Dividends4Life: 1 Dividend Stock for the Next 10 Years

1 Dividend Stock for the Next 10 Years

Posted by D4L | Sunday, January 01, 2017 | | 0 comments »

An elite group of companies I like to call my “Dependable Dividend Growers” (DDGs). DDGs are some of the largest, most profitable businesses around. Their competitive advantages results in steady revenues, robust cash flows, and oversized profit margins. This allows them to produce market-beating returns and growing dividends decade after decade. You can think of these businesses like the “beachfront properties” of the stock market. Dozens of the companies on this list have paid growing dividends for decades. Some longtime stockholders are earning triple-digit yields based on the price of their original purchases.

Enbridge Inc's (NYSE:ENB) status as a DDG comes down to a couple of points. First, a company needs a long, visible growth runway. You can’t just pull dividend hikes out of thin air. You need a growing stream of profits and cash flows to fund bigger payouts for shareholders. The second sign of a DDG is thick, growing profit margins. Wide profits margins signal the company has a competitive advantage in the marketplace. And as those get bigger, management is able to return more money to shareholders through dividends. Enbridge is a virtual cash cow. Because pipelines tend to be natural monopolies, the company is able to crank out oversized profits from existing assets without competitors eating into margins. As a result, Enbridge routinely cranks out operating margins north of 10%.

Source: Income Investor

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