Nov 08, 2026 FIX, GE, AM

Leo Nelissen

Investing Group Leader

Summary

• Dividend growth streaks offer initial outperformance, but their alpha-generating power fades after five years, making streak length a poor primary investment filter.
• My biggest winners – Comfort Systems USA, GE Aerospace, and Antero Midstream – succeeded due to forward growth drivers, not dividend consistency.
• FIX and GE are rated Buy, with FIX benefiting from data center demand and GE from its aerospace dominance and turnaround. AM excels via buybacks and disciplined capital allocation.
• Dividend growth is valuable, but future fundamentals and strategic positioning outweigh historical payout streaks for long-term portfolio success.
• Looking for a helping hand in the market? Members of Main Street Alpha get exclusive ideas and guidance to navigate any climate. Learn More »

Introduction

I have to say that I woke up today feeling mildly provocative, as we’ll discuss a different angle on a very popular activity. That activity is dividend growth investing.

But before we do, let me ask you a question.

Do you screen your dividend stocks by how many years in a row they have raised the dividend?

If you do, you’re one of many.

And you have also been in a good spot lately, as the ratio between the ProShares S&P 500 Dividend Aristocrats ETF (NOBL) and the S&P 500 has made a comeback in recent weeks, mostly due to a rotation from growth stocks into value stocks (see below).

I get the appeal of companies that have hiked their dividends for at least 25 consecutive years (Dividend Aristocrats) or 50 consecutive years (Dividend Kings). You have also seen me bring up these numbers in articles, as it’s obviously a good thing when a company is able to consistently hike its dividend. I will never make the case that it’s a bad thing.

However, over the past 10 years (and before that), these companies have been outperformed by the market. And as the chart below shows, it wasn’t even a close race.

Now, bear in mind that I’m also a dividend growth investor. Almost every penny of my liquid net worth is in a portfolio that I call the dividend growth portfolio.

There are just two important things to keep in mind:

• I apply a different strategy than most.
• Some of my biggest winners aren’t typical dividend growth stocks at all.

In this article, I’ll show you two studies that explain how we should handle dividend streaks and walk you through some of my biggest winners and why I continue to believe in them.

So, as we have a lot on our plate today, let’s dive right in!

The Research Is Right (With A Twist)

I love data. And I would never disagree with a fact. However, we always need to take things with a grain of salt.

If you have read my articles for a while, you know that I believe in the power of dividend growth stocks. As we can see below, between 1973 and 2025, dividend growers and initiators have returned 10.2% per year with a standard deviation of roughly 16.0%.

Essentially, it means that these companies give us both outperforming returns and lower risk. How awesome is that? Where else can you get a higher return by taking less risk?

Just imagine what $10,000 invested in 1973 in that group of stocks would be worth now.

It’s $1.7 million (10,000*1.1022^53)

So far, so good. What matters here, however, is that this includes “initiators.” These are companies that just started paying a dividend. They have a dividend growth streak of zero years (or just a handful, depending on how strict we are with the definition).

It shifts the focus from duration to other factors.

Take Dividend Growth Streaks With A Grain Of Salt

A terrific dividend growth streak is a nice bonus. Being able to consistently raise a dividend is a great sign of strength. Realty Income (O), for example, has hiked its dividend for 32 consecutive years (and more as a private company before its IPO). Despite sell-offs during recessions, investors could count almost with certainty (there’s never a guarantee) on a hike.

However, let me say this. While a dividend growth streak is beneficial, don’t ever buy a stock for that reason alone. A long dividend growth streak should never be the reason you buy a company.

This is something I brought up in January as well, when I used 2019 research from David Michayluk, who published a study in the Journal of Applied Corporate Finance. The research was based on a very simple question, which is:

Do companies that keep raising their dividends keep beating the market? And if so, for how long?

They found a few fascinating things:

• After its first dividend increase, a stock usually delivered significant positive abnormal returns (above what one would statistically expect) for the next two years.
• Companies kept positive abnormal returns on earnings after each of their first five annual hikes.

Now pay attention to what happened after that.

• Every additional raise came with lower abnormal returns, and statistics became unreliable.
• After the sixth increase, the abnormal returns were gone.

This means that while a company’s ability to grow the dividend gets rewarded initially, that benefit quickly fades as good news tends to get priced in quickly. And, in this case, quickly refers to the first five years.

