Two Exceptional Dividend Stocks I Intend to Include in My Retirement Portfolio Next Month

Two Exceptional Dividend Stocks I Intend to Include in My Retirement Portfolio Next Month

I’m self-employed, so I’m on my own when it comes to saving for retirement. I don’t have a retirement plan or 401(k) match to help me retire more comfortably. So I take a reasonably conservative approach with my retirement account. I strive to make investments that I firmly believe will grow my retirement nest egg over the long term.

This is why I focus on dividend stocks. They are proven wealth creators. Over the past 50 years, the average dividend stock in the S&P500 achieved average annual growth of 9.1% total return, surpassing the 7.7% return of an equal-weighted S&P 500 index. At the same time, dividend producers and originators generated even higher total returns of 10.2%. This data gave me the confidence to load my retirement portfolio with dividend growing stocks.

I plan to add several more dividend producers to my retirement account in April, including Chevron (NYSE: CVX) And Rexford Industrial Real estate (NYSE: REXR). Here’s why I think they’ll help me build my retirement nest egg.

A well-oiled machine that pays dividends

Chevron has been one of the fastest growing dividend companies over the decades. The oil giant announced its 37th consecutive annual dividend increase in 2024, increasing its payout by 8%. This continued its recent trend of generating above-average dividend growth. Over the past five years, Chevron has increased its dividend faster than the S&P 500 and more than twice as fast as its closest oil sector peer.

Chevron should have enough fuel to continue growing its dividends at an above-average pace over the next few years. The oil company focuses on investing in the most profitable opportunities. This focus on returns leads it to believe it can increase its free cash flow by more than 10% per year through 2027 at $60 oil. (Crude oil prices are currently in the 80s.) That’s enough money to fund its investment program, increase its dividend and buy back shares at the low end of its $10 billion to $20 billion annual range. Meanwhile, Chevron has several upside catalysts, including rising oil prices and its pending acquisition of Hess. The roughly $60 billion deal would more than double its free cash flow by 2027, to $70 oil, while extending its growth prospects into the 2030s.

At the same time, Chevron is investing in several new low-carbon energy opportunities to fuel future growth, including hydrogen And carbon capture. These catalysts could give it more power to grow its dividend in the future.

This REIT’s regional focus pays big dividends

Rexford Industrial Realty is a Industrial REIT focused on supply-constrained markets in Southern California. This regional focus has paid significant dividends to its investors over the years. The REIT increased its funds from operations (FFO) at a compound annual rate of 16% over the past five years, compared to 11% for its peers, driven by rental growth and acquisitions. These factors have allowed it to increase its dividend at a blistering average annual rate of 18%, compared to 10% per year for its peers.

The REIT is in an excellent position to continue its rapid growth. It recently seized the opportunity to acquire $1 billion worth of industrial assets from real estate funds managed by black stone. The deal will add 3 million square feet of exceptionally well-located, high-quality assets in Southern California to its portfolio. This acquisition brought its total investment to $1.4 billion this year. With a fortress-like balance sheet, even after this significant transaction, Rexford has the financial flexibility to continue making new investments.

This transaction adds to the company’s already strong organic growth profile. It expects rising rents and other catalysts to add $240 million in additional net operating income over the next three years, an increase of 42% by the end of 2026. These Internal and external catalysts should allow the REIT to continue to increase its dividend at a sustained pace. .

Magnificent Dividend Growth Stocks

Chevron and Rexford Industrial Realty have generated above-average dividend growth in recent years. Given their very visible growth prospects, I expect this to continue in the future. I also believe they can produce solid total returns over the long term, making them excellent investments to help build my retirement nest egg.

Should you invest $1,000 in Chevron right now?

Before buying Chevron stock, consider this:

THE Motley Fool Stock Advisor The analyst team has just identified what they think is the 10 best stocks for investors to buy now…and Chevron was not one of them. The 10 selected stocks could produce monster returns in the years to come.

Equity Advisor provides investors with an easy-to-follow plan for success, including portfolio building advice, regular analyst updates, and two new stock picks each month. THE Equity Advisor The service has more than tripled the performance of the S&P 500 since 2002*.

See the 10 values

*Stock Advisor returns as of April 1, 2024

Matt DiLallo holds positions at Blackstone, Chevron and Rexford Industrial Realty. The Motley Fool has positions and recommends Blackstone, Chevron and Rexford Industrial Realty. The Motley Fool has a disclosure policy.

2 Gorgeous Dividend Stocks I Plan to Add to My Retirement Account in April was originally published by The Motley Fool

Source Reference

Latest stories