This "Retirement Savings Stock" Has Raised Its Dividend For 34 Consecutive Quarters


Shutterstock photo

Around the StreetAuthority office, we like tocall them "Retirement SavingsStocks ."

That's because they can hand you a second income to supplement what you are already earning.

And byinvesting in companies like these, youput yourself above other investors when it comes to beating themarket .

Just consider this...

From 1972 through 2011, U.S.-baseddividend stocks in the S&P 500 returned 7.1% annually, far exceeding the 1.5% return for nondividend payers.

When picking stocks to add to my High-Yield Investing portfolio, these are some of the criteria I look at when evaluating an income investment:

1. Long track record of paying consistent and rising dividends

2. Matching history of improvingearnings

3. Strongcash flow sufficient to pay dividends and then some

4. High projected growth that can lead to dividend increases

5. Zero or little debt, because debt-free companies have morecash to distribute

6. Noncyclical business models that canprofit in all markets and at all times

If any security meets the high-yield/low-risk mandate of EPD).

Enterprise is the largest publicly-traded energypartnership in the United States. It operates more than 50,000 miles of pipelines, enough to circle Earth twice.

These pipelines are connected to about 95% of the country's refining capacity east of the Rockies.

The partnership is a dominant player in the rapidly-growing natural gas liquids (NGLs) market, which contributed 57% of profits in 2011.

My colleague, Paul Tracy, also named Enterprise Products a Top-10 Stock for 2013... Partly because of the oil and natural gas drilling boom in the U.S., and because of its exceptional dividend track record.

In the past year, Enterprise Products has paid more than $2 billion in distributions. And sincegoing public in 1998, the partnership has increased its distribution 43 times. In fact, the company has increased its dividend every quarter since 2004, or 34 straight dividend hikes. 

Enterprise receives a fixed fee, based on how much product runs through its pipeline, ensuring steady cash flow regardless ofcommodity prices.

I added Enterprise to my High-Yield Investing portfolio in February 2007. Since then, I've received $12.88 per share in distributions, and thestock has appreciated more than 75% for a total return of close to 120%.

Despite paying an ever-increasing dividend, Enterprise Products has been able to manage some major projects to ensure it keeps growing. In the first nine months of 2012, it spent $1.7 billion on new projects. In 2013, it plans an additional $2.4 billion of capital projects.

In total, some $7.9 billion of projects are under construction and scheduled to be completed during the next year and a half.

These projects position the company to benefit from the expected growth in natural gas, NGL and crude oil from shale plays.

Risks to Consider: Exposure to volatile natural gas and NGL prices can affectrevenue and distributable cash flow. But I think the company is pretty well shielded from these concerns.

Action to Take -->  Enterprise Products offers income investors a rising income stream and steady priceappreciation . Not to mention, as aprime Retirement Savings Stock , it should be on every investor's watch list.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

© Copyright 2001-2010 StreetAuthority, LLC. All Rights Reserved.

This article appears in: Investing , Investing Ideas , Stocks

More from StreetAuthority




Investing Ideas
Follow on:

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by