So a growth streak of 50-plus years is statistically meaningless for alpha generation. It may be good for peace of mind, as you can somewhat expect a hike every year, but it doesn’t add value to your overall performance. The edge is gone.

What do we make of the combination of both studies I just brought up?

• Dividend growth matters (Hartford)
• The market rewards it most early in the dividend growth story (Michayluk)

This is the reason why I care a great deal more about comeback stories than “dividend royalty.”

What Does A Dividend Growth Streak Tell Us?

Dividend growth data is backward-looking. While a new dividend hike tells us that management is confident in where the company is going, the many hikes before that don’t tell us much about the future.

Why would Realty Income be a better income investment than a younger REIT with a shorter dividend growth history like Agree Realty (ADC)?

Also, companies that have been growing for decades tend to have lost their growth appeal. While that does not apply to all cases, the NOBL ETF, which tracks companies with at least 25 consecutive annual dividend hikes, is massively overweight consumer staples, industrials, financials, and materials, as we can see below.

Just think about 3M (MMM), which ended a 64-year streak. Leggett & Platt (LEG) ended 52 years of consistent hikes. And then there’s Walgreens. These are just three examples.

With that said, many Aristocrats/Kings do better during recessions because they tend to be more conservative. That’s a huge benefit for a retiree or anyone close to retirement.

My point is not to badmouth these companies.

The point I’m making is that you shouldn’t put much emphasis on them.

Three Companies That Built A Lot Of My Wealth

I don’t own Comfort Systems USA (FIX) anymore. Earlier last year, I bought it in the $300 range. I sold it at roughly $1,000 earlier this year (less than a year after I bought it). Given the size of my investment and the short span, it was my biggest realized investment gain ever.

This company is a mechanical and electrical contractor that does HVAC, plumbing, and electrical work for major factories, hospitals, and schools. And because of the data center boom, it added a massive growth engine that explains these returns.

The interesting thing with regard to its dividend is that it has grown its dividend by 35% per year over the past five years, and it still has a low double-digit payout ratio. That’s obviously the result of exploding growth, as revenue in 3Q26 alone rose by 54%.

These numbers are truly wild and benefit the dividend. It’s not the other way around.

I sold because I disliked the valuation and because I knew that once the data center buildout slowed, its margins would likely come down a lot, as pricing power for many companies is built on huge bottlenecks. It will likely keep growing the dividend once that happens due to the low payout ratio, but it wouldn’t be good news for the company.

All I’m saying is that this is a prime example of a great company where the dividend is simply a byproduct, so to speak. On a side note, as FIX now trades below 30x earnings and I’m still bullish on the buildout, I give the stock a Buy rating.

The second pick is GE (GE), which is one of my biggest holdings. I love this company because it essentially dominates three-quarters of the commercial engine market, has a massive defense footprint, and 70% of its revenues come from services.

It sells an expensive engine close to cost and makes money on maintenance and parts for many decades. Innovation is used to stay on top, create better customer relationships, and keep competitors at bay. That’s the business model in a nutshell.

Moreover, it currently yields 0.6% and has a three-year dividend growth CAGR of 94%. In 3Q26, total orders grew by 49%, as this business model is firing on all cylinders.

The interesting thing is that GE is a dividend cutter. That’s why its dividend CAGR in recent years has been so high. Once the GE conglomerate started to weaken, major spin-offs and restructuring processes were needed to create what is now a pure-play aerospace giant.

It completely destroyed the dividend, as you can see below.

While this was annoying (to put it mildly) for long-term investors, new investors got an opportunity to bet on a turnaround. That turnaround worked, and I’m bullish that it will continue. Two decades from now, I think the odds are that GE becomes an Aristocrat again.

The next one is a higher-yielding pick.

Antero Midstream (AM) yields 4.1%. It hasn’t hiked its dividend once since the 2021 cut (see below). That cut was mostly to free up cash for investments in infrastructure.

Buying AM a few years ago got me pushback. And I understand why that is. In the midstream space, people preferred larger players with better dividend track records. However, they underestimated that the real value wasn’t in 5-6% annual dividend growth rates but in how a business is fundamentally changing (it brings me back to the theoretical part of this article).

Antero Midstream spent the past few years aggressively reducing debt, growing along with its customer, Antero Resources (AR), and shaping a strategy that relies on buybacks before dividend hikes.

