Dividend stocks don't typically boast high growth rates. That's because instead of investing all their cash on expanding, they return a portion to investors. That's especially true of higher-yielding stocks, since they tend to pay out a large percentage of their cash flow.
However, not all high-yield stocks lack growth. Here are five that plan to boost their payouts by more than 10% in 2020.
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Noble Midstream: Another 10% increase in 2020
Noble Midstream (NBLX) has been growing its payout at a high-octane rate in recent years, with it boosting it by 20% over the past 12 months. Those big raises have helped push the yield on the master limited partnership's distribution up to an eye-catching 10.2%.
The company expects more fast-paced growth in 2020, with a target to boost its payout by another 10%. On the one hand, that's a much slower pace than the 20% rate it expected to increase its distribution through 2022. However, Noble Midstream chose to slow down after buying the remaining midstream assets owned by its parent Noble Energy. By slowing down, it can retain more cash, which will bolster its financial profile and provide it with more funding to expand its midstream footprint.
Hess Midstream: Another 15% increase in 2020
Hess Midstream (HESM) has also delivered fast-paced income growth in recent years. The midstream company has been growing its payout -- which currently yields 7.5% -- at a 15% annual pace, which it expects to maintain in 2020. The company, like Noble Midstream, recently bolstered its midstream portfolio by completing a deal with its parent to bring all its energy infrastructure assets under Hess Midstream's control. That deal will enhance Hess Midstream's cash flow and financial profile, which should give it the fuel to continue increasing its payout at a 15% annual pace through at least 2021.
CNX Midstream: Another 15% increase in 2020
CNX Midstream (CNXM) is another MLP offering big-time distribution growth. It has increased its payout in each of the past 18 quarters, growing it by a 15% annual rate. This fast-paced growth has helped push its yield up to 9.6%. CNX Midstream expects more of the same in 2020, with a target to boost its distribution by another 15%. While its cash flow won't grow quite as quickly, it still expects to cover its payout by a comfortable 1.2 to 1.3 times next year, down slightly from the 1.4-1.5 it anticipates in 2019. It might need to slow its pace in 2021, though it has a strong enough financial profile to continue increasing it at a healthy rate in the coming years.
Oasis Midstream: Another 20% increase in 2020
Oasis Midstream (OMP) has been growing its payout at a 20% annual rate for the past few years, which has pushed its yield above 12%. The MLP expects to maintain that pace through at least the end of 2021. Two factors fuel that outlook. First, it's currently generating enough cash to cover its payout by an uber-comfortable 2 times, which is one of the highest levels among MLPs. It's also growing its cash flow at a rapid pace thanks to its recent acquisitions and expansion program. With such a large margin of safety, Oasis Midstream could continue increasing its payout at a fast pace for the next several years.
Kinder Morgan: Another 25% increase in 2020
Kinder Morgan (KMI -0.05%) has given dividend investors fits in recent years. The pipeline giant slashed its payout by 75% in 2015 to conserve cash and shore up its financial profile. However, it started boosting the dividend again in 2018, by raising it 60%. The company increased it by another 25% this year, so that it currently yields 4.8%, and expects to expand it by that same rate in 2020. While Kinder Morgan will probably slow its growth rate considerably in 2021, it's entering 2020 in its best financial shape in years. That affords it the financial flexibility to continue growing its pipeline systems as well as its dividend for many years to come.
Intriguing options for income-seekers
These energy midstream companies all offer investors big dividend yields with equally sizable growth prospects in 2020. They're interesting options for income-seeking investors to consider, since they could generate big-time total returns in 2020 if they deliver on their promised dividend growth.
