Long-term dividend growth investors are looking past an area under-appreciated by the market, mid-cap stocks. In recent decades, companies with stocks valued with market caps between $2 and $10 billion have put forth huge performances.
Mid-cap stocks have rolled out the highest risk-adjusted returns over the last two decades.
Matthew J. Bartolini, CFA, Head of SPDR Americas Research at State Street Global Advisors notes these high returns are relative to small-caps and large-caps. Because of their tighter operations, mid-caps, as a rule, can grow faster or be more easily acquired than large-caps. In addition, mid-caps often have more access to capital and are more diversified. They also tend to feature more established management when compared to small-cap companies. Most notably, some mid-caps also award handsome payouts as described below.
Nearly a century old, the Snap-on tool company is a mid-cap stock to invest in now, as well as into the future.
Snap-on Inc. (NYSE: SNA), with a presence in more than 130 countries worldwide, is a quality tool and equipment manufacturing company known for its reliable products. The company supplies diagnostic equipment, tool and tool storage, power tools, and shop equipment to automotive repair centers and car dealerships, in addition to a number of industrial markets including aviation.
Richard Hilgert, senior equity analyst at Morningstar wrote, “We think Snap-on is well positioned to benefit from growth in the vehicle repair market, thanks to the aging vehicle fleet, increased vehicle complexity, and new vehicle technologies that require the development of innovative tools.”
Announcing its eighth consecutive annual dividend increase last year is simply business as usual for the company as they have been paying non-stop dividends since 1939. Snap-on’s market value is $8.9 billion with a dividend yield of 2 percent.
Real estate investment trust National Retail Properties has much to offer as a stock to invest in – most notably, it can stand up to e-commerce in terms of stocks to buy.
Although not the first industry most investors envision for long-term growth, National Retail Properties (NYSE: NNN) has, through its management, situated itself to carry on with its profitable growth.
Equity analyst at CFRA Research Chris Kuiper stated recently, “We see NNN’s portfolio benefiting from the continued economic expansion with little disruption from the negative retailer environment as most of NNN’s tenants are in the services and dining/entertainment lines of business.”
The 2,800 property company currently boasts an occupancy rate of more than 99 percent with diversity in industry (convenience stores pay 17.9 percent of the rent) and tenants (none greater than 6.2 percent). Also remarkable is the fact that less than 10 percent of NNN’s rent is due for renewal any year through 2027.
National Retail Properties has delivered 28 uninterrupted years of yearly dividend increases, which exceeds 99 percent of all public companies. NNN has a market value of $6.4 billion and a dividend yield of 4.5 percent.
Pinnacle West presents itself as one of the most dependable mid-cap stocks to invest in within the utility industry.
The Pinnacle West Capital Corporation (NYSE: PNW) is a regulated Arizona-based utility profiling more favorably than others in the industry. Arizona’s steady population expansion is part of what makes this regulated utility pay better than most of its peers. In addition to job growth and economic development, the utility foresees close to a 50 percent increase in growth by adding an additional 550,000 new customers by 2032.
In the long run, PNW forecasts rate base growth of 6 to 7 percent per year which backs up management’s 6 percent annual dividend growth target – notably one of the fastest growth rates in the industry. Pinnacle West has a market value of $8.3 billion with a dividend yield of 3.7 percent.
One of the oldest insurance companies in the world, Old Republic International, remains solidly established as one of the best stocks to buy now.
Old Republic International Corporation (NYSE: ORI) insurance products encompass everything from real estate buyer’s title insurance, worker’s compensation, and trucking insurance to extended warranties on cars. The company limits its exposure to property insurance which can be devastating to an insurance company when faced with catastrophic events.
ORI has paid investors steady cash dividends since 1942, and it is on the road to continue its 36-year dividend growth track. The company has a market value of $6.5 billion and dividend yield of 3.6 percent.
Senior housing and nursing home proprietor National Health Investors expects increased demand in the years ahead making it one of the best mid-cap stocks to buy now.
Thirty-three states are home to real estate investment trust (REIT) National Health Investors, Inc. (NYSE: NHI) – comprised of over 225 properties. Known as “triple net” leases, the firm holds its usual 10 to 15-year lease tenants responsible for utilities, maintenance, and taxes which results in a high-margin outpouring of cash for its investors.
The REIT maintains lower than usual industry standard debt ratios and zeroes in on stronger tenants to keep its adjusted funds from income (AFFO) payout ratio close to 80 percent. NHI has a market value of $3.1 billion and a dividend yield of 5.2 percent.
Self-storage property CubeSmart intends to continue turning out a healthy cash flow enticing investors as an attractive mid-cap stock to add to their portfolios.
CubeSmart (NYSE: CUBE) is banking on increasing population and the recession-proof demand for storage to have its company remain as one of the three top self-storage properties in the U.S. Seventy-eight percent of the REIT’s 832 properties across the country are in markets with less supply than the national average.
As the industry consolidates, CUBE should be far less affected than most by the industry’s ups and downs and continue to generate substantial and growing cash flows over time. CubeSmart has a market value of $5.7 billion and a dividend yield of 3.6 percent.
Leggett & Platts’s 135-year-old reputation for quality manufacturing cement the company as a tested stock to invest in.
Leggett & Platt, Incorporated (NYSE: LEG) started out in steel coil bedsprings blossoming into a manufacturer of various components used in many products including airplanes, vehicles, furniture, and bedding.
LEG has increased its dividend for 47 years in a row and is a Dividend Aristocrat. The company’s management sees 6 percent to 9 percent annual revenue growth in the future. LEG has a market value of $5.8 billion with a dividend yield of 3.3 percent.
These are 7 Mid-Cap stocks that anyone who values underestimated and too-often overlooked opportunities for some of the best reliable stocks to invest in long-term will want to keep their eyes – and money – on.