The rarity of something often boosts its value, especially for those with an eye for what’s unique. Take vintage cars, for example. Over time, models that are no longer produced become highly sought after. However, rarity alone doesn’t guarantee value—it’s about the long-term desirability and the steady demand for that item.
In the world of investing, this principle holds true for certain assets that offer not only scarcity but also reliable income streams. For dividend growth investors, finding opportunities that deliver a growing income year after year can be just as rewarding as owning a rare collectible.
Today, we’ll explore two dividend growth opportunities that have delivered growing payments to shareholders for decades. These companies are positioned to provide growing income and solid returns in the long run, even in a changing market environment. Let’s dive in!
Pick 1: O – Yield 6%
Realty Income (O) traces its history to a sale-leaseback of a single Taco Bell in 1970. For several decades, O was a non-traded REIT, paying monthly dividends. The company went public in 1994 and calls itself “The Monthly Dividend Company.”
O is now a “Dividend Aristocrat” with 30 years of dividend growth under its belt. The REIT has done this through the Dot-Com Bust, the Great Financial Crisis, and the COVID-19 pandemic without compromising its dividend increases. The REIT’s current $0.264/share monthly dividend calculates to a 6% annualized yield.
One of the reasons O has done very well over time despite headwinds to certain property types over the years is the fact that it is deeply diversified. O manages 15,457 properties, and its largest tenant is Dollar General at 3.3% of rent, and the largest category is Grocery at 10.4%: Source.
The REIT maintains a strong balance sheet, ample capital, and a proven business model. As a result of its A- credit profile, the company has easy access to low-cost capital, fueling its ability to grow like a weed and acquire peers. In the past few years, it bought Vereit and Spirit Realty. O is currently more than 2x larger in terms of market cap than its closest peer, WP Carey.
The capital that O is dedicating to its newer pursuits is insignificant. The opportunity cost if they don't work out as planned is not significant. O can lose a billion on a failed plan, and it isn't a big deal in the big picture. That wasn't true 10 years ago, and that makes O a relatively safe income investment for retirees.
Pick 2: EPD – Yield 6.4%
Enterprise Products Partners (EPD) is one of the largest midstream companies, providing services to producers and consumers of energy commodities, namely natural gas, natural gas liquids, crude oil, refined products, and petrochemicals. EPD owns and operates over 50,000 miles of pipeline, 300 MMBbls liquids storage capacity, 26 fractionation facilities, 20 deepwater docks, and 42 natural gas processing trains.
EPD kicks off the first dividend raise for HDI in 2025 with a recently announced 3.9% YoY raise to $0.535/share per quarter. This reflects a 6.4% annualized yield and continues the midstream MLP’s track record of 26 years of continuous annual distribution raises.
EPD ended Q3 with an A- rated balance sheet, a 3x leverage ratio, and $5.6 billion in liquidity, the best in the midstream sector. 98% of the firm’s debt carries fixed interest rates with a 19-year average term to maturity.
During the third quarter, EPD reported $6.9 billion of capital projects under construction, with a large chunk coming online in FY 2025, further expanding its moat and cash flows. We can certainly expect more dividend growth from this midstream beast!
Conclusion
Retirement is a time to reflect on the rewards of your hard work—spending quality moments with loved ones, exploring new hobbies, and embracing the freedom to live life on your terms. It shouldn’t be overshadowed by the stress of market fluctuations or short-term stock prices.
Think about it like owning your home. The only time I’d care about its market value is if I were planning to sell soon. If I’m staying put, it doesn’t matter much whether the house next door sells for more or less. If it goes up, I feel good about the unrealized gains; if it drops, I may feel disappointed, but if I truly love the neighborhood, I’d even consider buying another property at a discount.
This mindset is key for me as an income investor. As long as my portfolio is generating consistent cash flow, I have no reason to sell in response to volatility. At High Dividend Opportunities, we focus on a diversified range of securities, each providing income for our time and patience. The steady stream of dividends keeps us grounded, allowing us to reinvest and compound without the temptation to react to short-term market noise.
In the end, the goal is simple: a reliable income that lets you enjoy your retirement years without worry. And with the right dividend-focused investments, you can confidently live your life free from the pressures of stock market swings. That's the beauty of my Income Method; and the beauty of income investing.
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