These 2 Top Stocks Offer High Yields and Double-Digit Dividend Growth

Income-seeking investors often need to choose between investment options that offer a high yield today and those that are growing at a high rate. That's because companies that pay more in dividends have less cash to invest in expanding their business.

However, there are a few companies that offer the best of both worlds. Two of these gems are pipeline giants Williams Companies (NYSE: WMB) and ONEOK (NYSE: OKE), which not only have dividend yields more than double the rate of the average stock in the S&P 500 but also expect to grow their cash flow and dividends at a double-digit annual pace.

Fast-paced growth for at least the next year

Williams Companies' dividend currently clocks in with a 4.8% yield, which is well above the S&P 500's 1.8% average. However, worth noting about the natural gas pipeline giant's dividend is that the company devotes only about 60% of its cash flow in support of that payout, which is low for such a high-yielding company. Because of that, Williams generates lots of excess cash that it can reinvest into expanding its pipeline network.

Currently, the company expects to spend $3.9 billion on growth projects this year and another $2.6 billion on expansions in 2019. Those new additions position the company to increase its adjusted earnings per share at an 18.9% compound annual growth rate through the end of next year, which is faster than the 14.8% yearly pace of the average stock in the S&P 500. That growth should give Williams Companies the fuel to increase its dividend at a 10% to 15% annual rate in 2018 and 2019, which at the midpoint is double the projected dividend growth rate of the average stock in the S&P 500.

While Williams Companies' current dividend growth forecast only goes through next year, the company has several projects that it won't complete until the 2020 to 2021 timeframe and a few more in development for 2020 and beyond. Because of that, it could be able to continue increasing its dividend at a high rate for the next several years.

An even longer-term opportunity

ONEOK currently offers investors an even higher yield of 5%, and the company anticipates that it can increase that payout at a 9% to 11% annual rate through 2021. That combination of a high yield and a high growth rate several years into the future puts the company in a class of its own in the S&P 500, as it's the only investment grade-rated large-cap stock with a dividend yield over 4% that expects to grow its earnings per share and dividend at around a 10% annual rate through 2020.

Like Williams Companies, ONEOK has a large backlog of expansion projects to fuel its fast-growing payout. At the moment, the company has secured more than $4.6 billion of new pipelines and other projects that it expects to complete through the end of 2020. Even better, the company has locked in long-term contracts that will enable it to earn lucrative returns on those investments, which will give it the fuel needed to increase its dividend at a high rate for the next several years.

Having your cake and eating it too

With dividend yields that are more than double the average rate of stocks in the S&P 500, Williams Companies and ONEOK will satisfy the income craving of most investors. On top of that, both companies expect to increase their high-yield payout at a double-digit pace for at least the next year. That dividend growth increases the likelihood that these two stocks can outperform the market from here, making them excellent stocks to consider buying.

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Matthew DiLallo has no position in any of the stocks mentioned. The Motley Fool recommends ONEOK. The Motley Fool has a disclosure policy.