These high-yielding dividend stocks are growing at breakneck speed


Most growth stocks do not pay a high yield dividend. This is because they need to keep more cash to support their expansion.

However, there are exceptions as some companies offer the best of both worlds – high growth and a high dividend yield. Two companies that stand out for their combination of growth and income are NextEra energy partners (NYSE: NEP) and Medical Property Trust (NYSE: MPW). This punch should allow them to produce attractive total returns.

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The dividend of NextEra Energy Partners currently stands at 3.4%. This is more than double that of the average stock in the S&P 500.

What stands out even more about NextEra, however, is its growth profile. The clean energy infrastructure company has increased its dividend by 253% since its inception in 2014. The growth of the company has been fueled by a steady stream of acquisitions, primarily renewable energy assets and gas pipelines. It focuses on the acquisition of infrastructure secured by long-term fixed rate contracts as they generate regular cash flows to support its dividend. This strategy has paid large dividends to investors, allowing it to double the total return of the S&P 500 since its inception.

NextEra Energy Partners sees a lot more growth to come. The company plans to increase its dividend at an annual rate of 12% to 15% until at least 2024. This plan is supported by the hope that it will continue to acquire clean energy infrastructure that generates cash flow. The company currently has approximately $ 2.2 billion in cash and borrowing capacity to fund its growth initiatives, giving it the financial strength it needs to execute its expansion strategy. bold and continue to generate strong returns for investors.

A healthy growth profile

Medical Properties Trust offers an attractive dividend yield of 5.5%. Usually such a high yield is a sign of slow growth. However, that is not the case for this hospital-focused real estate investment trust (REIT).

The healthcare REIT has grown its asset base at a compound annual rate of 31% over the past decade through a steady stream of hospital acquisitions. This rapidly expanding portfolio has paid big dividends for investors. Medical Properties has increased its payments in each of the past eight years, at a 5% cancellation rate. This has helped the REIT generate a total return of over 550% since its IPO in 2005, well ahead of the S&P 500’s approximately 390% total return during that time.

Meanwhile, he hasn’t slowed down a bit over the past year. It closed nearly $ 3.6 billion in hospital-related real estate investments last year, which helped increase its normalized FFO per share by 21%. Meanwhile, it has got off to a good start in 2021. It had already secured more than $ 3.6 billion in investments by mid-year, allowing it to increase its Normalized FFO per share by a rate of mid-year. -adolescence for 2021.

Medical Properties Trust still has a lot of room to develop. Despite being the second largest non-government hospital owner in the world, its $ 21.4 billion portfolio represents a small fraction of the global hospital real estate market. More and more hospital systems and governments are realizing that it is not in their best interests to own this real estate. They can better serve patients by selling and then renting these properties and reinvesting their income in improving their systems. As one of the few companies focused on hospital real estate, Medical Properties does not have much competition for this massive and growing market, which should allow it to continue its rapid expansion.

The best of both worlds

NextEra Energy Partners and Medical Properties Trust are expected to appeal to dividend investors given their high yields. What sets them apart from their peers, however, are their above-average growth rates. This one-two combo should allow them to continue to generate strong total returns, making them attractive to growth or income investors.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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