Recently, a young woman told me that her husband wanted to invest in dividend stocks. Both of them are in their twenties. My response to her was that at their age, they'd be better off focusing on stocks with solid long-term growth prospects, regardless of whether or not the stocks paid dividends.
My reply would have been different if the couple had been in their sixties.
Investing in dividend stocks in order to secure steady income is a great idea. Of course, you still want solid underlying businesses behind the stocks. With the two criteria of steady income and solid businesses in mind, here are three dividend stocks I'd buy right now.
I think that AbbVie (ABBV 0.09%) ranks as one of the most attractive dividend stocks on the market right now. The big drugmaker's dividend yield currently tops 4.8%. AbbVie is only one dividend hike away from becoming a Dividend King -- S&P 500 members with at least 50 consecutive years of dividend increases.
A single product, Humira, generated over 40% of AbbVie's total revenue last year, but the autoimmune-disease drug loses U.S. patent exclusivity in 2023. Does this present a reason to worry about AbbVie's dividend? Nope.
The company has been preparing for a long time for the day when it could no longer depend so heavily on Humira. AbbVie now has several other drugs with strong growth potential, notably including the successors to Humira -- Rinvoq and Skyrizi.
AbbVie will definitely feel the sting as biosimilars take market share away from Humira. It expects total revenue will fall in 2023. However, the company predicts a return to modest growth in 2024, with robust growth throughout the rest of the decade. AbbVie's dividends should keep on flowing and growing.
Brookfield Renewable Partners
Brookfield Renewable Partners (BEP -1.25%) doesn't belong to dividend royalty as AbbVie does. However, the company has increased its distribution (what limited partnerships call dividends) by a 6% compound annual growth rate (CAGR) since 2000. Its distribution currently yields nearly 2.9%.
The company's underlying business model is as solid as they come. There hasn't been a better time for renewable energy.
Demand is rising as countries across the world seek to reduce carbon emissions. Brookfield Renewable stands out as a leader in the renewable energy industry with its hydroelectric, wind, solar, and storage facilities in North America, South America, Asia, and Europe.
I view the stock as a great pick for income-seeking investors. However, Brookfield Renewable is also a very good choice for growth-oriented investors. The company claims a 23 gigawatt development pipeline that's more than double its current 19 gigawatt installed capacity.
Brookfield Renewable's growth prospects aren't just for the next few years. CEO Connor Teskey said in the company's Q4 update that management "look[s] forward to a multi-decade opportunity to advance decarbonization and assist with the transition of global electricity grids to a more sustainable future." That's the kind of opportunity that any investor would like.
Enterprise Products Partners
If you really like high dividend yields, you'll want to check out Enterprise Products Partners (EPD -2.56%). Its distribution currently yields a mouthwatering 7.8%. The company has increased its distribution for 22 consecutive years with a CAGR of 7%.
The biggest knock against EPD is that it's a midstream player in the fossil fuel industry. Yes, there's a definite shift away from fossil fuels to renewable energy sources. However, EPD's business is built for the long term.
For one thing, overall energy consumption is expected to increase over the next few decades. The U.S. Energy Information Administration projects that the percentage of total energy consumption generated by natural gas will also increase. In addition, rising demand for plastics is driving increased use of petrochemicals. It's no accident that 93% of EPD's major capital projects under construction focus on petrochemicals, natural gas, and natural gas liquids.
My Motley Fool colleague Gregg Brewer recently included EPD among his three safest energy dividends right now. I think his take is correct. EPD probably isn't a stock that will appeal to growth investors, but if you're looking for a solid dividend stock, I think it's a keeper.