For investors focused on cash flow or retirees who need their assets to generate income, dividend stocks are at the top of heap. Often though, these income stocks don’t offer much excitement or growth.
But you shouldn’t have to sacrifice growth when investing in dividend yielders, and each of the following three stocks offer both high dividends and growth.
The average dividend yield for the S&P 500 is right around an underwhelming 1.9%. Each of the following stocks offer significantly higher yields than that, making them attractive options.
Here’s what you need to know about these three stocks.
Intel (NASDAQ: INTC)
Dividend Yield: 2.54%
Chipmaker Intel (NASDAQ: INTC) is a great option for investors looking for dividend stocks. It’s got a healthy and sustainable yield, a track record of dividend growth, and solid fundamentals to back everything up.
Intel is especially interesting considering that it has exposure to the artificial intelligence (AI), internet of things (IoT), and cloud spaces, mega trends and secular growth tailwinds that INTC is in a great position to profit from as it makes the chips that power each of these markets.
As long as the demand from these markets holds out, Intel will do well. And considering that all of these trends are in their infancy, and the growth outlook for each looks impressive, the growth outlook for Intel looks solid as well.
The average analyst price target for INTC is $55.44, suggesting possible upside of 13.23% over the next twelve months. Last week, JPMorgan Chase rated the stock a Buy and set a price target of $70 – nearly 43% higher than the price as of this writing.
MPLX (NYSE: MPLX)
Dividend Yield: 7.5%
MPLX (NYSE: MPLX) is a master limited partnership. A master limited partnership, or MLP, is a limited partnership traded on a public exchange that combines the tax benefits of a limited partnership wth the liquidity of being a publicly traded security.
In theory, MLPs should acquire new assets at good prices, grow their payout, and be disciplined when they fund those new assets. In practice, though, many MLPs don’t do this all that well. But that’s not the case for MPLX.
MPLX has a massive growth pipeline. It’s expected to spend about $2.2 billion on new assets this year, and the company has continually been generating enough cash from its operations to fund its growth – as well as maintain payouts to its investors.
The company takes a conservative approach to debt and has consistently demonstrated that it can grow earnings and payouts to investors in a sustainable manner. And with a dividend yield of north of 7%, its a high-yield stock investors should consider.
Analysts’ average twelve month price target for MPLX is $40.83, indicating possible upside of 20.31%. Credit Suisse Group recently initiated coverage on the stock, rating it an Outperform and with a price target of $45 – 32.6% higher than the current price.
Hanesbrands (NYSE: HBI)
Dividend Yield: 3.63%
Hanesbrands (NYSE: HBI) hasn’t gotten much love from investors in the past few years and has been in a downtrend since 2015. Then Target’s (NYSE: TGT) recent decision not to renew a major contract for the company’s Champion C9 line—which is exclusively sold at Target—sent the stock tumbling even further.
But despite this, there’s a lot to like about the stock.
First, I think the market’s reaction to Target’s decision not to renew the contract for the C9 line was an overreaction. The line only generates $380 million in trailing twelve month revenue, which is just under 6% of the company’s total revenue. That 6% chunk, while not insignificant, is replaceable and the company’s management has until 2020 (which is when the contract with Target expires) to figure out how to fill that gap.
Second, Hanesbrands is actually doing really well internationally. Its international sales were $2.1 billion in 2017, representing 32% of total sales. Compare that to $0.5 billion in sales in 2013, and just 11% of total sales that year. And it’s likely that growth will continue, which is very positive news.
Hanesbrands’ $0.15 per share quarterly dividend works out to a 3.63% yield, which only eats up 35% of expected earnings and is a solid payout. Things would have to change very dramatically for this dividend to be at risk.
While Hanesbrands isn’t the most exciting company, analysts do see growth ahead considering the company’s success abroad. The average price target for HBI is $21.43, suggesting possible upside of 28.7% over the next twelve months.