It has its first investment-grade credit rating (BBB-) from Fitch and now has leverage below its target of 3.0x EBITDA, as you can see below. It’s also growing fast, as gathering volumes in 3Q26 rose by 19%, which helped it to lower debt by more than $400 million in that quarter. And while most of the $400 million came from litigation proceeds, core growth is impressive. That’s why I brought up the 19% number.

This led to accelerated buybacks:

Free cash flow after dividends was $449 million, including $377 million of Clearwater litigation proceeds. This free cash flow was utilized to reduce debt by over $400 million during the quarter and accelerate share repurchases once our leverage target was achieved. – AM 3Q26 Earnings Call

Now, let me explain why this is far from bad. By 2028, analysts expect this company to generate close to $910 million in free cash flow. This is operating cash flow minus capital expenditures. It’s the kind of cash the company can use to pay dividends, buy back stock, and reduce debt. As AM has a market cap of slightly less than $10 billion, it implies a free cash flow yield of slightly more than 9%.

Here’s what that means:

• It has a cash payout ratio of less than 50% based on its current dividend yield. This is the lowest number among all midstream companies on my radar.
• After paying a dividend, it could buy back 4.5% of its market cap every single year (assuming the market cap remains unchanged).

The more stock AM buys back, the better for future dividend growth, as every share that leaves the market won’t get a dividend payment in the future. So, if the business remains strong and free cash flow keeps growing, the company is setting itself up for accelerated future dividend growth. That will likely happen at a point when management believes its equity isn’t cheap anymore.

And for long-term investors, that’s exactly what you want to see.

Hence, despite zero dividend growth since 2021, AM shares have slightly outperformed the midstream and infrastructure ETF (MLPX), as the ratio below shows. Outperformance wasn’t substantial, but the slow uptrend is impressive nonetheless, as AM is such a small regional player that has no direct LNG exposure, no data center deals, no dividend growth, and no major M&A to grow beyond its Appalachia territory.

I feel really good about owning this one and expect it to be in my portfolio for decades.

Three Key Risks

For Comfort Systems, the biggest risk right now is a data center buildout slowdown. The midterm elections triggered these fears. I do not expect it to get worse, but if large hyperscalers were to cut their capex plans, FIX could suffer more.

For GE, the biggest risk is operational. Any major disruptions, including pandemics, widespread wars, and other things, could hurt its growth. Also, a major flaw in an engine program triggering mass maintenance demand would be short-term bearish.

For AM, the biggest risk is a prolonged period of subdued natural gas prices that cause Antero Resources to cut output.

Takeaway

You will never hear me say (or see me write) that dividend streaks are a bad thing. A company that is a Dividend King has earned my respect.

However, and this is a big “however,” respect doesn’t make for a great investment. Data shows that dividend growth streaks quickly lose their added benefit as the market cares more about what’s ahead than what a company has done in the past.

It sounds so obvious, but it’s something many people fall for when they screen stocks for dividend consistency. Don’t do that. Focus on the underlying story.

That’s why none of my biggest winners in recent years were Dividend Aristocrats. Today, I shared three of my best performers, two of which I expect to keep leading my portfolio. We’re talking about a small midstream company that cut its dividend, an aerospace turnaround that also cut its dividend, and a data center proxy that completely relies on data center capex at this point in the cycle.

The dividend is key in all of them for long-term investors, but not the driving factor.

That’s also how I approach investing at Main Street Alpha, as I look at the big picture first. Then, we scan for companies, including what sets them apart. The dividend assessment then follows automatically.

Dividend total £7,962 and from the list above £2,121

Total £10,083 with four months of dividends still to be received.

VWRP

LWDB

Brunner

Alliance Witan

Merchants Trust

City of London

Remember a dividend re-investment plan loves falling markets because as you re-invest your dividends, you get more shares for your hard earned and as prices fall yields rise.

Now most financial advisers, advice to concentrate on the dog and maybe use the 4% rule for income and ignore the tail.

From the article below.

The Capital Required at Three Yield Levels

If you need $80,000 per year in investment income, the capital required depends entirely on the yield you can sustainably generate.

