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Dividend investing is a time-tested strategy for building long-term wealth. However, not all dividend payers are created equal. Some companies have a track record of consistent dividend payments and growth spanning decades, making them excellent stocks to buy and hold forever.
Southern Company (SO), Oneok Inc. (OKE), and Public Storage (PSA) stand out as three elite dividend stocks with exceptionally durable payouts. Here’s why these companies deserve a spot in every dividend investor’s forever portfolio.
Table of Contents
- The Southern Company
- Oneok Inc.
- Public Storage
- Key Takeaways
Hundreds of companies have cut or suspended their dividends over the past several years, wreaking havoc on income investors’ portfolios. However, a select few dividend payers have delivered truly remarkable stability and growth over many decades.
The Southern Company, Oneok, and Public Storage stand out with dividend increase streaks measured in decades, not just years. These companies generate predictable cash flows to support their payouts in any economic environment.
For investors seeking abundant income they can truly rely on, Southern Company, Oneok, and Public Storage deserve strong consideration. Let’s examine what makes each company’s dividend so durable.
The Southern Company
Electric and gas utility Southern Company has an outstanding dividend track record spanning over 75 years. The company has paid equal or higher dividends every quarter since 1948. Even more impressive, Southern has increased its payout each year since 2000.
Southern Company has delivered dividend increases for over two decades.
This exceptional dividend longevity is enabled by Southern’s recession-resistant business model. As an electric and gas utility, Southern generates very stable revenue under long-term contracts and regulated rate structures approved by state utility commissions. Customers must purchase these essential services regardless of economic conditions.
Southern uses this steady cash flow to fund dividend payments and capital investments in infrastructure projects. The company is nearing completion on a multi-billion dollar nuclear power facility that will provide abundant carbon-free electricity for decades.
Once this facility comes fully online in 2023, it will transition from being a cash drain to producing over $700 million in annual earnings. Southern also has a lengthy pipeline of other capital projects to modernize and decarbonize its operations.
These investments position Southern Company to deliver rate base growth of 6–7% annually beyond 2024. This will provide fuel for continued dividend increases, just as the company has done for over two decades already. With a yield around 4%, Southern is an ideal stock for income investors to buy and hold forever.
Natural gas pipeline company Oneok likewise boasts an exceptional dividend track record. Oneok has maintained or increased its dividend every year since 1997, growing its payout at a 12% compound annual rate over the past two decades.
What makes Oneok’s dividend so safe? Like Southern Company, Oneok generates very stable cash flows. Around 90% of Oneok’s earnings come from fee-based contracts, not commodity price exposure. These contracts include “ship-or-pay” terms that require customers to pay for pipeline capacity regardless of actual usage.
In addition, the rates Oneok can charge customers are regulated by the Federal Energy Regulatory Commission (FERC), providing another layer of cash flow stability. Simply put, Oneok’s cash flows are recession-proof and unaffected by oil and gas price volatility.
Oneok uses retained cash flow to invest in new pipelines and processing facilities, enabling continued growth. The company expects to invest $20 billion over the next five years, funding expansion in the Permian Basin, Rocky Mountains, and Midcontinent region.
These projects will strengthen Oneok’s footprint in strategic shale oil and gas basins. Management targets 5–7% annual earnings growth through at least 2025 from this capital investment program. Rising profits will give Oneok ample ability to keep increasing its 5.7% yielding dividend.
Furthermore, Oneok is acquiring Magellan Midstream Partners in a deal that will boost its free cash flow 20% starting in 2024. This provides even more cushion to maintain dividend growth despite any economic challenges.
Self-storage REIT Public Storage has one of the most impressive dividend growth track records of any REIT. Since introducing its dividend in 1996, Public Storage has never reduced its payout. The company has grown its dividend every year for the past decade, expanding its yield from 2.5% in 2012 to 4.4% currently.
What makes Public Storage’s dividend so dependable? Demand for self-storage space has proven remarkably stable through booms and busts. Consumers continue using storage units while moving, downsizing, or just needing more room even in recessions. This enables Public Storage to consistently raise rental rates year after year.
In fact, the company has posted 5.3% average annual growth in same-store net operating income since 2004. Existing properties keep generating more profit every year. This fuels Public Storage’s dividend growth.
Furthermore, Public Storage uses retained cash flow to acquire new properties and develop additional storage units on its existing land. The company invested a whopping $10.7 billion in expansionary capital expenditures from 2019 to 2021, expanding its portfolio by 33%.
More properties equal more rental income to fund dividend increases. Public Storage also maintains an investment-grade balance sheet, giving it ample ability to continue acquiring and building new storage locations.
With self-storage demand projected to keep rising and Public Storage’s best-in-class operations, this REIT is built for decades more of dividend growth ahead.
The Southern Company, Oneok, and Public Storage have track records of dividend stability and growth spanning multiple decades.
Essential infrastructure assets and durable demand create recession-resistant cash flows to support these companies’ dividends.
Continued capital investments provide fuel for further dividend increases in the years ahead.
These elite dividend payers deserve consideration for long-term buy-and-hold income portfolios.
For investors seeking abundant current income plus the potential for income growth over time, Southern Company, Oneok, and Public Storage check all the boxes.
Q: How long has Southern Company paid uninterrupted dividends?
A: Southern Company holds the impressive record of having paid equal or increased dividends every quarter for over 75 consecutive years.
Q: What percent of Oneok’s earnings are fee-based?
A: Approximately 90% of Oneok’s earnings come from fee-based contracts, making the company’s profits highly stable.
Q: How fast is Public Storage growing its same-store net operating income?
A: Public Storage has delivered 5.3% average annual same-store NOI growth since 2004, enabling consistent dividend increases.
Q: Are these stocks safe to hold through recessions?
A: Yes, essential infrastructure assets and durable demand for self-storage make these companies’ dividends highly recession-resistant.
Q: How much dividend growth should investors expect in the future?
A: These companies should be able to deliver annual dividend growth in the 4–6% range over the long term based on their capital investment plans.