3 Dividend Stocks to Double Up on Right Now

The Motley Fool highlights three dividend-oriented ideas—Enbridge, Home Depot and Nordson—each characterized by strong cash generation and long streaks of dividend increases. Enbridge benefits from dominant energy-delivery assets, rising free cash flow (CA$1.2bn in 2021 to CA$9.3bn in 2023), a CA$0.915 quarterly dividend and recent gas-utility and renewables dealmaking that management says supports continued payout growth; Home Depot shows stable sales and robust free cash flow (averaging ~$14.5bn 2021–23), a $2.25 quarterly dividend, and an $18.25bn SRS Distribution acquisition that expands its TAM but is largely debt-financed and will weigh on near-term EPS; Nordson, a Dividend King, posted its 61st straight raise (quarterly $0.78), modest revenue and net-income gains, a conservative payout ratio with room to grow, and strategic bolt-on acquisitions to broaden exposure despite some near-term pressure from higher finance costs. Together they present durable income and dividend-growth prospects for income-focused investors, though idiosyncratic risks—acquisition-related leverage and elevated interest/expense pressures—could temper near-term earnings and payout dynamics.

Analysis

Enbridge is presented as a cash-generative energy-delivery franchise that transports roughly 30% of U.S. crude and a fifth of U.S. natural gas, with revenue moving from CA$47.1bn (2021) to CA$53.3bn (2022) and CA$43.6bn (2023) while free cash flow rose from CA$1.2bn to CA$9.3bn over the same period; its quarterly dividend is CA$0.915, marking a 29-year stretch of increases and distributable cash flow of CA$6.3bn in H1 2024 (up from CA$5.9bn), supported by approved gas-utility acquisitions and renewables PPAs with Amazon and AT&T.

Home Depot shows stable top-line scale (sales roughly $151.2bn to $152.7bn from 2021–2023) and consistently high free cash flow (averaging ~$14.5bn), but net income slid to $15.1bn in 2023 from $16.4bn in 2021 and H1 2024 net fell 4.3% to $8.2bn due to higher interest expense; the $18.25bn SRS Distribution acquisition expands TAM by ~$50bn to $1tn and is largely debt-financed, implying near-term EPS dilution with management forecasting accretion from year two.

Nordson, a Dividend King, posted modest revenue growth to $2.6bn in 2023 and net income of $487.5m, raised its quarterly dividend 15% to $0.78 (61st consecutive raise), and shows room to grow dividends with a payout ratio rising to ~31% (2021–2023) and an implied ~40% using latest annualized EPS of $7.90 versus $3.12 annualized dividends; H1 2024 free cash flow was $273m and net income slipped 1.7% as finance costs more than doubled, while bolt-on acquisitions (ARAG, Atrion ~$800m) diversify end markets but warrant monitoring of leverage and integration risk.

Key Decisions for Investors

• Consider overweighting Enbridge for dividend growth and income stability given its sharp free-cash-flow recovery (CA$1.2bn to CA$9.3bn) and H1 2024 distributable cash flow improvement, but monitor commodity exposure and execution on utilities/renewables integration
• Treat Home Depot as a core retail-income holding to accumulate on meaningful pullbacks given strong free cash generation, while watching leverage metrics and near-term EPS dilution from the $18.25bn SRS deal and the company’s quarterly earnings trajectory
• Favor Nordson for dividend-growth exposure due to its multi-decade increase streak and conservative historical payout, yet limit position size or hedge until rising finance costs and acquisition-related cash outflows stabilize
• Across the trio, track free-cash-flow trends, payout ratios and acquisition integration milestones closely, and use any short-term volatility from interest-rate or inflation developments as opportunistic entry points