• Conservative tier (3% to 4% yield): Roughly $2,286,000. This range covers dividend growth stocks and broad equity funds. You are barely clearing risk-free government bonds while accepting equity volatility. The upside: dividend growth compounds over time, and principal is most likely to appreciate.
• Moderate tier (5% to 7% yield): Roughly $1,333,000. This range includes midstream MLPs, preferred shares, high-dividend equities, and select consumer staples names. Income is meaningful, but dividend growth tends to slow.
• Aggressive tier (10% to 14% yield): Roughly $667,000. This range covers leveraged covered call funds, certain mortgage REITs, and distressed credit vehicles. Principal erosion is common, distributions get cut in stress cycles, and the portfolio may shrink even while paying income.

The 8% tier requires exactly $1,000,000 to generate $80,000 annually. That is a number many retirement savers can reach. The real question is whether the holdings at that yield are durable.

If your plan is to have a TR portfolio of 1 million and you are on plan, read no further. If you expect to have a modest retirement pot, read on.

The SNOWBALL majors on re-investing the dividends to earn more dividends. The capital cannot be spent as it would reduce you dividend income, unless there is an unplanned family disaster. The best thing about compound income is it takes a few years to accelerate, so if your investment pot is modest that’s a plus, especially if you can add when possible.

The income for the SNOWBALL will meet the 2033 target and for the year 2027 it will try to match the target but the fcast is for income of 13k meeting the 2032 fcast.

That will be a yield of 13% on seed capital but now that compound interest really starts to accelerate the yield will be 26% before the next ten year period ends.

5 Cheap Dividends Up to 11%: Bargain Buys or Damaged Goods?

Brett Owens, Chief Investment Strategist
Updated: November 6, 2026

Whenever I see a stock, a dividend payer, that looks attractive but is a dog, OC’s voice jumps in my head: “Hey, it’s cheap for a reason!”

Let’s look at five overlooked payers yielding 5.6%-11% at prices any penny-pincher would love.

Take Comcast (CMCSA, 5.6% dividend yield), for example.

It owns NBC, Telemundo, Peacock, Sky Sports and theme parks around the world, plus a connectivity business (largely Xfinity) that sells broadband, wireless and cable TV.

It’s an extremely well-known consumer name, but it hasn’t warranted our attention until recently. A multiyear funk has sent CMCSA shares to a thin forward price-to-earnings (P/E) ratio of just under 7.

It also sent Comcast’s yield above 5% for the first time earlier this year, and it remains there today.

Comcast has been taking shots from all sides. It has struggled to retain broadband subscribers amid competitors peddling cheap high-speed fiber and 5G home internet; accelerating cord-cutting, which has hit both its pay-TV and advertising businesses; and decelerating Universal theme-park growth.

The company is answering with a massive unloading spree. It already spun off its cable channels into Versant Media Group (VSNT) and sold its Sky Deutschland operations earlier this year. It plans to spin off the NBCUniversal and broader Sky business in 2027. And Comcast is laying off workers as part of a broader restructuring that CMCSA warned would result in a roughly $1 billion charge in Q4.

CMCSA has raised its quarterly payout at least once a year since 2008 … until this year. All four dividends have been announced, and they’re all the same amount as last year’s final distribution.

But the dividend isn’t necessarily in trouble. For one, it only accounts for a little less than 40% of this year’s projected earnings. And also, while the company has suspended stock buybacks for the time being, management has said it’s still committed to the dividend.

The real question is whether there will be enough growth potential left once Comcast is done shedding assets.

High oil prices have translated into few discounts across the energy sector, but Northern Oil & Gas (NOG, 7.9% dividend yield) is trading below 6 times earnings estimates, all while paying us a high-single-digit yield.

Northern Oil deals in oil and natural gas across the Williston, Uinta, Permian, Appalachian and Duvernay formations. But while it’s technically an exploration-and-production (E&P) firm, it’s not an operator. Instead, it holds interests in thousands of wells, then partners with other E&P operators to work them.

That makes NOG less of a growth play on oil, and more a cash-flow play.

Northern Oil & Gas started paying us 3 cents per share quarterly in 2021, then dramatically ramped up the distribution, hiking every quarter for a few years before slowing to semiannually, then eventually stopping its raises altogether.

But NOG still pays one of the highest yields we can find among non-infrastructure energy stocks, and cash is no issue. Not only is coverage still plenty safe at a little more than 40% of this year’s earnings estimates, but NOG also authorized a $150 million increase to its buyback program in July.

