2 Top Dividend Stocks I Plan to Buy Even More of In November

Matt DiLallo, The Motley Fool

Sat, Nov 2, 2024, 4:31 AM 4 min read

A well-oiled, dividend-paying machine

Chevron is one of the best dividend stocks around, increasing its payout for more than 35 straight years. The oil giant raised its payment by 8% earlier this year and has grown it faster than its peers and the S&P 500 over the last five years. Chevron currently offers a very attractive dividend yield of more than 4%, putting it much higher than the S&P 500 (under 1.5%).

The company should have plenty of fuel to increase its dividend in the future. Chevron expects to grow free cash flow by more than 10% annually through 2027. That forecast assumes oil prices of $60 a barrel, which is below levels of the past three-plus years. Meanwhile, shareholders should also benefit as the company uses some of that cash to repurchase shares. Chevron is planning to buy back $10 billion to $20 billion of shares annually, which is enough to retire 3% to 6% of its outstanding shares. Thanks to its fortress-like balance sheet, it can achieve the low end of that range even if crude oil prices average around $50 a barrel.

Meanwhile, there's upside to that plan if Chevron closes its needle-moving acquisition of Hess. That deal would more than double its free cash flow by 2027, assuming $70 oil. The acquisition would also extend its production growth outlook into the 2030s. That could give Chevron even more fuel to increase its dividend in the future.

A low-risk wager on a rising income stream

Vici Properties has developed an excellent record of paying dividends. The real estate investment trust (REIT), which focuses on experiential properties like casinos, has increased its payment every year since its formation seven years ago. It most recently raised its dividend by 4.2% and has grown its payout at a peer-leading rate since it came public.

The REIT's dividend currently yields more than 5%. Vici Properties should be able to continue growing its payout in the future. It has several growth drivers, including:

Rental increases: A growing percentage of the rent Vici collects on its properties will rise with inflation in the coming years (40% in 2024 to 90% by 2035).
Acquisitions: Vici Properties routinely acquires experiential properties leased to high-quality operators. It bought 38 bowling entertainment centers for $432.9 million and Chelsea Piers in NYC for $342.9 million late last year.
Partner Property Growth Fund: The REIT will provide capital to its partners to help enhance and expand existing properties. For example, it agreed to provide up to $700 million to fund several projects at the Venetian Resort in Las Vegas, like hotel room renovations and entertainment and convention center enhancements.
Credit investments: Vici will originate loans to support the expansion of new and existing partners. For example, it agreed to provide a $105 million construction loan to fund the development of a Margaritaville Resort. Many of its credit investments offer built-in growth opportunities to acquire properties upon completion. It has the option to buy that Margaritaville Resort and several other sports facilities the developer also owns.

Vici Properties' income should rise as it expands its investment portfolio. That should enable it to continue increasing its dividend.

Attractive and growing income streams

I like to invest in companies that pay a high-yielding and growing dividend. That's because it supplies me with a rising dividend income stream and steady stock price appreciation. Chevron and Vici Properties have excellent records of doing both, which is why I plan to buy even more shares this November.

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Matt DiLallo has positions in Chevron and Vici Properties. The Motley Fool has positions in and recommends Chevron. The Motley Fool recommends Vici Properties. The Motley Fool has a disclosure policy.

2 Top Dividend Stocks I Plan to Buy Even More of In November was originally published by The Motley Fool

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