Income Play: 3 Stocks with Dividend Growth Potential

Looking for yield on your savings account has been pretty difficult these past few years. The Fed has continued to print money and keep interest rates low, so it could be quite a while before there is a change to this environment.

S0 how does an investor produce yield on their accounts while trying to have a safe haven for their savings?

One way is to invest in companies with growth that also provide dividends. There are a few stocks that are growing dividends that the average investor can earn a good return.

Many solid companies, such as Coca Cola (KO) and CVS Health (CVS), are strong stocks to invest in that offer dividends over 3%.

This is a fairly good return considering inflation is expected to be about 1.2% and savings rates are averaging 0.9%.

But there are companies that are just as stable and have higher dividends with excellent expected growth.

AbbVie (ABBV)

One such company is AbbVie (ABBV), a pharmaceutical company that has increased its dividend for the last 48 years and at a 20% rate over the last five years. With a dividend of 5.3%, it exceeds the average.

Some analysts are concerned about drug-price reform. The company’s two best-selling drugs, Humira and Imbruvica, are boosted by Medicare. However, each could be affected by legislation that could impact ABBV’s bottom line.

Marathon

Marathon Petroleum (MPC) has a dividend of 7.9%. The companies’ stock is undervalued after the capital improvement from the sale of its Speedway convenience store chain for $21 million.

As the demand for gasoline and other petroleum products increases over the next year, MPC’s stock price has a good potential to increase along with the excellent dividend yield.

Valero

Another petroleum company, Valero Energy (VLO) has a dividend yield of 9.5% that makes it one of the top yields offered.

VLO is forecast to be profitable in 2021 with an estimated earning per share of $2.73. Revenues are expected to increase to $81 billion, or by 28% next year.

Most industry analysts expect an annual profit growth over the next three to five years of around 5%.

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