With Thanksgiving coming up this week, it's a good time to reflect on things that we're thankful for this year. Investors have a lot to be grateful for this year since it has been an excellent one in the market. The S&P 500 has delivered scorching total returns of more than 25% this year.
Several companies have done even better. Three that have richly rewarded dividend investors are Brookfield Renewable Partners (BEP 0.41%), Brookfield Infrastructure Partners (BIP 2.70%), and ONEOK (OKE 1.96%). Here's why investors in these income-focused stocks are probably very thankful they hold them in their portfolios.
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A red-hot year
Most investors probably hold Brookfield Renewable Partners for its high-yielding dividend, which is 4.3% at the moment, thanks in part to a 5% increase at the beginning of the year. The renewable-energy-focused company, however, has rewarded investors well beyond that above-average payout by generating an eye-popping total return of roughly 85% so far this year.
Powering Brookfield Renewable's surge has been a combination of factors. One of the biggest has been the strong performance of its underlying business. Its cash flow per share is up more than 25% through the first nine months of the year. That's due to the improved profitability of its legacy assets as well as its growth initiatives.
The company has made excellent progress in expanding its portfolio this year. Among the highlights is an investment in a Canadian hydroelectric portfolio, the formation of a solar development joint venture, and giving an assist to its majority-owned sibling TerraForm Power in making another acquisition. The company is now on track to generate high-powered growth for the next five years.
All the wheeling and dealing is starting to pay dividends
Brookfield Renewable's infrastructure-focused sibling Brookfield Infrastructure Partners, meanwhile, has also given investors lots to be thankful for this year. For starters, it boosted its payout by 7% to start 2019, giving it a current yield of 3.8%. That payout, however, pales in comparison with the company's total return to investors this year, which is closing in on 60%.
The primary driver of that big gain has been the success of Brookfield Infrastructure's capital recycling program. It has been selling slower-growing mature businesses and replacing them with higher-returning opportunities. As a result, the company is on track to boost its earnings by 25% as it enjoys the full benefits of the first phase of this endeavor. Meanwhile, it's well under way with the second phase, which should drive accelerated growth in 2020 as well. The company should have plenty of fuel to continue increasing its dividend.
Thankful in anticipation of what lies ahead
Pipeline giant ONEOK has also given its income-focused investors plenty of reasons to be thankful this year. First of all, it has increased its dividend each quarter, growing it by 9% compared with last year's payout. As a result, it now yields 5.1%. In addition, its stock price has surged this year, which has pushed its total return above 40%.
While the company has had a solid year financially, 2019 has been about building for future growth. ONEOK has five expansion projects coming online by the first quarter of 2020, which should drive greater than 20% earnings growth next year. That's an acceleration from the roughly 6% increase it anticipates in 2019. Meanwhile, it has another wave of projects coming in 2021, which should keep its growth engine humming along. It should have plenty of fuel to continue growing its dividend and producing high-octane total returns in the coming years.
Having your cake and eating it too
Many investors think that by investing in a dividend-paying stock, they're automatically accepting a lower return. However, that hasn't been the case historically, as dividend growth stocks have vastly outperformed non-payers. That was clearly the case for Brookfield Renewable, Brookfield Infrastructure, and ONEOK this year, as they've treated their income-focused investors to market-crushing total returns, which is something they're probably very thankful for this year.
