Dividend stocks are a key component for long-term investors looking to maximize their returns. According to Harford Funds, a staggering 85% of the S&P 500’s total return since 1960 has been attributed to reinvesting dividends.
When it comes to choosing dividend stocks, not all are created equal. It’s important for investors to focus on high-quality companies that have the ability to sustain and grow their dividend payments over time. Two top picks in this category right now are British American Tobacco (BTI) and Tanger (SKT).
British American Tobacco, despite facing a decline in traditional tobacco products, is seeing success in its newer categories such as vaping, tobacco heating, and modern oral products. The company expects organic revenue and profit growth this year, supporting its current dividend yield of about 9.4%. Additionally, British American Tobacco is engaging in stock buybacks while working to reduce its debt levels.
Tanger, a company operating outlet centers in the U.S. and Canada, faced challenges during the pandemic but has since bounced back. With plans for growth through improving existing centers, opening new ones, and monetizing adjacent properties, Tanger expects to increase its same-center net operating income this year. The stock offers a yield of just over 4% and has shown potential for dividend growth.
Both British American Tobacco and Tanger present attractive opportunities for investors seeking dividend stocks with growth potential. However, it’s important to note that investing always carries risks, and it’s advisable to conduct thorough research before making any investment decisions.