Morgan Housel tweeted a few weeks ago that there are really only three legal investment strategies. You can be smarter than others. You can be luckier than others. Or you can be more patient than others. The only thing I would add is that these are the only three legal winning investment strategies.
The one winning strategy that you as an investor have a significant amount of control over is to be more patient than others. This strategy works especially well for dividend investors, since dividends can add greatly to total returns over a long period of time.
Admittedly, some dividend stocks aren't great long-term picks. Their weaknesses can outweigh high yields. Others, though, deliver great total returns for decades thanks to strong and sustainable business models. Brookfield Infrastructure Partners (BIP 0.57%), Iron Mountain (IRM 0.19%), and Welltower (WELL -0.90%) fit into the latter category. Here's why these three are tremendous dividend stocks to buy for the long run.
1. Brookfield Infrastructure Partners
Brookfield Infrastructure Partners, like the company's middle name states, focuses on infrastructure. The company owns communications towers, energy transmission lines, ports, railroads, toll roads, and more. Brookfield Infrastructure operates across the world, with assets in North America, South America, Europe, and the Asia Pacific region.
The company's dividend currently yields nearly 5%. Over the last five years, Brookfield Infrastructure has increased its dividend payout by 47%.
One great thing about Brookfield Infrastructure's business model is that its assets deliver steady revenue streams year in and year out. Also, the company often has little competition in the markets in which it operates. Brookfield Infrastructure should have solid growth opportunities as it makes additional acquisitions, something the company is already doing.
2. Iron Mountain
Iron Mountain provides records and data storage services for more than 225,000 customers in 54 countries across the world. Its customers include 95% of the Fortune 1000 companies. The company has more than 1,400 facilities with roughly 90 million square feet of storage space.
Because Iron Mountain is organized as a real estate investment trust (REIT), it must distribute at least 90% of taxable income to shareholders in the form of dividends. The company's dividend yield currently stands at 7.1%. Over the last five years, Iron Mountain has boosted its dividend by 126%.
Iron Mountain is a solid long-term pick in large part because of the durability of its business. Customers continue to generate more records and data to store. And customer retention rates are very high since it's easier to keep using Iron Mountain than to move records and data to another vendor. The company should be able to grow by winning new customers who have handled records and data storage internally, by expanding more into emerging markets, and by capitalizing on the opportunity in the high-growth data center business.
Welltower ranks as the largest healthcare-focused REIT and the fifth-largest U.S. REIT overall by enterprise value. It owns more than 1,500 healthcare properties, including senior housing operators, post-acute care communities, and outpatient medical facilities.
The company's dividend currently yields 4.7%. Welltower's dividend hikes haven't been very impressive, although the healthcare REIT has increased its dividend payout by more than 9% over the last five years. But Welltower has changed its strategy to focus primarily on senior housing properties in major high-growth urban markets, a move that could translate to better dividend growth in the future.
Welltower should benefit significantly from demographic trends. Aging populations in the U.S., Canada, and the United Kingdom will drive higher demand for the company's properties. In addition, a shift from procedures being performed in inpatient settings to outpatient settings should be good news for Welltower's outpatient medical facilities.
Long vs. short
Each of these stocks could experience short-term struggles from time to time. Brookfield Infrastructure Partners, for example, reported lower profitability in the third quarter due to a divestiture and foreign exchange headwinds. The broader stock market pullback in October weighed on all three stocks.
Over the long run, though, Brookfield Infrastructure, Iron Mountain, and Welltower have strong business models that should generate solid growth and enable the companies to continue distributing attractive dividends. You don't have to be smarter or luckier than other investors to win with these three stocks. You just have to be patient.