Dividend stocks can be terrific investments. In addition to generating dividend income, they have historically produced strong total returns. The average dividend stock in the S&P 500 has delivered a 9.2% average annual total return over the last 50 years compared to a 4.3% return for nonpayers, according to data from Hartford Funds and Ned Davis Research.
Enbridge (ENB -0.05%) and Mid-America Apartment Communities (MAA -1.13%) are great dividend stocks to double up on right now if you already own them or buy if you don’t. The companies have excellent track records of growing their dividends and shareholder value.
The fuel to continue producing compelling total returns
Enbridge is a dividend-paying machine. The Canadian pipeline and utility operator has paid dividends for over 69 years while growing its payout for 29 in a row. The company currently offers a generous dividend yield of 6%, well above its average over the past 10 years. It has generated a robust total shareholder return, averaging 11% annually since 2004.
Enbridge has plenty of fuel to continue growing shareholder value in the future. It expects to increase its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) by 7% to 9% annually through 2026, fueled by expansion projects and acquisitions, including the recently closed purchase of three gas utilities. That should drive 3% annual cash flow per share growth, slowed down by a higher share count to fund its recent acquisitions and some modest headwinds from tax legislation. Post-2026, the company expects to settle into around a 5% annual growth rate for adjusted EBITDA and cash flow per share, driven by its extensive pipeline of expansion projects and ample excess annual investment capacity.
With its dividend yielding 6% and cash flow per share growing by 3% to 5% annually in the future, Enbridge should have the fuel to produce double-digit annual total returns.
About to hit the accelerator
Mid-America Apartment Communities (MAA) currently pays a dividend yielding more than 3.5%, toward the high end of its average over the past decade. The real estate investment trust (REIT) focused on apartments has delivered 30 years of dividend stability and growth. While it hasn’t increased its payment every year, it has raised it for 14 years in a row, including by 5% late last year.
That combination of income and growth has contributed to the landlord’s strong total returns. It has delivered a more than 11.5% average annual total shareholder return in each of the last 10-, 15-, and 20-year periods, outperforming its apartment peers in each period.
MAA is in a strong position to grow its rental income over the next few years. It has battled headwinds from a higher volume of new apartment supply in its markets over the past year, which has weighed on rent growth. However, it has now passed the peak in new supply, and according to CEO Eric Bolton on the third-quarter earnings report, the company is “confident that in calendar year 2025 we will see a meaningful decline in the amount of new supply impacting our portfolio, and we will enter a new multiyear cycle with demand outpacing supply.”
The company is capitalizing on that opportunity by investing about $1 billion to develop additional apartment communities across several of its markets. It expects to complete these projects through 2027. Meanwhile, it plans to start several more projects this year and remain very active in acquiring additional apartment communities as opportunities arise. The REIT is also investing money to redevelop and reposition existing apartments to increase their appeal to renters. “The upside opportunity within our current portfolio from these changing market conditions, coupled with the growing contribution from our new development and acquisitions pipeline, has MAA very well positioned,” noted the CEO. Those growth catalysts should enable the REIT to continue increasing its dividend, which should help it deliver attractive total returns.
Great times to buy
Enbridge and MAA currently offer attractive dividend yields. On top of that, they have visible earnings growth ahead, which should enable them to continue increasing their dividends. That income and growth combo positions them to produce attractive total returns, making them great dividend stocks to double up on right now.
Matt DiLallo has positions in Enbridge and Mid-America Apartment Communities. The Motley Fool has positions in and recommends Enbridge and Mid-America Apartment Communities. The Motley Fool has a disclosure policy.
