Dividend investing is back in vogue. Indeed, passive income from company distributions acts as a defensive buffer for portfolios during times of market turmoil – and with share prices still relatively low, many investors are eyeing up some attractive opportunities in the space.
In fact, industries that are seen as steady and reliable are often the most sought-after by dividend investors, as they promise a consistent source of income that can be reinvested to generate even more returns over time. This type of investing can be a great way to build a defensive portfolio that will weather anything the market throws at it.
So here are two excellent dividend-paying companies that you can snap up today.
Carlisle Companies Incorporated (CSL)
There aren’t too many companies that can boast a track record of increasing their dividend payments for 46 consecutive years – and even fewer can say they’ve raised their payout by 39% amid some of the worst economic conditions in decades.
And yet, that’s exactly what Carlisle Companies has just done. The firm is a globally diversified manufacturing business, and produces commercial building materials, physical infrastructure, and specialty products for a selection of regular and niche industries.
Indeed, the organization is divided into distinct segments, including Construction Materials, Fluid Technologies and Weatherproofing.
The company’s products are used in the aerospace, military, and automotive sectors, and are designed to improve the energy efficiency and sustainability of their client’s operations.
In addition to its energy-saving benefits, CSL also contributes to LEED certification points and helps building owners meet their environmental, social, and governance goals.
To that end, CSL’s Weatherproofing Technologies wing designs envelope solutions that improve a building’s thermal performance, resulting in significant reductions in heating and cooling costs. The company’s solutions can be used on a variety of structures, including residential and commercial buildings, industrial facilities, and institutional properties such as hospitals and schools.
Moreover, the Weatherproofing segment is also incredibly lucrative, having grown its revenues in the last quarter by 44.3% – the most significant increase of any of its other business operations. Operating income was up a massive 60% year-on-year at $9.6 million, while an adjusted EBITDA of $59.1 million delivered margins of 14.5%.
But it’s Carlisle’s dividend that really shines. The company enjoys a low payout ratio of 14.2%, meaning that most of its earnings are reinvested into the business. This allows for strong growth and ensures that shareholders will continue enjoying healthy future dividends.
On top of that, CSL has a reassuringly conservative yield of 1.32%, ensuring that even if the company’s earnings were to decline, shareholders would still receive a decent return on their investment.
Finally, Carlisle Companies has a robust 1-year dividend growth rate of 12.1% – which is just another indication of the firm’s solid financial position and its commitment to returning value to shareholders.
And investors don’t need to worry about CSL’s continued ability to keep paying its dividend either. Certainly, residential construction markets in the US face near-term headwinds due to a reduction in building expenditures and a signification rising in interest rates, but Carlisle believes that the long-term fundamentals remain attractive. There’s a lack of adequate housing in America, and the rising demand for energy-efficient homes is a major trend for the business.
In fact, Carlisle just reported a record third quarter, both in revenue and GAAP diluted earnings-per-share. Furthermore, the business is also shoring up its dividend credentials by having bought back 105,000 shares during the last period, taking its cumulative share repurchases over the previous five years to $2 billion.
Universal Health Realty Income Trust (UHT)
While some stock investments have taken a hit recently, many real estate investment trusts (REITs) have actually outperformed the broader market of late. That’s due in no small part to the fact that rental income usually grows at the same pace as inflation, which also makes them a good hedge against rising interest rates as well.
Best of all, REITs typically pay out over 90% of their profits in dividends, so you can enjoy a healthy stream of income even when the markets are struggling.
Medical REITS – like Universal Health Realty Income Trust – are considered especially safe since healthcare spending is relatively recession-proof. Indeed, UHT is a real estate investment trust whose portfolio consists of properties leased to leading healthcare providers, including hospitals, outpatient centers, laboratories, and residential treatment facilities.
The REIT is managed by Universal Health Services (UHS), from whom the company was spun-off in 1986. Unlike many other externally managed REITs – which some investors may be wary of – the two business’s interests are highly aligned, with UHS founder, Alan B. Miller, holding a 1% stake in the real estate vehicle.
Since going public, UHT has been a steady performer, with strong occupancy rates and consistent dividend growth. The company has increased its dividend for 36 consecutive years and is one of the few publicly traded medical REITs with a long track record of solid dividend growth.
However, the firm’s FFO dropped in the third quarter, going from $0.92 a share in 2021 to $0.86 today. That loss was attributed to a “vacant specialty hospital located in Chicago,” as well as increases in interest rate expenditures.
That said, UHT still maintains a high-yielding forward dividend of 5.85%, and the REIT is seeing increases in net operating income at various other sites in its portfolio. Furthermore, the company’s share price is also down nearly 20% this year, making the present moment the perfect time to snap up this defensive-minded dividend aristocrat.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.