It's been a rough year for dividend investors. Reliable payers like Ford and Boeing suspended their dividends as the coronavirus pandemic upended global markets. Meanwhile, the S&P 500 has bounced back from its March sell-off, so most of early April's double-digit yields are a thing of the past.
But don't despair! Dividend investors can still find worthy candidates for their money. If you like dividends, here are three stocks you should love.
Atlantica Sustainable Infrastructure: a big yield
Atlantica Sustainable Infrastructure (AY -1.60%) was formerly known as Atlantica Yield, and for good reason. This renewable energy company is part of a class of investments known as renewable yieldcos. Similar to real estate investment trusts (REITs), renewable yieldcos pay out the vast majority of their cash flow as dividends to shareholders. As a result, Atlantica is currently yielding about 5.3%.
Better still for dividend investors, Atlantica's payout looks relatively secure. It makes its money by operating a global portfolio of renewable energy assets, including solar farms in Spain, wind farms in South America, and water desalination plants in Algeria.
Not only are Atlantica's assets diversified geographically, but all are also operated under long-term, fixed-rate contracts. The nearest expiration date for an Atlantica contract isn't until 2032, and most won't expire until 2036 or later. That makes for a very secure stream of income to fund its dividend. And with a share price that still hasn't quite reached its pre-crash high, Atlantica looks like a good buy now.
NextEra Energy: a growing payout
As the largest publicly traded utility in North America and one of the biggest energy companies in the world by market cap, NextEra Energy (NEE 1.37%) might not seem like a candidate for rapid growth. But it has lots of trends working in its favor, which should benefit dividend investors.
NextEra owns two Florida electric utilities, Gulf Power and Florida Power & Light. Between the two, it currently serves about 5.5 million customer accounts. But Florida's ever-increasing population offers a big opportunity for NextEra to grow. Plus, with annual temperatures continuing to increase, those Florida customers are going to need more and more of NextEra's electricity to power their air-conditioners.
The company does three things with the steady stream of cash it generates from its Florida utility customers: It maintains its infrastructure (of course), it funds new renewable energy projects across the country, and it pays a fast-growing dividend to investors. That payout currently yields only about 1.8%, in part because NextEra's share price keeps growing faster than its dividend can keep up. In fact, NextEra's shares have nearly tripled in price over the past five years.
Management expects that to continue, predicting earnings growth between 6% and 8% through 2023, and double-digit dividend growth through 2022. Investors will want to hop on for the ride.
Johnson & Johnson: a stalwart
With a payout that has increased annually for the last 57 years, Johnson & Johnson (JNJ -0.04%) is one of the rare companies that's made it past Dividend Aristocrat status to become a Dividend King. Better still, the company has managed to maintain a better-than-average yield, currently 2.8%.
Johnson & Johnson's status as a top dividend stock is nothing new. What is new is the company's effort to develop a coronavirus vaccine. It currently has a candidate in phase 3 clinical trials, and could produce 1 billion doses of the vaccine in 2021 alone, subject to regulatory approval.
Unlike some other coronavirus vaccine hopefuls, Johnson & Johnson doesn't rely on a single product. The company has a robust healthcare portfolio and more than $80 billion in annual sales. A recent dip in its share price looks like a buying opportunity for dividend investors.
Don't sweat the yield
Yields of 1.8% to 5.3% may be lower than you were hoping to find, but it's important to balance a company's dividend yield against its overall performance and stability. A double-digit yield isn't worth anything if the company cuts its dividend before the next payout.
Atlantica Sustainable Infrastructure, NextEra Energy, and Johnson & Johnson, on the other hand, offer dividends that should stand the test of time, putting long-term rewards into your portfolio.