Who doesn't like making easy money?
Well, dividend payments are about the easiest money you can make in the stock market. You don't need to worry about "buying low and selling high" or how a company's share price is doing. All you need to do is own shares of the stock, and the business will pay you for doing so. You can take the money in cash or reinvest the dividends to buy more shares and drive your payments even higher.
Here are three great "set-it-and-forget-it" dividend stocks that look like safe bets for building easy wealth.
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1. Nike
You might be wondering why Nike (NKE +3.32%) is at the top of this list. The company's shares have tumbled more than 75% from their highs, profits are down more than 60%, and free cash flow has been spotty, sometimes soaring above $2.5 billion and at other times falling into negative territory.
But investors aren't interested in what Nike's stock has done in the past: They're looking at what its dividend is doing today. And the company's share price decline has pushed its dividend yield to 3.8%. That's a juicy yield that looks worth locking in now.
NYSE: NKE
Key Data Points
A potential dividend cut seems unlikely, given that Nike has increased its dividend every year for the past 24 years. That puts it just one annual dividend increase away from the all-important 25-year threshold. Nike certainly doesn't want its short-term woes to keep it off that elite list.
Nike's payout ratio recently crept up to 106.6%, which means it paid out slightly more in dividends over the past year than it earned in net income. But that appears to be a one-time anomaly that's unlikely to persist. Meanwhile, Nike has bought back $10.8 billion of its own stock over the past three years and still has more than $8 billion in cash on its balance sheet. The company clearly has ample cash reserves to maintain its payout over the long term.
2. Verizon Communications
If you like Nike's commitment to upping its quarterly payout, but were hoping for a higher yield than 3.8%, you'll probably be very interested in Verizon Communications (VZ +2.31%). The telecom has been increasing its dividend for almost as long as Nike (20 consecutive years, compared to Nike's 24), but its current dividend yield is much higher at 6.6%.
NYSE: VZ
Key Data Points
Better still for Verizon's investors, that payment looks rock-solid. The company's payout ratio of just 67.4% means it brings in plenty of net income to cover its quarterly payouts and to continue increasing them over the long term.
3. Enterprise Products Partners
With a current yield of 6%, a payout ratio of 80.9%, and a special tax structure that's designed to maximize shareholder payouts, master limited partnership (MLP) Enterprise Products Partners (EPD +1.01%) is an excellent choice for long-term dividend investors.
NYSE: EPD
Key Data Points
Enterprise is a well-managed energy infrastructure company that runs on a "toll gate" model: It owns pipelines and storage terminals and charges customers to use them. Its MLP status requires it to return almost all of its cash flow to customers as dividends. One drawback is that MLP ownership, especially in non-tax-advantaged accounts, can require additional paperwork at tax time.
Otherwise, Enterprise should make an excellent addition to any dividend portfolio.
