Investing in stocks can help you make money in two ways. The most significant way is for stock values to rise. Many equities also provide extra rewards by providing dividends.
Every investor enjoys seeing the values of the stocks they hold rise. However, don’t underestimate the ability of it to deliver significant long-term returns. Here are three equities that, based just on dividend, may quadruple your money in ten years.
1. Devon Energy.
The “rule of 72” is a straightforward method for calculating how long it takes for a particular investment to double. Divide 72 by the estimated rate of return to find the approximate time it will take for the investment to double.
Devon Energy (DVN 2.45%) has a dividend yield of about 9.1% right now. Using the rule of 72, the stock could double your money in less than eight years based only on it at the present yield. Devon, on the other hand, has not required investors to rely solely on it. The oil and gas producer’s stock has risen over 35% year to date.
Devon’s momentum, on the other hand, is heavily reliant on crude oil prices. To some extent, so does its dividend. The dividend is divided into two parts: a fixed component and a variable component based on excess free cash flow. Devon’s free cash flow has decreased as crude oil prices have fallen in recent months. As a result, the company’s variable dividend payout was lowered.
Devon’s payouts may not be able to double your money in the following ten years due to the probable volatility of its dividend. However, certain oil price estimates for the rest of the decade auger well for Devon’s prospects of generating significant free cash flow. Devon should be a doubler if crude oil prices do not fall too far.
2. Medical Properties Trust
Unlike Devon, Medical Properties Trust (MPW 0.42%) (MPT) does not have a variable dividend component. For the past eight years, the healthcare real estate investment trust (REIT) has continuously boosted its dividend.
MPT currently has a dividend yield of 9.8%. That’s enough to more than quadruple your money in it alone in less than 7.5 years.
MPT’s concern this year is that its share price has fallen so far that it has wiped out years of dividend payments. The stock has underperformed due to concerns about the financial health of its hospital operator tenants.
However, I believe MPT is one of the best stocks to buy right now. One reason for this is that the REIT’s value has become extremely appealing as a result of the severe sell-off. Another factor is that the prognosis for hospital operators appears to be better as a result of improved reimbursements. The dividend of MPT appears to be in good shape. If the yield falls, it is most likely due to an increase in the stock.
3. Verizon Communications Inc.
The dividend yield on Verizon Communications (VZ 1.47%) is currently a little around 7%. That is insufficient to double your money in return from dividend alone in ten years. However, I believe Verizon should be included on the list for one simple reason: its track record of dividend growth.
For the past 16 years, the telecommunications behemoth has increased its dividend. Even a few tiny dividend increases over the next few years would be enough to double your money by the end of 2032.
However, Verizon raises two critical issues. First and foremost, is its dividend secure? Second, might the stock’s performance negate any dividend benefits (as it has this year)?
I believe the solution to the first question is simple. Verizon’s dividend appears to be rather secure. The dividend payout ratio of the company is less than 56%, which is an acceptable amount. Verizon’s management understands that its dividend attracts investors. I believe they will do everything possible to maintain the dividend rise streak.
Verizon’s stock performance in the future is more difficult to forecast. However, the telecom company’s stock is trading at less than 7.4 times earnings. With this already good value, I don’t believe the stock will fall much lower than its current level.
Verizon will also benefit from the adoption of its 5G services. The main result is that Verizon’s dividends have a reasonable probability of doubling your money over the next ten years without its stock performance canceling out those gains.
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