This is ultimately a play on oil prices and little else, but it can still deliver some pop from depressed prices. NOG shares have put up a total return of almost 25% since my July article, and improving estimates have it trading at roughly the same valuation as before.

I’ve been warning about Flowers Foods (FLO, 7.1% dividend yield) for a long time. In May, the bread baker finally hacked its dividend nearly in half, to 12.5 cents per quarter.

It’s a critical reset—and given that Flowers still yields more than 7% even after the hack, it’s worth revisiting this consumer staples play to see whether the worst is over.

Flowers is a carbohydrate king, selling bread (Wonder, Sunbeam, Nature’s Own, Dave’s Killer Bread, among others) and snacks (Tastykake, Mrs. Freshley’s and more).

FLO has struggled mightily with high input costs and a generational shift away from sugary and otherwise unhealthy snacks. While revenues have actually climbed every year since 2022, profits have plunged by about 60% in that time—and the bottom-line hemorrhaging is expected to continue through the rest of this year and next. Flowers has lost three-quarters of its value since late 2022, and the stock now trades at a dirt-cheap 9.2 times earnings estimates.

Flowers’ answer to its issues is a pivot toward “better-for-you” brands. It bought Simple Mills (trail bars, baking mixes, crackers and healthier snacks) for $795 million last year. In August, the company reportedly was seeking a buyer for Tastykake. Unloading that brand, combined with the shearing of its dividend, would give FLO more deal ammunition and give it some room to cut into its debt.

But while Flowers is on better financial ground, the core business continues to teeter. Higher prices have softened demand for its premium Dave’s Killer Bread, and the relaunch of the Nature’s Own brand hasn’t done anything to shore up sales. FLO might look toward M&A for a spark, but any real recovery will almost certainly require improvement in the bread basket.

The Federal Reserve’s interest-rate turnabout sent real estate investment trusts (REITs) into freefall for a few weeks. The sector is finally getting up off the mat, but several are still trading on the cheap.

Douglas Emmett (DEI, 7.1% dividend yield) is a niche office-and-apartment operator whose geographical footprint is limited to Los Angeles and Honolulu. That’s it. All 18.2 million square feet of office space, as well as 4,410 apartments (plus another thousand or so in development), are contained within a pair of cities. That’s a critical lack of diversification.

Those two property types are imbalanced, too. Office tenants account for almost 80% of rent, which is largely why Douglas Emmett was among the worst REITs both during the COVID bear market and following it—and why DEI had to slice its dividend by nearly a third in 2022.

But DEI still has a few noteworthy qualities. It’s pretty well-rounded by industry—legal, financial services, real estate, health, entertainment and more—with no segment making up more than 20% of the tenant mix. Its tenants are also small and mostly local; 96% of its office leases are under 20,000 square feet. Local laws obstruct the building of new office towers near most of their locations. And the company’s leases bake in 3%-5% annual rent increase.

And it’s cheap, too. Right now, DEI trades at less than 7 times expectations for next year’s funds from operations (FFO). Throw in a yield just over 7% that’s extremely well covered at only around half of FFO estimates, and there’s a lot to like about Douglas Emmett in a favorable environment.

We’re just not in that environment yet. California has suffered from a corporate drain to other states, and one of Los Angeles’ bread-and-butter industries—entertainment—has suffered significant headwinds of late, too. That’s reflected in a poor occupancy of around 77%, which is 11 points less than the office-REIT industry average.

Commercial REIT Global Net Lease (GNL, 11.0% dividend yield) has crashed this fall. Earlier this summer, it traded at an 8% yield. Now it’s at 11%.

Global Net Lease’s name refers to its net-lease contracts, which are “net” of taxes, insurance and maintenance costs. GNL collects the rent; nothing more. And the lion’s share of those contracts (87%) have rent increases built in.

Its portfolio of nearly 800 properties covers 40 million square feet. Industrial and distribution real estate makes up almost half of straight-line rents, with the rest split almost evenly between office and retail. GNL is also more geographically diversified than most REITs, with three-quarters of straight-line rents coming from the U.S. and Canada, and the remainder from Europe.

Global Net Lease is moving that mix further away from offices, most notably with the $535 million, all-stock acquisition of Modiv Industrial announced in May.

This is a REIT that has been improving just about every aspect of its business over the past couple years, including shedding some debt, upping occupancy and percentage of investment-grade tenants, reducing expenses and getting rid of suboptimal properties. But it’s still dogged by extremely high leverage and some looming refinancings that look even worse in the wake of the Fed’s recent rate hike.

