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Want to see a mini portfolio spread out across three different areas of the economy? Like the idea of getting a blended 5.7% yield on this portfolio? Would you also like to see your big dividends safely grow well into the future?
Building out a portfolio over the course of years is one of the most rewarding parts of being a long-term investor. I kind of see my own portfolio like a painting. It's something you visualize at the outset. Then you slowly bring it to life over time.
You fill it in. You touch it up over here. Add some color over there. Before you know it, it's a masterpiece. But where to start? What does a small portfolio potentially look like? And what if you want a yield on a small portfolio that smashes the market? I've got you covered.
Today, I want to tell you about a mini portfolio of three totally different dividend growth stocks, offering a blended yield of 5.7%. Ready? Let's dig in.
The first dividend growth stock of this mini portfolio is Universal Health Realty Income Trust (UHT).
Universal Health Realty Income is a real estate investment trust with a market cap of $780 million.
Yep. Almost four straight decades of ever-bigger dividends. This is a super consistent dividend payer and grower. Plus, the stock yields a market-smashing 5.0%. That's almost four times higher than the broader market's yield. Now, the 10-year DGR of 1.3% isn't super inspiring. This is more of an income play than a compounder. But with a payout ratio of 76.0%, based on the current FFO/share annual run-rate, the dividend is highly likely to continue flowing and growing for years to come.
The next high-yield dividend growth stock in this mini portfolio is Altria Group Inc. (MO).
This Dividend King is an all-star dividend growth stock, especially for those out there that like yield. Check it out. This stock yields a monstrous 7.5%. Where else are you going to find a 7.5% yield backed by more than 50 straight years of dividend raises? The 10-year DGR of 9.1% only adds to the near-mythic status of this stock's overall dividend profile, although recent dividend increases have been more modest. And the payout ratio is a manageable 78.4%, based on midpoint guidance for this fiscal year's adjusted EPS.
The last high-yield dividend growth stock for this mini portfolio is Verizon Communications Inc. (VZ).
Verizon is a telecommunications conglomerate with a market cap of $224 billion.
Not only do you get those reliable, consistent dividend increases to look forward to, but you also get a big dividend here. The stock yields an appealing 4.7%. Compared to the market, that's very juicy. Actually, compared to the usual yield for Verizon stock, it's juicy - the five-year average yield for this stock is 4.2%. Like the other stocks listed, this is more of an income play than a compounder - the 10-year DGR is just 2.6%. But if you want a big, safe dividend that allows you to keep up with inflation over the long run, this gets you there. Speaking of safe, the dividend is covered by a rather low payout ratio of 48.3%, based on midpoint adjusted EPS guidance for this fiscal year.
This stock is down nearly 10% on the year, and it looks undervalued.
This mini portfolio gives you diversification, breadth, yield, and value. Speaking on that last point, Verizon's stock is trading hands for a forward P/E ratio of just 10.2, based on their guidance. Again, nearly a single-digit P/E ratio in this market. Every basic valuation metric I look at is below its respective recent historical average. And don't forget, owning Verizon stock would mean you're investing alongside the billionaire investor Warren Buffett. As we covered not long ago, he's been buying this stock up left and right this year and now has over $8 billion wrapped up in Verizon shares. If you want yield, value, and the Buffett seal of approval, take a look at Verizon.
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LEGAL DISCLAIMER: Please consult with a licensed investment professional before investing any of your money. Never invest in a security or idea featured on this channel unless you can afford to lose your entire investment. If your money is not FDIC insured, it may decline in value. Jason is not a licensed financial advisor, tax professional, or stockbroker and he does not purport to be. The links above may include affiliate commissions paid to the owners of Dividends and Income and help support this channel.
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