Sometimes the next great stock idea is pretty hard to find. That's why well-known investor Peter Lynch famously said that the "best stock to buy is the one you already own."
With that advice in mind, right now is a great time to consider adding to your positions in Coca-Cola (KO +0.10%), NextEra Energy (NEE 0.49%), and Vici Properties (VICI 0.75%). These are great dividend stocks to double up on right now, as long as that won't overallocate your portfolio to those positions. If you don't already own shares, now's a great time to consider jumping in.
The royal treatment continues
NYSE: KO
Key Data Points
Coca-Cola has been a fantastic dividend stock over the years. The beverage giant recently declared its latest dividend payment. It's giving investors a 5.2% raise. That marks the 63rd year in a row that Coca-Cola has increased its dividend. This streak puts the company in the elite group of Dividend Kings, companies with 50 or more years of annual dividend increases. With that raise, Coca-Cola's dividend now yields 2.9%, more than double the S&P 500's 1.3% dividend yield.
The company paid a whopping $8.4 billion in dividends to shareholders last year, boosting its total outlay to $93 billion since the start of 2010. Coca-Cola can easily afford that massive payout. It generated $10.8 billion in free cash flow last year, an 11% increase from the prior year. It used the remaining excess free cash to repurchase $1.1 billion in stock and strengthen its balance sheet. The company ended the year with $10.8 billion in cash and another $2 billion in short-term investments on its balance sheet.
Coca-Cola should be able to continue growing its dividend. The company's long-term target is to deliver 4% to 6% annual organic revenue growth and 7% to 9% earnings-per-share growth. On top of that solid organic growth rate, the company has ample financial capacity to make value-enhancing acquisitions as opportunities arise.
Powerful growth drivers
NYSE: NEE
Key Data Points
NextEra Energy has grown its dividend at a 10% compound annual rate over the past 20 years. That's a powerful growth rate for a utility.
The company expects to continue growing its payout (which currently yields 3.2%) by around that same annual pace through at least next year. It has a lower dividend payout ratio than its utility sector peers and a robust growth profile.
NextEra Energy currently expects to grow its adjusted earnings per share at or near the top end of its 6% to 8% annual target range through at least 2027. The company's heavy investments in building new renewable energy capacity are a big factor powering that high-end growth rate. By 2027, NextEra's energy resources segment will operate a staggering 75 gigawatts of renewable energy capacity, which would be larger than the installed capacity of all but seven countries. Meanwhile, it has plenty of growth beyond that due to the expected surge in power demand in the U.S. from catalysts like AI data centers, the onshoring of manufacturing, and the electrification of everything.
A low-risk, high-yielding dividend stock
NYSE: VICI
Key Data Points
Vici Properties has increased its dividend for seven straight years, which is every single year since its formation. The real estate investment trust (REIT) has grown its payout at a peer-leading 7% compound annual rate during that period, well above the 2.2% average of other REITs focused on owning commercial real estate secured by triple net leases (NNN).
The REIT's portfolio of experiential properties (gaming, hospitality, and entertainment destinations) produces very stable cash flow. That enables Vici Properties to pay an attractive dividend (5.4% yield) while still retaining a quarter of its cash flow to make additional income-generating real estate investments. The REIT also has a solid investment-grade balance sheet, giving it additional financial flexibility to continue investing in new properties.
Vici Properties has many ways to continue expanding its portfolio. It can buy properties from new or existing operators in sale-leaseback transactions, fund renovation projects at existing properties, and finance the development of new experiential properties. Those investments will help grow its sources of stable income, enabling it to continue increasing its dividend.
Top-notch dividend stocks
Coca-Cola, NextEra Energy, and Vici Properties are great dividend stocks to double up on right now. They offer high-yielding payouts backed by rock-solid financial profiles. That has enabled them to steadily increase their dividends over the years, which seems likely to continue. That income and growth combo could allow them to produce attractive total returns in the coming years.
