The best dividend stocks strive to increase their payments once a year. Over 150 have managed to do that for the past decade, which is impressive considering all that has transpired in the past 10 years.
While many companies aim to give their investors an annual raise, some have a higher standard. They strive to increase their payments once a quarter.
Two companies stand out for their current streaks of consecutive quarterly dividend increases: Realty Income (O 0.17%) and Delek Logistics Partners (DKL 0.83%). Delek recently extended its streak to 49 quarters in a row, while Realty Income is up to 110 consecutive quarters. Combine that consistency with their high dividend yields, and they're appealing options for those seeking a lucrative and very steadily rising income stream.
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A big-time and steadily rising distribution
Delek Logistics Partners recently raised its quarterly cash distribution to $1.11 per unit, or $4.44 annualized. That extended its streak to 49 quarters in a row, or more than 12 straight years. The new rate is 0.5% above the prior quarter's level and a 3.7% increase compared to the year-ago payment. At its current rate, the midstream company has a more than 10% yield at its recent unit price.
It's not uncommon for master limited partnerships (MLPs) like Delek Logistics Partners to have a monster yield, though its payout is the highest in the sector. That's partly due to the tax complications of investing in an MLP, which weighs on valuations across the space: MLPs send their investors a Schedule K-1 Federal Tax Form each year.
NYSE: DKL
Key Data Points
Delek Logistics Partners supports its big-time payout with fairly solid financial metrics. It produces stable cash flow backed by long-term contracts. The company expects to generate enough cash to cover its payout by more than 1.3 times this year, which is a comfortable level and up from last year's 1.23 coverage level. Meanwhile, the MLP's leverage ratio has been trending down, from 4.78 in the first quarter of 2023 to 4.21 at the end of this year's first quarter.
That solid financial profile gives it the flexibility to continue investing in expanding its operations. Delek recently commissioned its Libby 2 processing plant and closed its acquisition of Gravity Water Midstream. Future growth investments should give Delek the fuel to continue increasing its payout.
A very consistent dividend growth stock
Realty Income is a preeminent dividend stock. Known as The Monthly Dividend Stock, the real estate investment trust (REIT) is on a mission to invest in places that help it deliver dependable monthly dividends to its shareholders that grow over time. It has definitely succeeded in its mission over the years.
The REIT recently declared its 659th consecutive monthly dividend since its formation. It has raised its payment 130 times since its public market listing in 1994, including the past 110 quarters in a row. That's 27 and a half years. Realty Income also has an unbroken streak of 30 consecutive annual dividend increases. It has grown its payout at a 4.3% compound annual rate during that period. The REIT's monthly dividend yields nearly 6% at its current dividend rate and share price.
NYSE: O
Key Data Points
Realty Income backs its dividend with one of the strongest financial profiles in the sector. It has a low payout ratio of 75% of its adjusted funds from operations and one of the 10 highest credit ratings in the REIT industry. That gives it robust financial flexibility to continue investing in income-generating commercial real estate.
The landlord invests billions of dollars each year to build and buy additional properties. It focuses on net lease properties because they produce very stable rental income. It invests in retail, industrial, gaming, and other properties across the U.S. and Europe. Its steadily expanding real estate portfolio should enable it to continue to routinely raise its dividend.
Premium dividend stocks
Realty Income and Delek Logistics Partners stand out for their unbroken streaks of consecutive quarterly dividend increases. It makes them ideal options for investors seeking to generate a little more passive income each quarter.
