Do You Really Need Kinder Morgan, Inc. (NYSE:KMI) Stock in Your Portfolio?
Of course you don’t. But the energy sector’s temporary price correction is an excellent opportunity for medium- to long-term investors and Kinder Morgan, Inc. (NYSE:KMI) offers a solid package of good assets. That’s why this is one of my top dividend stocks for 2016.
In this market, it’s tough to find good buys. The difficulty in finding good stocks to buy is compounded by the fact that the stock market has already gone up tremendously.
That’s why the energy sector is so appealing now. The sector is down; drilling is on the decline. But for the stock market investor, the combination of turnaround capital gains potential, combined with way above-average dividends, makes opportunities like Kinder Morgan stock particularly attractive.
Currently, KMI stock is offering approximately 6.5% in dividend yield. That’s a big deal in a slow growth world—a slow growth economy that’s likely to be lackluster for the rest of this decade.
Kinder Morgan stock, with its strong pipeline and storage business, isn’t just for income-seeking investors. This position makes for an excellent candidate for automatic dividend reinvestment in new shares (an investment strategy that really works).
Shareholders can use these strong dividends to accumulate more shares (at no cost) while the sector continues to consolidate.
When the market for oil turns, you’ve got those added shares to benefit from a better commodity price environment.
The stock chart for Kinder Morgan, Inc. is featured below:
Chart courtesy of www.StockCharts.com
The Walt Disney Company (NYSE:DIS) Could Be Magic for Your Portfolio
I like dividends in a slow-growth world. With the stock market already having appreciated tremendously over the last few years, dividends may be the only returns equity investors can get.
With no wind at your portfolio’s back, individual stock selection is the only way to beat the market. The Walt Disney Company (NYSE:DIS) is one mature Dow stock that’s still growing. That’s why it’s another one of my top dividend stocks for 2016.
Any large-cap, mature enterprise able to generate high single-digit sales growth and double-digit comparable earnings growth is an accomplishment in this economy.
Disney stock is a proven wealth creator. The company’s profits aren’t just about a one-off box office hit; four out of five main operating divisions (media networks, parks and resorts, studio entertainment, and consumer products) are growing. The company’s interactive gaming unit is the laggard.
Last quarter, Disney’s studio entertainment revenues grew 13% comparatively to $2.04 billion, followed by a five percent gain in media networks and a four percent improvement in parks and resorts sales.
The surprise last quarter was the company’s improvement in its cable networks business where affiliate fees produced a material gain in sales.
Disney’s stock chart is featured below:
Chart courtesy of www.StockCharts.com
In terms of domestic parks and resorts, Disney has been able to increase its volume and prices without affecting demand. Higher average guest spending on food, beverages, and merchandise combined with higher average ticket prices for cruises produced a solid improvement over the same quarter last year.
U.S. dollar strength is hurting the company’s international operations, but Wall Street still expects Disney to produce high double-digit earnings growth this fiscal year and about 10% for next year.
In a slow-growth stock market, select dividend-paying stocks have a lot to offer, even to investors who don’t traditionally look at these types of securities.
I like Kinder Morgan, Inc. and The Walt Disney Company. They are two solid businesses that should do well over the next several years.
- Warren Buffett’s Top 5 Dividend-Paying Stocks for 2015
- This Company Hasn’t Missed a Dividend Payment Since 1882