work while still remaining disciplined in its lending practices. Along with the increase to its dividend, Citizens has also sought to return more money to shareholders through stock buybacks, and the bank just boosted its repurchase authorization by 20% to $1.275 billion. Citizens acknowledges that interest rate challenges have created tough conditions, but it's still in position to keep delivering strong performance for the foreseeable future.

Putting some energy into your dividend portfolio

Kinder Morgan is another stock that's been volatile with its dividends in recent years. The energy bust prompted the energy infrastructure giant to make a massive dividend cut of more than 75% back in early 2016, which took the quarterly payout down to just $0.125 per share. However, a 60% boost in 2018 helped get Kinder Morgan's dividend moving back in the right direction, and another 25% increase in April 2019 has the stock paying $0.25 per share each quarter. That brings Kinder Morgan's yield to about 5%.

Oil and natural gas prices haven't exactly been perfect for the energy industry, but that hasn't stopped Kinder Morgan from booking an impressive backlog of projects. Many producers are staying active simply to keep cash flowing in, and that puts Kinder Morgan in position to meet the demand for energy transportation needs. If the energy markets ever start recovering fully to move back toward triple-digit prices for crude, then the future could look even brighter for Kinder Morgan's business -- supporting even more dividend increases in the years to come.

Get what you need

There's no reason to sacrifice dividend growth just to get current yield. Dividend stocks like Kinder Morgan, Citizens, and Wynn give you both. They're not free of risk, and there's always a possibility that they'll hit new obstacles that will pose new challenges. Right now, though, all three have positive things to recommend them, and that makes them all worthy of a closer look from income investors.

Dan Caplinger owns shares of Wynn Resorts. The Motley Fool owns shares of and recommends Kinder Morgan. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Wynn Resorts, Limited Stock Quote
Wynn Resorts, Limited
WYNN
$68.33 (-0.60%) $0.41
Kinder Morgan, Inc. Stock Quote
Kinder Morgan, Inc.
KMI
$18.57 (-0.64%) $0.12
Citizens Financial Group, Inc. Stock Quote
Citizens Financial Group, Inc.
CFG
$39.83 (-0.20%) $0.08

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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