3 Top Dividend Stocks for Income Investors

Investors planning to start a passive income stream through their investments can consider investing in dividend-paying stocks. Additionally, investors will likely benefit from capital gains in the long term. 

However, investors must take caution when selecting dividend stocks, as not all of them prove to be reliable investments. It's best to opt for companies with a long track record of dividend payments, consistent dividend growth, and a growing earnings base to cover their payouts.  

Among the notable contenders, here's a look at three companies that stand out for their solid payout histories and ability to sustain their dividend payments into the future. These companies have consistently grown their dividends and enhanced shareholders’ returns in all market conditions. Let's take a closer look at why these are top dividend stocks for income investors right now.

Dividend Stock #1: Agree Realty Corp (ADC)

Agree Realty Corp (ADC) is an integrated real estate investment trust (REIT) focusing predominantly on retail properties. The company primarily leases its properties to industry-leading, omni-channel retail tenants throughout the U.S. 

ADC has 2,135 retail properties totaling over 44 million square feet across 49 states.  

Agree Realty pays a monthly dividend; moreover, its dividends have grown at a CAGR of approximately 6% in the last 10 years. The current monthly dividend of $0.247 per share translates into a forward yield of about 5.2%.  

Thanks to its high-quality real estate portfolio and exposure to counter-cyclical sectors and retailers with strong credit profiles, the company consistently generates high-quality earnings that easily cover its dividend payouts. 

Agree Realty’s top-quality portfolio - focusing on leading operators that have matured in omni-channel businesses - extremely high occupancy rate of 99.8%, strong balance sheet, and robust developmental pipeline all positions the REIT well to generate cash flows to support its payouts. In addition, its active portfolio management strategy of selling non-core assets, along with its low leverage profile, bode well for future growth. 

Out of the 15 analysts covering ADC, 10 have a “Strong Buy” recommendation, two recommend “Moderate Buy,” and three analysts suggest a “Hold.” The average price target for Agree Realty stock is $67.63, which implies approximately 18.8% growth potential from current levels. 

Dividend Stock #2: Energy Transfer LP (ET)

Energy Transfer LP (ET) owns a diversified portfolio of energy assets. It operates an energy infrastructure business specializing in the transportation and storage of natural gas (NGH24), crude oil (CLJ24), and NGLs (natural gas liquids). Further, with assets in every major production basin in the U.S. and a focus on accretive acquisitions, the company is well-positioned to capitalize on energy demand.  

The company’s diversified asset base and higher mix of fee-based cash flows enable ET to generate strong earnings, irrespective of commodity cycles. Further, this allows Energy Transfer to enhance shareholder returns consistently through higher dividend payouts. Notably, approximately 90% of the company's adjusted EBITDA is derived from fee-based contracts, ensuring reliable earnings and dividend payouts. 

Energy Transfer increased its quarterly dividend to $0.3150 per share in January 2024, reflecting a yield of about 8.5%. Further, the company expects to grow its dividend by 3-5% annually in the coming years.

Analysts remain optimistic about ET stock, with 12 out of 14 rating it as a "Strong Buy." The average price target from this group is $17.71, suggesting a potential upside of approximately 20% from current levels.

Dividend Stock #3: EOG Resources (EOG)

EOG Resources (EOG) is involved in the exploration and production of crude oil, NGLs, and natural gas. The company has a strong track record of growing its dividend across commodity cycles, which makes it a dependable income stock. Not only has EOG never suspended or reduced its dividend, it has increased its dividend for 26 consecutive years.   

EOG is committed to returning a significant portion of its annual free cash flows to shareholders. In 2023 alone, it distributed a special dividend of $1.5 billion, and has disbursed approximately $12 billion since 2021 through dividends and share repurchases. EOG currently offers a quarterly dividend of $0.94 per share, representing a forward yield of 3.25%. 

The company’s strengths lie in its high-quality asset portfolio, efficient cost structure, secured gas sales agreements, and robust balance sheet, all of which position it favorably to generate substantial cash flows to sustain future dividend distributions. Additionally, its multi-billion capital program, characterized by a low breakeven, bodes well for future growth. 

Among the 24 analysts covering EOG, 14 advocate a "Strong Buy" recommendation, while the remaining 10 suggest a "Hold." The average price target for EOG is $142.21, indicating a potential upside of roughly 26% from its current price.