That puts the dividend in serious question. Even after raising full-year AFFO guidance to 82-85 cents, GNL pays out roughly 90% of it—not great considering a still-heavy debt load and higher debt expenses on the horizon.

My Retirement Income Plan for 2027

Our dividend targets for 2027 should be capable of generating so much annual income that, by the time we retire, we’ll never have to sell a single share.

But that won’t happen by owning stocks with a history of cutting bait on their dividends every time they face a financial hurdle.

Fortunately, that’s not a concern for the investments in my “No Withdrawal” portfolio.

The “No Withdrawal” portfolio solves the retirement-savings shortfall that literally millions of Americans face today.

Before COVID, I remember the talking heads on CNBC and Fox Business telling us we needed to have at least $1 million saved if we wanted to retire comfortably. When inflation kicked into high gear, that number did, too—it became $1.25 million, then $1.5 million. This year, I’ve seen numerous headlines asking whether $2 million is enough to retire!

But here on planet Earth, the average 55- to 64-year-old has just more than $500,000 socked away!

What will that half-million get you?

• If you invest that $500,000 in a traditional 60/40 portfolio, you’ll earn $26,900 a year. That’s just above the poverty line.
• If you invest that $500,000 in my 8% “No Withdrawal” Retirement Portfolio, you’ll earn an annual income of 8%, 9% or even 10%+. That means you could bank $40,000 to $50,000 (and potentially more) each year!

An 8% yield sits in a sweet spot: high enough to generate real income on a realistic capital base, low enough that underlying holdings can run legitimate businesses without financial engineering propping up every distribution. The question is whether you…

By Drew Wood

Published April 20, 2026

An 8% yield sits in a sweet spot: high enough to generate real income on a realistic capital base, low enough that underlying holdings can run legitimate businesses without financial engineering propping up every distribution. The question is whether you can build a portfolio at that yield without distributions getting cut and principal eroding.

The short answer is yes, but the portfolio looks different from typical income-focused content. The portfolio centers on midstream pipelines, a battle-tested business development company, and a consumer staples company that has raised its dividend for more than five decades.

The Capital Required at Three Yield Levels

If you need $80,000 per year in investment income, the capital required depends entirely on the yield you can sustainably generate.

• Conservative tier (3% to 4% yield): Roughly $2,286,000. This range covers dividend growth stocks and broad equity funds. You are barely clearing risk-free government bonds while accepting equity volatility. The upside: dividend growth compounds over time, and principal is most likely to appreciate.
• Moderate tier (5% to 7% yield): Roughly $1,333,000. This range includes midstream MLPs, preferred shares, high-dividend equities, and select consumer staples names. Income is meaningful, but dividend growth tends to slow.
• Aggressive tier (10% to 14% yield): Roughly $667,000. This range covers leveraged covered call funds, certain mortgage REITs, and distressed credit vehicles. Principal erosion is common, distributions get cut in stress cycles, and the portfolio may shrink even while paying income.

The 8% tier requires exactly $1,000,000 to generate $80,000 annually. That is a number many retirement savers can reach. The real question is whether the holdings at that yield are durable.

What an 8% Portfolio Actually Holds

Ares Capital Corporation (NASDAQ:ARCC | ARCC Price Prediction) is the largest publicly traded business development company in the U.S. It lends primarily to middle-market companies, with 80% of its $29.48 billion portfolio in first lien senior secured loans. First lien lenders get paid before everyone else in a default. The non-accrual rate sits at 1.8%, meaning less than 2% of loans are not generating interest payments. The current yield runs near 10.6%, and the quarterly dividend has held at $0.48 per share through the most recent quarter. Core EPS of $0.50 covers that distribution. Ares Capital is the most institutionally credible name in its category, with 12 analyst buy or strong buy ratings and zero sells.

Energy Transfer LP (NYSE:ET) operates one of the largest midstream pipeline networks in North America. The fee-based model means cash flow does not move much with commodity prices. The annualized distribution of $1.34 per unit represents a 3%+ increase year over year. At a recent price near $19, the yield runs close to 6.9%. The company guides for $17.45 to $17.85 billion in adjusted EBITDA for 2026, which provides substantial coverage for the distribution.

