- W.P. Carey is a diversified landlord that has long focused on opportunistic investing and rewarding investors with dividends.
- Enbridge is in the oil and gas industry, but it’s working on a shift toward clean energy and has a long history of regular dividend hikes.
- Medtronic is a medical device giant dealing with some headwinds, but it has four decades of dividend growth behind it.
If you are looking for stocks that you can own for your entire life and leave to your kids, this trio should be on your list.
If you are looking for stocks to own that you can, eventually, hand on to your children, then you need to make sure you stick with the biggest and best names. One of the best ways to do that is to focus on industry-leading companies with great dividend histories. W.P. Carey (WPC -0.57%), Enbridge (ENB -1.09%), and Medtronic(MDT 0.11%) all fit that bill. Here’s why this trio could help you create lasting generational wealth.
1. The all-in-one REIT
W.P. Carey is a net lease real estate investment trust (REIT). That means it owns single tenant properties for which the lessee is responsible for most of the property-level expenses. Over a large enough portfolio, this is a fairly low-risk approach to real estate ownership. W.P. Carey layers diversification on top of that, with rents spread across the industrial (26% of rents), warehouse (24%), office (19%), retail (18%), and self-storage (5%) sectors, with a fairly large “other” section rounding things out. It also generates about 37% of its rents from outside the U.S., largely Europe.
But the real sign of success here is that W.P. Carey has increased its dividend every single year since its initial public offering in 1998. If you include the dividend increase in 2022, W.P. Carey has put up 25 years of consecutive annual increases, which puts it in Dividend Aristocrat territory. The thing is, W.P. Carey has been around longer than it has been public. In fact, it was one of the first companies to popularize the net lease model, specifically building a diversified portfolio that allows it to invest where management thinks it can find the most value for investors. With its generous 5.1% dividend yield, investors looking to collect dividend checks today and provide income for heirs tomorrow should take a look.
2. Preparing for the future
Canada’s Enbridge is one of the largest so-called midstream companies in North America. That means it owns oil and natural gas pipelines and other transportation and processing assets that help to move energy around the continent and world. However, the midstream business is largely driven by fees, so the ups and downs of commodity prices aren’t really a big driver of Enbridge’s results. Demand for these fuels is the issue to monitor, and at this point, it looks like the fuels will remain important for decades to come even as the world shifts toward cleaner energy choices. That said, Enbridge is using the cash it generates from its carbon operations to help it build a renewable power business. So it is, in fact, looking to adjust along with the world. That’s a move that will help ensure its long-term survival and your ability to eventually pass its shares on to children.
But the really exciting story here is the dividend. The current yield is a lofty 6.7%. The dividend has been increased annually for 27 consecutive years. And Enbridge is generating about $2 billion in excess cash flows — that is, more than its current dividend and capital spending needs — that it intends to invest in its business to keep that streak going. That suggests growth will continue for years to come.
3. Plenty of opportunity ahead
Medtronic is one of the world’s largest medical device manufacturers, with products that range from pacemakers to robotic surgery systems. Although its products help people of all ages, the baby boom generation is rapidly heading into retirement and will likely need increasing medical assistance. Medtronic should get its fair share of the dollars spent on that effort. That said, the company has been dealing with a couple of missteps including product delays and a recall, but these should be surmountable problems.
Which is why the historically high 3% dividend yield here is so attractive. Basically, it’s a great company that looks cheap right now. One of the key selling points, however, is that Medtronic has increased its dividend annually for more than four decades. You don’t build a record like that by accident, and there’s really nothing to suggest that the streak is likely to end anytime soon. If you are willing to think long term here, you should be able to hand this great dividend stock on to your children.
Time for some digging
W.P. Carey, Enbridge, and Medtronic are all fine companies offering generous dividends backed by very impressive dividend growth streaks. They will reward you for owning them, and if you keep them in your portfolio, they can be left to your children, who can then benefit from those growing dividends, too. If you want to create generational wealth, these three stocks are the kind you’ll want to explore today.