Dividend stocks are my favorite investments. They generate passive income that I can reinvest. Furthermore, dividend stocks historically generate higher total returns than non-paying stocks, with much less volatility.
There are a lot of good dividend stocks. Brookfield Infrastructure (NYSE: BIPC)(NYSE: BIP) And Enbridge (NYSE: ENB) are two of the top ones. They pay high-yielding dividends that are rising steadily. With more growth forwardthey are excellent dividend stocks to buy in December.
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Brookfield Infrastructure has increased its dividend every year since its inception 15 years ago. The global infrastructure manager has increased its payout by a compound annual rate of 9% over that period. It currently offers investors a dividend yield of almost 4%, that is more than three times as high as the S&P500 (SNPINDEX: ^GSPC) (1.2% return).
The company pays a well-substantiated dividend. It generates terribly stable cash flow, where 90% is contracted or regulated (70% of which has no volume or price exposure) and 85% is indexed or protected against inflation. Brookfield expects that dividend payout ratio will derive approximately 67% of resources from operations (FFO) this year, putting it within the target range of 60%-70%. The company also has a strong investment-grade balance sheet with plenty of liquidity.
Brookfield’s dividend is only part of the equation. The company also expects FFO to continue to grow at over 10% annually. There are several organic growth drivers, including inflation-related interest rate increases, volume growth as the global economy grows, and development projects. It currently has a record $8 billion backlog of projects (data centers, semiconductor manufacturing facilities, utility connections and midstream expansions) and more than $4 billion in additional projects in development.
In addition, the company expects to continue completing mergers and acquisitions. The current deal pipeline is as large as it has been in two years and continues to grow.
These factors should allow Brookfield to grow its dividend by 5% to 9% every year.
Enbridge recently reached a remarkable milestone. The Canadian pipeline and utility company has increased its dividend by 30 directly year. It currently offers an even higher dividend yield of over 6%.
The company has one of the lowest risk business models in the energy sector. About 98% of revenue comes from stable service fees or contracted assets, while 80% enjoys inflation protection. This allows the company to generate highly predictable profits. It is on track to meet its 19th year annual financial guidance in a row.