Western Midstream Partners LP (NYSE:WES) offers a sharper yield within the same midstream category. The current quarterly distribution of $0.91 per unit annualizes to $3.64, and the company has guided a planned Q1 2026 increase to $0.93 per unit. The yield runs near 8.8%. Distributable cash flow guidance for 2026 of $1.85 to $2.05 billion implies solid coverage at the current distribution level.

Altria Group (NYSE:MO) is the tobacco name income investors have debated for decades. Altria has raised its dividend 60 times in 56 years, with a 3.9% increase in 2025. The current quarterly payout of $1.06 per share annualizes to $4.24. At a recent share price near $67, the yield runs near 6.2%. Altria targets mid-single digit annual dividend per share growth through 2028, which means the income stream is designed to expand.

Why the Middle Tier Often Wins Over Time

Chasing the highest current yield frequently produces the worst long-term income. A 12% yield with no distribution growth delivers the same nominal dollars in year ten as in year one. Inflation erodes its purchasing power. A 6% yield that grows 5% annually doubles the income stream in roughly 14 years, and the underlying asset likely appreciates alongside it.

Altria’s dividend history illustrates this. The quarterly payout has grown from $0.48 in early 2000 to $1.06 today. An investor who bought in 2000 and held is collecting a yield-on-cost that dwarfs anything available from a static high-yield instrument purchased at the same time.

The 8% tier blends names with genuine distribution growth (Altria, Energy Transfer) alongside a higher-current-yield anchor (Ares Capital, Western Midstream). The portfolio collects cash flows from fee-based infrastructure, secured lending, and a consumer staples business with pricing power.

Three Things Worth Doing Before Building This Portfolio

1. Calculate your actual annual spending, not your salary. Most people need to replace 70% to 80% of pre-retirement income. If your actual spending is $65,000 rather than $80,000, the capital required at 8% drops to around $812,000.
2. Model the tax treatment of each holding separately. MLPs like Energy Transfer and Western Midstream generate K-1 forms and often return capital distributions that defer taxes. Ares Capital income is typically taxed as ordinary income. Altria dividends qualify for the lower qualified dividend rate. The after-tax yield profile differs meaningfully from the gross yield.
3. Compare the 10-year total return of an 8% portfolio against a 12% high-yield alternative. The 10-year price performance of Ares Capital is up roughly 210% on a price basis alone, before distributions. A leveraged covered call fund paying 12% with flat or declining NAV would show a very different picture.

Here’s how I’m aiming for a £4,106 passive income from a boring FTSE 100 dividend stock

Story by Ken Hall

07 Nov

• Dividend Potential: Lloyds offers a 4.18% dividend yield, with dividends per share projected to rise 42% by 2028, potentially turning a £30,000 investment into £102,483 over 30 years with reinvested dividends.
• Strong Financials: Q3 2026 results show £6.6bn pre-tax profits, 17.9% return on tangible equity, and a solid CET1 ratio of 13.3%, supporting dividends and share buybacks.
• Undervalued Opportunity: Analysts forecast EPS of 13.7p by 2028, implying a potential 15% upside from the current share price, making Lloyds attractive for long-term income and growth investors.

Here’s how I’m aiming for a £4,106 passive income from a boring FTSE 100 dividend stock

I’m a big believer that passive income is the secret to financial freedom. Building a diversified portfolio of high-quality income stocks can generate a steady second income and make your money work harder for you.

Clearly, the starting point has to be finding companies with a high dividend yield. Growing profits and strong, consistent cash generation are also great attributes to look for.

Of course, buying an undervalued stock would be a bonus to help to boost long-term returns.

What am I watching today?

Lloyds (LSE: LLOY) is one boring FTSE 100 stock that I like at the moment. The company’s Q3 2026 results released on 29 October showed a 42% increase in statutory pre-tax profits to £6.6bn for the first nine months of the year, while return on tangible equity jumped to an impressive 17.9%.

The bank generated £11.1bn in underlying net interest income, up 10% year on year at a healthy margin of 3.21%. Management remains on track to deliver its full-year targets, including net interest income exceeding £14.9bn and a cost-to-income ratio below 50%.

Meanwhile, its Common Equity Tier 1 (CET1) capital ratio stood at 13.3% at the end of September, providing a solid capital buffer and supporting shareholder returns through dividends and share buybacks.

What about the dividend income?

