Investing in dividend stocks has been a lucrative strategy for me, providing a steady stream of passive income. Historical data suggests that dividend-paying stocks have outperformed non-payers by a significant margin, with dividend growers delivering the highest returns. This is why I focus on companies with a proven track record of dividend growth and a high likelihood of continued increases.
Three dividend stocks that currently top my list are Brookfield Infrastructure, NextEra Energy, and Prologis. These companies have demonstrated a commitment to sharing their profits with shareholders and have the financial strength to sustain their dividend payments.
Brookfield Infrastructure, a global infrastructure operator, has grown its dividend at a 9% compound annual rate over the past 15 years. With a current yield of nearly 4% and a conservative payout ratio of 67%, the company is well-positioned to continue increasing its dividend. Its robust growth profile, driven by organic growth and accretive acquisitions, supports its target of 5-9% annual dividend growth.
NextEra Energy, a utility company, has increased its dividend for 30 consecutive years, growing its payout at a 10% annual rate over the past 20 years. With a low payout ratio and expected adjusted EPS growth of 6-8% annually, the company is poised to continue its dividend growth streak.
Prologis, a leading industrial REIT, has delivered impressive dividend growth, with a 13% compound annual rate over the past five years. The company’s strong demand for warehouse space, driven by e-commerce growth, is expected to drive high single-digit annual same-store income growth through 2026. Additionally, its development projects and accretive acquisitions provide further upside potential.
These three dividend stocks offer attractive yields, strong growth prospects, and a high likelihood of continued dividend increases, making them excellent additions to any portfolio. By investing in these companies, investors can benefit from a steady stream of income and potentially strong total returns over the long term.
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