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3 Top Dividend Stocks to Buy in July

By John Bromels - Jul 4, 2020 at 8:31AM

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These reliable dividend payers look like good bets right now.

It would be nice to have a little bit of stability right now: in the economy, in the stock market, or just in general. But July is shaping up to be a very uncertain month this year. The normally sleepy summer season could get shaken up at any moment. 

With so much up in the air, it's a good time to invest in reliable dividend-paying stocks. Even in times of high volatility, solid dividend payers can provide ballast to your portfolio and income for your wallet. Three dividend payers that look especially enticing right now are Brookfield Infrastructure Corporation (BIPC 1.24%), NextEra Energy (NEE 0.97%), and Waste Management (WM 0.10%). Here's why you might want to pick up shares this month. 

A piggy bank wearing sunglasses sits in a deck chair on a beach.

Image source: Getty Images.

A new look for an old standby

Master limited partnership (MLP) Brookfield Infrastructure Partners (BIP 1.58%) has been on a tear over the past decade. Its unit price -- MLP-speak for share price -- has appreciated 283% over the last 10 years, besting the S&P 500's 203.2% return. In spite of all that price appreciation, management has done a good job ensuring that the company's yield hasn't collapsed: it currently yields 4.9%. 

In April, though, the Canadian company -- which owns critical infrastructure assets across the globe like telecom towers, railway lines, and gas pipelines -- tried something new. It listed itself as a C-Corporation on the Toronto and New York stock exchanges, allowing investors to purchase stock shares as well as MLP units. That's great news for investors who want to own Brookfield Infrastructure in a retirement account, in which MLP units can be problematic.

Even better for investors, management says dividends for the new Brookfield Infrastructure Corporation "are expected to be declared and paid at the same time and in the same amount (on a per-share and unit basis) as distributions are declared and paid on units of Brookfield Infrastructure Partners LP." In 2019, Brookfield declared its second quarter distribution on Aug. 1. That makes July a great time to pick up shares (or, if you prefer, units) of this reliable outperformer. 

Beating the heat and the market

July's going to be a scorcher in Florida this year. The last full week of June was Miami's hottest week ever recorded, and the mercury's only likely to rise this month.

When Florida residents start cranking up the air conditioning, it's good for electric utilities like Florida Power & Light and Gulf Power. Both are owned by electricity behemoth NextEra Energy, one of the largest energy companies in the world. With 4.5 million customer accounts in Florida, NextEra stands to benefit from the hot summer, giving it plenty of cash flow to fund its dividend, which currently yields 2.2%. 

Even when it's not the height of summer, though, NextEra has proven to be a solid investment. It has upped its payout every year for the last 25 years, and its share price growth has crushed the market's return by 200 percentage points over the last decade. NextEra foresees more growth to come, especially for its renewable energy generation business, which operates wind and solar farms across the country. NextEra looks like a buy.

BIP Chart

All three companies have beaten the market over the last 10 years. BIP data by YCharts.

Stay trashy

Besides air conditioning, something you really can't live without in the hot summer is regular trash pickup. As North America's largest trash hauler and landfill operator, Waste Management has been a consistent outperformer as well. With a growing population generating ever-higher volumes of trash, and a massive competitive moat, Waste Management may see some short-term underperformance as shuttered businesses cancel trash service, but the company's long-term outlook is strong.

When its share price took a hit during the market crash in March, Waste Management's dividend yield jumped above 2% for the first time in more than a year. Even now, shares are still down about 8% year-to-date, and that dividend is right at the 2% mark. Meanwhile, the stock is trading at about 26.6 times earnings: not cheap by any stretch, but reasonably priced for such a consistent outperformer. 

Now looks like a good time to buy into Waste Management's long-term growth.

A boring summer

Summer is usually synonymous with fun and excitement. Well, let's hope we start having a little less excitement in the markets this July. But just in case, you may want to add an extra dose of boring dividend investments like infrastructure, electricity transmission, and trash hauling to your portfolio. Brookfield Infrastructure, NextEra Energy, and Waste Management may not be flashy stocks, but they're good picks for an uncertain July. 

John Bromels owns shares of Brookfield Infrastructure Partners and Waste Management. The Motley Fool recommends Brookfield Infrastructure, Brookfield Infrastructure Partners, NextEra Energy, and Waste Management. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Waste Management, Inc. Stock Quote
Waste Management, Inc.
WM
$170.07 (0.10%) $0.17
NextEra Energy, Inc. Stock Quote
NextEra Energy, Inc.
NEE
$89.78 (0.97%) $0.86
Brookfield Infrastructure Partners L.P. Stock Quote
Brookfield Infrastructure Partners L.P.
BIP
$41.01 (1.58%) $0.64
Brookfield Infrastructure Corporation Stock Quote
Brookfield Infrastructure Corporation
BIPC
$47.56 (1.24%) $0.58

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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