2 Fantastic Dividend Stocks to Buy Right Now for Income and Growth

There’s a common mindset among dividend investors that you must choose either high-income, low-growth stocks or low-income, high-growth stocks.

But why not choose both? Sure, it’s going to be difficult. Stocks with higher growth tend to trade at higher valuations and thus lower dividend yields. But it’s not impossible. Enbridge (ENB +0.55%) and Philip Morris International (PM +0.18%) are two notable exceptions.

Both stocks offer higher dividend yields than you’ll typically find on the market, while packing enough growth that investors should see some solid dividend increases and capital appreciation over the coming years.

Here is why investors may want to jump on both stocks right now for income and growth.

1. Enbridge plays a crucial role in North America’s booming energy picture

Canadian energy company Enbridge operates a network of pipelines that transport approximately 30% of the crude oil produced and 20% of the natural gas consumed in North America. Additionally, Enbridge operates North America’s largest gas utility and clean energy projects with a total generation capacity of over 7,200 megawatts.

Since society constantly consumes energy, Enbridge’s pipelines and utilities generate durable and recurring revenue streams, making the company a consistent dividend payer over the years. Enbridge has raised its dividend for 28 consecutive years, a streak that has endured recessions and a global pandemic. The stock’s current dividend yield is 5.8%, a strong starting point for substantial income, as the payout increases each year.

Technology has begun to strain North America’s energy grid, especially with the surge in data centers for artificial intelligence. The industry anticipates significant growth in North American natural gas, from both domestic consumption and exports. Enbridge’s pipeline infrastructure runs from Canada into the United States near the Great Lakes, traversing the resource-rich Marcellus Shale and Permian Basin regions, and on to key export locations near the U.S. Gulf Coast.

That positions Enbridge nicely for what could be a prolonged energy boom ahead. Management believes the business will grow at an annualized rate of 5% over the long term, beginning in 2027. That growth should translate to similar dividend increases, a nice complement for a stock that pays generously from day one.

2. Philip Morris International is the clear winner in this new era of nicotine use

Tobacco stocks are famous for paying large dividends, as their asset-light nature enables them to send most of their cash flow to shareholders. However, tobacco stocks aren’t known for growth because smoking rates have declined for decades. Yet Philip Morris International is becoming a very notable exception.

Philip Morris is already the largest publicly traded tobacco company by market cap. It was once part of Altria Group but became an independent company in 2008. Its core business remains selling Marlboro cigarettes worldwide, but it may not be for much longer. Philip Morris began investing in a future beyond cigarettes, introducing the heated tobacco device Iqos in 2014.

Then, in late 2022, Philip Morris acquired Swedish Match for its Zyn brand of oral nicotine salt pouches. Both Iqos and Zyn are currently market leaders in their respective categories, and smoke-free products now account for 41% of Philip Morris’ total net sales. The company is growing faster on the back of these products, and analysts now estimate that Philip Morris will grow earnings per share by an average of over 9% annually over the next three to five years.

Philip Morris already offers a solid 3.8% starting dividend yield. The company has raised its dividend annually since it began trading in 2008, and the expected growth should provide plenty of financial firepower to extend that streak for the foreseeable future. Philip Morris represents a potential new golden age for the nicotine industry, which makes it a no-brainer for growth and income.