3 Top Dividend Stocks to Buy in August

Key Points

• Enbridge offers investors low risk and an attractive dividend.

• Enterprise Products Partners has an ultra-high distribution yield and a bargain valuation.

• Realty Income features an impeccable dividend track record and great growth prospects.

• 10 stocks we like better than Enbridge ›

Don't forget dividends: That's good advice for a new or seasoned investor. Dividends can significantly boost the total returns of the stocks you buy. And they can provide income when needed.

Thousands of stocks offer dividends, but they're not all great picks. What are the top dividend stocks to buy in August? Here are three great stocks that I really like right now.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

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1. Enbridge

Enbridge (NYSE: ENB) succinctly summed up a big reason why its stock is attractive in its first-quarter update, describing its business as "low-risk" and "utility-like." With the S&P 500 CAPE ratio at its third-highest level ever (suggesting potential poor market returns ahead), that's the kind of stock many investors will want to buy this month.

I think Enbridge's description is accurate, by the way. The company is a midstream energy leader, operating the world's longest oil and liquids transportation system. This system includes over 18,000 miles of crude oil pipeline and nearly 19,000 miles of natural gas pipeline. Like toll roads, pipelines generate steady and consistent cash flow.

Thanks to three 2023 acquisitions, the business is more low-risk and utility-like than ever before. The company now ranks as the largest natural gas utility in North America (based on volume). It delivers roughly 9.3 billion cubic feet of natural gas per day to around 7 million customers.

Another key reason to like this stock is its dividend. Enbridge has increased its payout for an impressive 30 consecutive years. Its forward dividend yield currently tops 6%. With the company projecting average annual growth of around 5% through the rest of this decade, the stock should be in a strong position to generate double-digit percentage total returns.

2. Enterprise Products Partners

If you're interested in a pure-play midstream energy stock with an even juicier dividend, you'll want to check out Enterprise Products Partners LP (NYSE: EPD). The distribution yield for this master limited partnership (MLP) is 6.93%, and it has increased its distribution for 26 consecutive years.

Although the company doesn't have the utility-like business profile of Enbridge, I view its stock as relatively low risk. The company has delivered a double-digit percentage return on invested capital (ROIC) and solid cash flow every year for two decades.

The MLP's growth prospects should be good. The European Union has agreed to significantly increase its natural gas purchases from the U.S. as part of a recent trade agreement. A lot of this natural gas will flow through the company's more than 50,000 miles of pipeline.

Valuation is another plus for this ultra-high-yield dividend stock. Enterprise Products Partners' forward price-to-earnings ratio is around 11.2, lower than many of its peers and less than half the forward earnings multiple of the S&P 500.

3. Realty Income

Not every top dividend stock to buy in August is in the energy sector. Realty Income (NYSE: O) is one of the world's largest real estate investment trusts (REITs). It owns 15,627 properties in eight countries.

I like the diversification of Realty Income's portfolio. The REIT has nearly 1,600 tenants representing 91 industries. Roughly 91% of its total rent is largely resistant to economic downturns and/or protected from e-commerce threats.

Its track record is impeccable. The company has delivered an average annual total return of 13.6% since listing on the New York Stock Exchange in 1994. Its total operational return was positive in each of those years. The REIT has increased its dividend -- which is paid monthly -- for 30 consecutive years (and 110 consecutive quarters), with its forward dividend yield now at 5.68%.

To add icing to the cake, Realty Income's growth prospects are attractive. That's especially true in Europe, which has an addressable market of $8.5 trillion and only two major rivals.

Should you invest $1,000 in Enbridge right now?

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Keith Speights has positions in Enbridge, Enterprise Products Partners, and Realty Income. The Motley Fool has positions in and recommends Enbridge and Realty Income. The Motley Fool recommends Enterprise Products Partners. The Motley Fool has a disclosure policy.