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Anyone living on a fixed income can attest to the Fed's punishment over the last decade. With the 10-year U.S. Treasury bond sitting at a paltry 1.7%, we're facing a yield crisis as central banks around the globe continue to pump more stimulus into the markets.
The solution for investors looking for yield is to tap into the best dividend stocks. Those are the ones with a steady track record of hiking payments to their investors.
Today, we're discussing companies that have consistently paid great dividends over many years. But our top dividend stock also offers potential upside of 43% this year on top of that.
Let's dive into the top dividend stocks of the week. This first dividend stock has hiked its dividend for 57 straight years…
Dividend Stock No. 3: Coca-Cola
There may be no more of an iconic, global brand than Coca-Cola Co. (NYSE: KO). And when it comes to taking care of its investors, the firm is a proven winner with its record of dividend hikes. The company has increased its dividend for 57 years in a row. And it's fair to expect that the firm will raise its dividend once again when it reports earnings at the end of the month.
Right now, we're hearing concerns about economic growth around the world. But Coca-Cola is a stock that can weather any economic downturn and provide investors with a solid source of income. Its dividend yield currently sits at 2.8%, but the firm will likely hike it toward the 3% level after it reports earnings on Jan. 30.
KO stock currently trades near 52-week highs at about $57 per share. A dividend boost combined with stronger sales could push shares up to $64 by the end of the year. That figure represents potential upside of more than 12%.
Our next dividend stock pays more than double KO's dividend…
Dividend Stock No. 2: Plains All American Pipeline
Oil prices have pulled back since the standoff between the United States and Iran. With economic growth slipping in China (and the latest on the coronavirus), oil prices continue to slide. That is creating opportunities in the midstream of the energy sector.
Plains All American Pipeline LP (NYSE: PAA) is a Houston-based operator of oil and gas pipelines. The firm has North American pipelines bringing fuel from the north down to refineries along the Gulf Coast. It has a combined 17,000 miles of pipelines and can store up to 110 million barrels of crude oil and natural gas.
The firm is expected to show solid earnings growth heading into earnings season.
The best part of the midstream of the sector is the remarkable cash flow it generates. Pipeline and storage companies receive cold hard cash no matter the price of crude oil. When oil prices are high, they're pumping it through their pipelines as their customers (the drilling companies) move it to market as fast as possible. When prices are low, customers will pay for storage and hope for prices to rise again.
Right now, PAA yields an incredible 7.96% dividend and trades at a bottom-barrel price/earnings ratio of 4.94. The $1.44 it returns to investors in the form of dividends could easily increase when it reports earnings in early February.
Over the next 12 months, PAA stock could easily hit $25. That figure represents a potential gain of 38% all while investors lock in a hefty dividend for the years ahead.
But neither of these picks quite measures up to the combination of dividend and upside potential in our top dividend stock today…