4 Market-Leading Dividend Stocks That Can Double Your Money By 2026
There are several ways for investors to make money on Wall Street. However, dividend-paying stocks sit head and shoulders above their peers.
In 2013, JP Morgan Asset Management published a report comparing the performance of companies that initiated and increased their dividend against non-dividend paying stocks over a four-decade period (1972-2012). The result? Dividend-paying stocks generated an average annual gain of 9.5% over 40 years. By comparison, non-dividend-paying companies managed a meager annualized return of 1.6% over the same period.
Because dividend-paying stocks are often profitable and proven, they are the perfect way for long-term investors to grow their money in any economic environment.
If you are looking for the best-performing dividend-paying stocks in the market, that is, companies with a higher yield than S&P 500 – which can generate significant wealth and income, the next four have the potential to double your money by 2026.
AGNC Investment Corp. : yield of 8.8%
For most of the past decade, mortgage real estate investment trusts (REITs) have been pariahs on Wall Street. But with some economic factors now playing in their favor, the next five years could be particularly favorable for a very high yielding stock like AGNC Investment Corp. (NASDAQ: AGNC).
Virtually nothing matters more to mortgage REITs than interest rates. This is because mortgage REITs borrow money at short-term lending rates with the aim of using that capital to acquire mortgage-backed securities (MBS) that offer a higher long-term yield. AGNC and its peers are always looking for ways to maximize the difference between the average return on assets held and the average cost of borrowing. This difference is known as the net interest margin.
The advantage for investors is that the mortgage REIT space is transparent. If the interest rate curve flattens (i.e. the spread between short-term and long-term yields narrows) or if the Federal Reserve quickly changes its monetary stance, mortgage REITs like AGNC are malfunctioning. Conversely, when the yield curve steepens and the Fed telegraphs its movements in an orderly fashion, companies like AGNC thrive. We’re 100% in the latter scenario at the moment, and we’ll likely stay in that scenario for years to come.
As the US economy recovers, we should see a slow but steady expansion in AGNC’s net interest margin. Coupled with its use of leverage to increase profitability, AGNC Investment has a good chance of generating significant income for shareholders and providing a modest average annual return on its shares through 2026.
Innovative industrial properties: yield of 2.3%
Try this for size: a stock of dividend-paying marijuana.
While it is abnormal for a high growth company to pay a dividend, it is quite normal for a REIT to distribute most of its profits in the form of a dividend to its shareholders. This is exactly the case with cannabis-focused REIT Innovative industrial properties (NYSE: IIPR).
Innovative Industrial Properties, or IIP for short, acquires cultivation and processing facilities focused on medical marijuana with the intention of leasing them for long periods. While acquisitions are the main source of growth for IIP, investors should keep in mind that inflationary rent increases and property management fees based on the annual rental rate are passed on to its tenants each year. Thus, a modest component of organic growth is integrated into its operating model.
As of mid-August, IIP had 74 properties covering 6.9 million square feet of rental space in 18 states. The most important figure is that 100% of this space has been leased, with a weighted average lease term of 16.6 years. The company should take less than half of that time to fully repay its invested capital.
The icing on the cake for innovative industrial properties is that a lack of cannabis banking reform in the United States has worked in its favor. The company’s leaseback program has been particularly popular with multi-state operators.
It’s a fast growing income stock that could double your money by 2026.
Viatris: 3% yield
Another market-leading dividend-paying stock with all the tools to double investor money by 2026 is the pharmaceutical company Viatris (NASDAQ: VTRS). If the name doesn’t ring a bell, it’s because it was formed less than a year ago from the combination of PfizerUpjohn’s established drug unit and generic drug maker Mylan.
As a combined company, Viatris is expected to perform better and be able to do more from a growth standpoint than Upjohn and Mylan ever could as stand-alone companies. Although the combination of forces has left the company with approximately $ 26 billion in debt, it is expected that a quarter of that debt ($ 6.5 billion) will be paid off by the end. by 2023. will almost certainly buy back and invest in the development of new drugs.
Another thing that is overlooked about Viatris is the key role it will play in the credits space. Since generic drugs have considerably lower margins than brand name drugs, volume is important. With the current prices of brand name drugs increasing at a breakneck rate, it seems logical to expect generic use to increase over time. Both patients and insurers will be looking to cut costs, and generic drug developers are the obvious beneficiary.
Viatris is also very inexpensive, which could be a selling point for value investors. It has generated $ 2 billion in operating cash flow in the past 12 months, and it can be bought for less than four times the expected earnings per share in 2021. Go for a 3% return, and you have the recipe for success.
Annaly Capital Management: 10.1% return
No list of the best-performing dividend-paying stocks on the market is ever complete without Annaly Capital management (NYSE: NLY), which I believe is the best that ultra-high yield dividend equity income seekers can buy. Between its double-digit return and its potential for share price appreciation, this mortgage REIT is capable of doubling investors’ money by 2026.
As I described with AGNC Investment, Mortgage REITs are at the sweet spot of their growth cycle. Almost every economic recovery in decades has seen the yield curve steepen. As long-term returns increase, Annaly should be able to earn a higher average return on the MBS she purchases. At the same time, short-term borrowing costs are expected to remain stable or increase at a slower pace. It is a formula for a widening of the net interest margin.
Another key element to Annaly’s (as well as AGNC’s) success is the focus on agency-backed securities. These are assets backed by the federal government in the event of default. As of June 30, $ 66.5 billion of its $ 69 billion in securities held were agency MBS. While this extra layer of protection reduces the net return that Anna earns from these securities, it also allows the company to use leverage to increase its profit potential.
Since its inception in 1997, Annaly has paid over $ 20 billion in dividends to shareholders. It has also averaged around 10% yield over the past two decades. It is a good bet to always deliver for its shareholders at least in the middle of the decade.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.