Here's Why These 3 Stocks With Alluring Dividends Are Strong Buys

With rock-bottom interest rates, dividend-paying stocks are still income investors' best bets.

Let's look at three such companies with a strong commitment to diversifying their revenue streams.

1. Avangrid (AGR)
Utilities such as Avangrid don't generate power but deliver electricity or gas, a structure that is even better than traditional utilities for protecting investors.

Also called "grid" firms or "wires," these utilities are more insulated from commodity price swings because they don't buy and burn coal, gas or oil. For Avangrid, this inherent stability means that both its stock price and yield at 4.3% will be protected when the next recession hits.

Avangrid has a great history of paying dividends. Its predecessor utility, UIL, paid a dividend for more than a century, and for the past 14 years, the dividend yield usually has topped 4%.

With a payout ratio at a low 51%, the firm can easily maintain its dividend.

Avangrid is developing renewable energy power sources at a fast clip, and its projects are usually supported by long-term power purchase agreements that shield the company from price volatility. But renewables are only the icing on the cake.

The utility will also boost revenue through a number of scheduled electric and natural-gas distribution projects, as well as interstate transmission expansion projects.

Under its five-year capital spending plan, Avangrid expects $1.3 billion of annual investments in its various systems.

Analysts forecast that all these projects add up to earnings growth of 9% each year for the next two years.

Consensus estimates call for 3% revenue growth over the same period, before any growth from potential future mergers, which Avangrid can afford, thanks to its low debt.

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