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I'm loading my retirement account with dividend stocks. The thesis is simple: Dividend stocks have historically outperformed non-dividend payers by more than 2-to-1 over the past 50 years and have been much less volatile.
The highest returns and lowest volatility have come from dividend growers. That's why I'm most focused on investing in companies with excellent records of increasing their dividends that should continue over the long term. VICI Properties (NYSE: VICI), Medtronic (NYSE: MDT), and Enbridge (NYSE: ENB) certainly meet those criteria. That's why I plan to buy even more shares of these top dividend stocks in my retirement account this month.
Sector-leading dividend growth
VICI Properties is a real estate investment trust (REIT) focused on investing in experiential properties like gaming, hospitality, and entertainment destinations. The company leases its properties to companies that operate the experiences under very long-term triple net leases (NNN). Those leases provide it with very stable and durable rental income that steadily rises due to inflation-linked rental escalation clauses.
The REIT currently pays a 5.8%-yielding dividend. It has increased its payout every single year since its formation seven years ago. VICI has delivered a peer-leading 7% compound annual dividend growth rate during that period, well above the 2.2% average.
VICI Properties is in an excellent position to continue increasing its high-yielding dividend. The REIT has a reasonable dividend payout ratio (75% of its adjusted funds from operations), allowing it to retain some cash to fund new investments. It also has a solid investment-grade balance sheet.
The company also has lots of growth drivers, including embedded acquisition opportunities due to existing tenant relationships, multiple development financing partnerships, and the ability to expand into new experiential property sectors.
A very healthy dividend stock
Medtronic is a leading medical technology company. It has a diversified portfolio of cardiovascular, neuroscience, medical-surgical, and diabetes products and solutions.
The healthcare company has an exceptional record of paying dividends. Last year was the 47th straight year that it increased its dividend. It has grown its payout at a 16% compound annual rate during that period.
The medical technology company generates lots of cash even after investing heavily in research and development. It aims to return at least half its free cash flow to shareholders each year via dividends and share repurchases ($5.5 billion in its 2024 fiscal year). It retains the rest to maintain its financial flexibility and capitalize on acquisition opportunities. Its growth investments should increase its free cash flow, enabling Medtronic to continue raising its 3.1%-yielding dividend.