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Have $1,000? 2 All-Weather Dividend Stocks to Buy and Hold Forever

By Reuben Gregg Brewer – Nov 13, 2021 at 11:09AM

Key Points

  • W.P. Carey is a unique REIT that has the flexibility to excel in just about any market.
  • Enbridge is tied to oil today, but it is using that business to shift with the world toward cleaner options.

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These companies own physical assets and have incredible track records of rewarding investors. And they offer big dividend yields, too.

Just paying a dividend isn't enough to make a company a worthwhile investment. There needs to be a consistent payment history and an attractive yield. Real estate investment trust (REIT) W.P. Carey (WPC 0.91%) and midstream giant Enbridge (ENB 1.09%) meet both of those criteria, and a few more. Here's why these companies are all-weather dividend payers you can buy and hold with comfort.

The diversified landlord

W.P. Carey is a real estate investment trust focused on owning net lease assets. These properties are single tenant and the lessee is responsible for paying most of the operating expenses. When you own a lot of properties, like this REIT's over 1,250 strong portfolio, it's generally considered a low-risk way of investing in real estate since no one location will have too large an impact. That's a solid core that's backed a dividend increase every year since W.P. Carey's initial public offering in 1998 (23 years and counting). But there's more to this story than just reliable dividend growth.

A cow colored piggy bank with coins around it.

Image source: Getty Images.

Notably, W.P. Carey is one of the most diversified REITs you can buy. Its portfolio spans the industrial (25% of rents), warehouse (24%), office (21%), retail (17%), and self-storage (5%) spaces, with a fairly large "other" category rounding things out to 100%. In addition, it generates around 37% of its rents from outside the United States, mostly Europe. You would be hard-pressed to find another REIT with that kind of diversification. 

However, there's still more to understand here. That's because W.P. Carey tends to be opportunistic, often investing when others are fearful. For example, early in the coronavirus pandemic it announced it was looking for industrial and warehouse assets to buy. Notably, its diversification allows it the flexibility to put money to work where it sees the best opportunities. And it generally likes to do sale/leaseback deals, which means it sets the terms of the leases it signs. Which helps explain why nearly 60% of its leases have regular cost increases built in, helping to protect the REIT from the impact of inflation. If you can buy only one REIT, W.P. Carey should be on your short list.

The best part? It also offers a generous 5.3% dividend yield. To be fair, its yield has been higher in the past, so it would be hard to call W.P. Carey cheap today. However, its closest peer (Realty Income) is yielding roughly 4%, and the average REIT, using Vanguard Real Estate Index ETF as a proxy, is offering just 2.2%. All in all, if you are a dividend investor, W.P. Carey is a name you could buy and happily hold for a very long time.

WPC Dividend Yield Chart

WPC Dividend Yield data by YCharts

Plenty of time to change

Enbridge is a North American energy giant that owns oil and natural gas pipelines (83% of earnings before interest, taxes, depreciation, and amortization, or EBITDA), a natural gas utility operation (14%), and renewable power assets (3%). The company claims to transport 25% of all of the crude oil produced in North America and that there are 170 million people reliant on its natural gas pipelines, which count many of the largest utilities as customers. This business has backed 26 consecutive years of dividend growth and supports a hefty 6.1% dividend yield.

But what about the heavy reliance on carbon fuels? Don't get too hung up on this fact. First off, despite the world's desire to reduce its use of oil, it is expected to be an important piece of the energy pie for decades to come. Meanwhile, natural gas is likely to help support the transition toward cleaner alternatives as it supplants coal. And Enbridge's renewable power business, while small today, should grow in importance over time as the company puts more money to work in the space. And that money will come from the cash that gets created by carbon-intensive oil and gas assets. In other words, Enbridge is using its cash cow operations to change with the world around it.

The best part, however, is that Enbridge's business is largely fee based. So the price of oil and natural gas is less important than the demand for these fuels. Thus, the midstream company's business is highly reliable even though the industry it services is prone to volatile commodity price swings. Add it all up, and this high-yield stock is worth adding to your portfolio even if you think renewable power is the future of the energy sector.

These stocks are built to last

Forever is a long time, which means you need to find stocks that have proven their mettle and that have what it takes to adjust over time. W.P. Carey and Enbridge are both diversified and have shown through their actions that they can shift with the world around them. And all along the way, they have made paying investors well via dividends a key piece of their businesses. With high yields and great histories, these are names you can buy and hold while still sleeping well at night.

Reuben Gregg Brewer owns shares of Enbridge, Realty Income, and W. P. Carey. The Motley Fool owns shares of and recommends Enbridge and Vanguard REIT ETF. The Motley Fool has a disclosure policy.

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