If you're looking for a stock to buy in March, you should start your search with dividend payers NextEra Energy(NYSE: NEE), Enterprise Products Partners(NYSE: EPD), and Stanley Black & Decker(NYSE: SWK). They will each appeal to different types of investors, but they all offer very attractive stories today. Here's a quick look at each.
1. NextEra Energy is a reliable dividend grower
A lot of dividend investors will look at NextEra Energy's 3.7% dividend yield, which is roughly average for a utility, and move right on to the next investment. That would be a mistake if you like dividend growth, since NextEra has increased its dividend at a roughly 10% clip over the past decade. And that payment has been increased annually for nearly 30 years. The key here, however, is that the utility sector downturn has pushed NextEra's yield up to near the highest in a decade, suggesting the stock is on sale.
What you get if you buy NextEra is a unique combination of a boring regulated utility business (about 70% of the company) and a fast-growing clean-energy company (30%). And while rising rates may take the growth rate down a notch, the company is still projecting 6% to 8% earnings growth through 2026. That's a rapid clip in the utility sector, and it should keep the dividend on a solid upward path. Long-term dividend growth investors have an opportunity to add a great company at a reasonable price today, and that shouldn't be ignored.
2. Enterprise Products Partners is a reliable energy stock
Enterprise Products Partners operates one of the largest portfolios of midstream energy infrastructure in North America. It charges fees for the use of its assets, so the price of the oil and natural gas that flows through its pipelines, storage, processing, and transportation facilities is less important than demand. On that score, energy demand is expected to remain robust for decades to come, even as clean energy production increases thanks to a growing global population and rising living standards.
That's the underpinning of the story. But what makes it really exciting is the ultra-high 7.3% distribution yield on offer here. The distribution has been increased for 25 consecutive years. It's backed by an investment grade-rated balance sheet. And distributable cash flow covered the payment by a very healthy 1.7 times in 2023. To be fair, the yield will probably make up the vast majority of an investor's return here, but if you're trying to maximize your income stream, that probably won't bother you at all.
3. Stanley Black & Decker's earnings trend is set to change direction in 2024
Toolmaker Stanley Black & Decker has been a tough company to love for a couple of years. A series of debt-funded acquisitions, supply chain disruptions, and volatility surrounding the coronavirus pandemic pushed earnings materially lower in 2022 and again in 2023. But management has done a lot of heavy lifting in an effort to get the company back on track, including debt reduction, asset sales, and the streamlining of the company. In 2024, earnings should hit an inflection point and grow over 2023 levels.
The industrial company isn't out of the woods just yet, but as investors see positive momentum, Wall Street will probably start to take a more positive view of the stock. Meanwhile, this Dividend King is offering investors a historically high 3.6% dividend yield. If you can stomach buying a turnaround play, Stanley Black & Decker looks to be about to turn the corner earnings wise. There might not be much more time to buy it before other investors start to catch on to the improving business performance.
Dividend growth, high yield, and a turnaround play
Few investors will want to buy each of the stocks on this list, because they all appeal to different types of investors. Dividend growth types will appreciate NextEra Energy, yield seekers will like Enterprise, and more aggressive investors willing to step into a turnaround story will probably find the likely earnings upturn at Stanley Black & Decker very exciting
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Reuben Gregg Brewer has positions in Stanley Black & Decker. The Motley Fool has positions in and recommends NextEra Energy. The Motley Fool recommends Enterprise Products Partners. The Motley Fool has a disclosure policy.
