While the average dividend-paying stock in the S&P 500 currently yields 1.9%, investors can do much better than that. Several companies pay more than double that level, making them excellent options for income-seeking investors. Three of the top ones are Brookfield Infrastructure Partners (BIP 2.27%), Enterprise Products Partners (EPD +0.46%), and TerraForm Partners (TERP +0.00%).
A decade of dividend growth, with more to come
Brookfield Infrastructure Partners is a diversified global infrastructure company. It operates assets in the utility, energy, transportation, and data sectors. These businesses generate predictable income. Brookfield uses about 65% of those funds to pay an above-average dividend that currently yields 4.2%.
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Brookfield has been an excellent income stock over the years. In the decade since its formation, it has grown its cash flow at an 18% compound annual rate on a per-share basis. That has enabled the company to increase its distribution to investors at an 11% yearly pace over that time frame. More growth is on the way. Brookfield has enough expansion projects and other growth initiatives under way to increase its payout by at least a 5% to 9% annual rate over the next five years. That visible income growth makes it an excellent option for yield-seeking investors.
Renewable-powered dividend growth
TerraForm Power is a renewable energy company focused on operating wind and solar assets in North America and Western Europe. The company sells the power those facilities generate under long-term contracts, which provides it with predictable cash flow. It uses roughly 80% of those funds to pay a dividend that currently yields 4.7%.
The company believes it can grow that payout at a 5% to 8% annual rate through at least 2022. Powering that plan is the expected boost from recent acquisitions and the company's ability to improve the profitability of its legacy assets. Meanwhile, TerraForm has additional upside potential by continuing to make acquisitions, which could give it the power to grow its dividend at an even faster rate in the future.
20 years and counting
Enterprise Products Partners is one of the largest midstream MLPs in the country. The company typically leases the capacity of its assets under long-term, fixed-price contracts, which supplies it with predictable cash flow. It pays out about 60% of that money to investors via a dividend that currently yields 6.2%.
What makes Enterprise's payout all the more attractive is its consistent growth. The MLP has increased it for 20 straight years, including raising it in each of the past 60 quarters.
Meanwhile, there's plenty more growth ahead. Enterprise Products Partners currently has $6 billion of major capital projects under construction, which provide it with visible cash flow growth through 2020. It has another $5 billion to $10 billion of expansions in development, which should give it plenty of fuel to keep growing in the coming years. Enterprise Products Partners should have no trouble keeping its dividend growth streak alive.
High yields and healthy growth
Enterprise Products, Brookfield Infrastructure, and TerraForm Power offer income-seekers the best of both worlds. Each pays a high-yielding dividend that they expect to steadily increase over the next several years. That growing income stream makes them excellent stocks for yield-seeking investors to consider buying.
