Nearing 10 Years of Dividend Increases, Are These 3 Stocks a Buy?

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It's impressive when a company increases its dividend every year for 10 consecutive years. It shows a commitment to rewarding shareholders with a tangible cash return on their investment. Brookfield Renewable Partners L.P. (NYSE: BEP), Eaton Corporation plc (NYSE: ETN), and Rockwell Automation Inc. (NYSE: ROK) are all about to hit the decade mark with dividend increases. But does that make any of them worth buying?

From water to wind

Brookfield Renewable Partners has nine years of annual dividend increases under its belt, and currently yields a generous 6.7%. The master limited partnership is run by Canadian money manager Brookfield Asset Management and owns, as its name implies, renewable power assets. However, it's important to note that Brookfield Renewable Partners is designed to be an actively managed portfolio, in which renewable power facilities are bought and sold over time.

A woman using her finger to swipe up, with an arrow and the word dividends
A woman using her finger to swipe up, with an arrow and the word dividends

Image source: Getty Images

The core of Brookfield Renewable Partners' portfolio is hydroelectric power, which accounts for around 80% of its funds from operations. The partnership uses this foundation to expand into other areas like solar and wind. The portfolio, meanwhile, is spread across the globe, with renewable assets in 10 countries. Notable recent acquisitions include an investment in TerraForm Power and the purchase of TerraForm Global, moves that vastly expanded the partnership's reach outside of the hydro sector.

Brookfield Renewable Partners believes it can grow funds from operations by 6% to 11% a year. Underpinning that is inflation escalators in its power contracts, margin expansion from cost cutting and efficiency efforts, and capital investments, including acquisitions and ground up construction. The target growth rate for the distribution is 5% to 9%, a range that it has achieved over the trailing 1-, 3-, and 5-year periods. With an investment grade balance sheet, Brookfield Renewable Partners is a solid option for income investors looking to buy a renewable power company.

Still in the early stages

After a strong price advance, Eaton Corp's stock has fallen around 10% from recent highs. That's left it basically breakeven on the year, and a much better value than it was just a month or so ago. That said, Eaton appears to be reasonably valued at this point, with its price to earnings ratio below its five-year average and those of its peers (using the Vanguard Industrials Index Fund ETF as a benchmark) and price to cash flow, price to book value, and price to sales all roughly in line with historical averages and the benchmark.