Do you have $5,000? 3 Best Dividend Stocks to Buy Right Now

Dividend stocks are proven wealth creators. They have historically produced higher total returns than non-payers, with less volatility. Meanwhile, the best returns have come from companies that have steadily increased their dividends over time. This allows investors to benefit from a growing passive income stream and price appreciation.

Three blue chip dividend stocks to consider buying if you have the cash to put to work are Brookfield Infrastructure (NYSE: BIPC)(NYSE: BEEP), Clearway Energy (NYSE: CWEN.A)(NYSE: CWEN)and WP Carey (NYSE: WPC). A $5,000 investment spread across these three stocks would produce over $210 in annual passive income that should steadily increase in the years to come:

Dividend shares

Initial investment

Current income yield

Annual Passive Income

Brookfield Infrastructure

$1,666.67

3.4%

$57.33

Clearway Energy

$1,666.67

4.2%

$69.83

WP Carey

$1,666.67

5.1%

$85.50

Total

$5,000.00

4.3%

$212.67

Data source: Google Finance.

Steady growth ahead

Brookfield Infrastructure has been a blue chip dividend stock over the years. The global infrastructure operator has increased its payout for 13 consecutive years – every year since its inception – growing it at a compound annual rate of 10%.

The company plans to continue to increase its dividend in the future. It generates very steady cash flows supported by long-term contracts and government-regulated tariffs. Meanwhile, it only pays out 60% to 70% of this stable income through the dividend, allowing it to retain a substantial amount to fund maintenance and expansion projects. Brookfield complements that conservative payout ratio with a top-notch balance sheet, giving it additional financial flexibility to fund expansions.

The company estimates that a combination of expansion plans, inflation-driven rate increases and higher volumes as the global economy expands will result in 6% to 9% annual growth in cash flow. cash per share. Meanwhile, it expects its capital recycling program – selling mature assets to fund new investment – ​​to further improve its results. This prospect leads Brookfield to believe that it can increase its dividend at an annual rate of 5% to 9% over the next few years.

Visible future growth

Clearway Energy is an American leader renewable energy producer. The company sells the electricity it produces under long-term, fixed-price power purchase agreements to utilities and large corporations, allowing it to generate steady cash flow. The company uses most of these funds to support its high-yielding dividend, keeping the remaining money to continue to grow its portfolio.

The company is currently in the midst of a large-scale capital recycling program. It sold its thermal assets earlier this year, bringing in $1.35 billion to reinvest in expanding its renewable energy business. The company regularly leveraged this capital the acquisition of cash flow generating renewable energy assets.

Clearway Energy estimates that these new investments will increase its cash flow to support dividend growth towards the top of its annual target range of 5% to 8% through 2026. In the meantime, the company has great growth potential at beyond this period due to the acceleration in the adoption of renewable energy. Its parent company is a major developer of renewable energy, while one of its the main investors are a large global energy company that is investing heavily in renewable energy. These strategic relationships should provide Clearway with many growth opportunities in the years to come.

A pillar of consistency

WP Carey is a large real estate investment trust (REITs). It has a diversified real estate portfolio in the office, industrial, retail, warehouse and self-storage sectors. It focuses on operationally critical facilities that it leases to tenants under long-term triple net leases. This lease structure provides WP Carey with stable rental income because it makes the tenant responsible for variable expenses such as building maintenance, property taxes and insurance.

Most of these leases feature annual rental rate adjustments (fixed or inflation-linked), allowing WP Carey to steadily increase its rental income. This is one of the factors that determines the REIT’s ability to increase its dividend, which it has done every year since 1998. The other major driver of dividend growth is acquisitions, primarily sale-leaseback transactions with owner-operators.

WP Carey invested a record $1.73 billion in expanding its portfolio last year and sees the potential to buy between $1.5 billion and $2 billion in properties this year. The Diversified REITs has a strong balance sheet to help fund growth and a great opportunity given that there are trillions of dollars in owner-occupied real estate ripe for sale-leaseback transactions. Future transactions should allow the REIT to continue to develop its portfolio, its rental income and its dividend.

Excellent passive income generators

Brookfield Infrastructure, Clearway Energy and WP Carey are paying above-average dividends which they believe will continue to grow in years to come. As a result, they can turn an investment into a large and growing passive income stream. On top of that, the capital invested in these dividend-paying stocks should also increase over time, helping to grow this nest egg in the years to come.

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Matthew DiLallo holds positions at Brookfield Infrastructure Corporation, Brookfield Infrastructure Partners, Clearway Energy, Inc. and WP Carey. The Motley Fool recommends Brookfield Infra Partners LP Units, Brookfield Infrastructure Corporation and Brookfield Infrastructure Partners. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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