In This Article:
Creating income becomes more important once you retire. But you don't want to only reach for yield -- instead, you should be focused on companies that can provide a reliable, and hopefully growing, stream of dividends. Magellan Midstream Partners, L.P. (NYSE: MMP), PPL Corporation (NYSE: PPL), and ExxonMobil Corporation (NYSE: XOM) are all high yielding dividend payers with long histories of increasing their dividends on a regular basis. If you are retired, you should consider these three stocks today.
1. Super conservative in the midstream
Midstream master limited partnership Magellan offers a distribution yield of 5.5%. It has increased that distribution for 18 consecutive years. The average annual increase over the past decade was 10%, over three times the historical rate of inflation growth. These are impressive numbers, and they don't even tell the whole story.
Image source: Getty Images
Magellan has long been one of the most conservative midstream partnerships, focusing on self-funding as much of its growth as it can to avoid dilutive unit sales -- a model which peer and industry bellwether Enterprise Products Partners L.P. is starting to mimic. At the same time, Magellan has used leverage sparingly, with debt to EBITDA at the low end of the industry.
This conservative approach, however, doesn't mean the company is skimping on growth. Magellan currently has $2.5 billion in growth projects in the works between 2018 and 2020 that should push distributions higher by as much as 8% a year over that span. And, true to its conservative approach, most of its capital spending is backed by customer commitments, or being made at facilities where demand clearly demonstrates a need for expansion.
2. Dirty can be a good thing
Globally diversified electric utility PPL, with assets in the United States and the United Kingdom, yields around 5.4%. That's toward the high end of the utility sector, and the dividend has been increased each year for 17 consecutive years. Although the average annualized increase over the past decade is only around 3%, that's enough to keep pace with inflation and, thus, protect shareholders' purchasing power.
XOM Dividend Per Share (Annual) data by YCharts
One key story here is PPL's heavy reliance on carbon-based fuels to generate electricity: In 2017, for example, coal accounted for 85% of the electricity PPL generated. That's a bad thing for the environment, but could be a good thing for PPL, which plans to reduce its carbon emissions by 70% by 2050. That's going to require a lot of spending on capital investments. In fact, the utility plans to spend roughly $15 billion through 2022 alone.