Of course, Lloyds isn’t without risks. A prolonged economic downturn could trigger rising loan defaults, while falling interest rates could squeeze lending margins and weigh on profitability. Nonetheless, analysts remain optimistic with consensus estimates forecasting earnings per share (EPS) tipped to climb from 9.9p in 2026 to 13.7p by 2028.

Meanwhile, dividends per share are forecast to rise 42%, from 4.31p to 6.12p over the same period. With a projected earnings payout ratio of around 45% in 2028, those distributions appear well supported by profits.

So what could a further £30,000 investment deliver? At today’s (6 November) 4.18% dividend yield, I’d initially receive £1,254 annually. Based on the current 95.9p share price and analysts’ dividend forecasts, that could increase to around £1,914 by 2028, even without reinvesting a penny.

Looking further ahead, reinvesting dividends at an average 4.18% annual yield over 30 years could grow a further £30,000 investment today to around £102,483. That’s £72,483 in accumulated dividend returns, excluding any share price appreciation.

The enlarged investment could then generate around £4,284 in annual passive income, assuming the same yield.

Of course, neither earnings growth nor dividends are guaranteed. But I think Lloyds’ improving profitability and potential for growing shareholder distributions make it an attractive long-term income candidate.

Is Lloyds undervalued?

I also think Lloyds’ shares look attractively priced against their future earnings potential. Using analysts’ forecasts of 13.7p in earnings per share by 2028, I’ve calculated a potential fair value based on a price-to-earnings (P/E) ratio of 10 — broadly in line with Lloyds’ average valuation over the past three years.

That implies a future share price of 137p. Discounting this back to today’s money at an annual rate of 10% gives me a fair value of around 113p. Against the current 95.9p share price, this suggests the stock could be around 15% undervalued.

Of course, this depends on the bank meeting analysts’ earnings forecasts and maintaining its valuation multiple. A weaker UK economy or rising loan defaults could derail those expectations, as could changes to bank profit taxes.

Still, with a dividend yield of 4.18% alongside potential capital gains, I think Lloyds is just one stock worth considering for long-term income and growth investors.

When Congress Changes Hands, Will Dividend Investors Have the Advantage? Political changes in Washington can have a major impact on the stock market. When a new political party gains control of Congress, investors often begin wondering what comes next.   •Will taxes increase? •Will regulations change? •Which industries could benefit, and which ones might struggle? These questions can create uncertainty, especially for investors who own companies heavily dependent on government policies or favorable economic conditions. But there’s another way to approach this uncertainty: dividend investing. One of the biggest advantages of owning quality dividend-paying companies is that their long-term success doesn’t necessarily depend on which political party controls Washington. Think about it. Elections happen every few years. Tax policies change, regulations evolve, and government priorities shift.  But established businesses still need to serve customers, generate cash flow and remain profitable. Companies with durable business models, manageable debt and a history of increasing their dividends may be better positioned to navigate these changing environments. That’s an important distinction compared to investing primarily for growth. Growth investors often depend heavily on expectations for future earnings and stock price appreciation. If a new Congress introduces policies that hurt a particular industry, or uncertainty causes investors to reassess future growth, those stocks could experience significant volatility. Dividend investors can face those same market declines, but they have another potential source of return: cash distributions from the companies they own. Even if stock prices struggle while investors wait for the political and economic picture to become clearer, quality dividend payers may continue rewarding shareholders. There’s also an advantage when uncertainty creates buying opportunities. If a financially sound dividend-paying company experiences a temporary decline because of political concerns, investors who believe in its long-term business prospects may be able to purchase shares at more attractive prices.  If the dividend remains intact and continues growing, those purchases could contribute to a larger income stream over time. Of course, dividend stocks aren’t immune to political changes. Certain industries can be heavily affected by taxes, regulations and government spending. Dividends can also be reduced or eliminated, which makes financial strength and business quality especially important. The point isn’t to predict which political party will produce the best stock market returns. It’s to build a portfolio that doesn’t require Washington to get everything right. Political control will change. Economic policies will change. Market leadership will change, too. But owning quality companies that consistently generate cash and increase their dividends can provide a foundation for building wealth through all of it. — Nate Tucci P.S. KEY is another example of the core ideas behind the Dividends Forever Portfolio: owning quality companies with established dividend payouts, the potential for future income growth and the opportunity to build long-term wealth through both dividends and capital appreciation.