Please ensure Javascript is enabled for purposes of website accessibility

Forget The Procter & Gamble Company: Here are 3 Better Dividend Stocks

By Travis Hoium - Jan 31, 2016 at 12:40PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Here are a few dividend stocks that look better than Procter & Gamble Company today.

For more than a century, Procter & Gamble Company (PG 0.95%) has been a rock-solid dividend stock. The company has paid a dividend for 125 straight years, and has increased its payout for 59 straight years. 

Lately, earnings haven't kept up with the growth of the dividend. Today, Procter & Gamble pays out more in dividends than it earns from operations -- not a position any company wants to be in. For investors looking for a better dividend, I have a few stocks you may not have thought of before.

PG Dividends Paid (TTM) Chart

PG Dividends Paid (TTM) data by YCharts.

Diageo plc
When you order your next cocktail, there's a high probability that you'll be getting a Diageo (DEO 1.74%) product. The company makes brands like Ketel One, Johnny Walker, Crown Royal, and Smirnoff. It has a level of scale in both production and distribution that make it nearly impossible to replace them on store shelves.

The company has become a solid dividend stock, as well. It has a 4% dividend yield today, and has been increasing its payout for over a decade straight.  

I think there's more of a competitive threat in diapers and detergent than there is in alcohol. Diageo will be around for years, and it's a dividend stock to consider today.

8point3 Energy Partners
Yieldcos are fairly new to the market, but 8point3 Energy Partners (CAFD) is one of the best for investors right now. It's a product of co-sponsors First Solar and SunPower, two of the largest solar developers in the world, with market-leading technologies and strong balance sheets.

What 8point3 Energy Partners does is buy projects from its sponsors that have 20+ year contracts, and then pays out cash generated from those projects in the form of a dividend. It's like an MLP, except for solar projects with long-term contracts.

What separates 8point3 Energy Partners is that its dual-sponsor structure keeps each sponsor in check from overpaying for projects, and the companies will keep the balance sheet conservative in an effort to reduce rise. With a 5.9% dividend yield that will likely grow 12%-15% over the next few years, this is a dividend stock to be very bullish about.

Las Vegas Sands
Gaming stocks aren't for everyone, but if you're looking for a solid dividend and the potential for stock appreciation, Las Vegas Sands is a gaming company to watch.

Las Vegas Sands owns premier assets in Macau, as well as one of only two casinos in Singapore. Both are hubs of gaming in Asia, a region that's crazy about gambling. The company just reported $4.2 billion in EBITDA -- a proxy for cash flow from a resort -- in the past year, and has started returning that cash in the form of dividends and share buybacks. 

In the past year, the company has paid $2.1 billion in dividends, and bought back $205 million of shares. The 2016 dividend of $2.88 per share implies a yield of 6.7%, and with cash flow from operations more than covering that payout, I think this is a dividend worth considering for investors interested in gaming.

Dividends of the future
With Procter & Gamble struggling to grow revenue, and now paying out more in a dividend than it earns each year, it may be time to start looking at better dividend options. Diageo, 8point3 Energy Partners, and Las Vegas Sands offer both high yields and stable businesses, which makes them better options than the former king of dividends Procter & Gamble.

Travis Hoium owns shares of 8point3 Energy Partners LP, First Solar, Procter & Gamble, and SunPower. The Motley Fool recommends Diageo (ADR) and Procter & Gamble. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

The Procter & Gamble Company Stock Quote
The Procter & Gamble Company
$146.30 (0.95%) $1.37
Diageo plc Stock Quote
Diageo plc
$190.98 (1.74%) $3.27
8point3 Energy Partners LP Stock Quote
8point3 Energy Partners LP

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/11/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.