If there's one thing retirees want, it's an income stream that can sustain them through their golden years, ideally one that will grow along with their expenses. While fixed income options like bonds can deliver the desired durability, they don't offer the upside. On the other hand, dividend stocks can provide retirees with a steadily rising income stream.

Three companies that have a long history of growth that they should be able to maintain in the future are NextEra Energy (NYSE:NEE)American Water Works (NYSE:AWK), and Prologis (NYSE:PLD). That makes them ideal stocks for retirement-focused investors.

A person making a retirement plan chart with rising income.

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High-powered dividend growth

Electric utility NextEra Energy has been an outstanding dividend stock over the years. Since 2004, the company has grown its payout at a 9.4% compound annual rate. Thanks in part to that outsize growth, it currently yields slightly more than 2%, which is a bit better than the S&P 500's average of 1.7%.

More growth seems likely as NextEra currently expects to increase its dividend by about 10% per year through at least 2022. Powering that forecast is its reasonably low dividend payout ratio (60% at the end of 2019, versus 65% for its industry peers) and its expectation that earnings will expand by 6% to 8% per year during that timeframe, with it expecting growth at the high end of that range. Powering that earnings growth outlook is the company's massive backlog of renewable energy projects, which it can fund with retained cash and its A-rated balance sheet. That focus on renewables could enable the company to keep increasing its payout for years to come. 

A steadily growing income stream

Water utility American Water Works currently offers investors a below-average yield at 1.6%. However, what its payout lacks in size, it more than makes up for in durability and growth potential. One reason for the lower yield is that American Water Works pays out a conservative amount of its earnings, usually 50% to 60% each year. That enables it to retain more money to expand its operations, which it complements by having one of the highest-rated balance sheets in the utility sector.

That strong financial profile gives American Water Works the flexibility to continue expanding. It currently plans to invest $20 billion to $22 billion over the next 10 years. The utility sees $8.9 billion to $9.4 billion of that coming between now and 2024. That should support dividend increases of 7% to 10% per year through that timeframe, though it expects growth toward that range's high-end.

Steadily building a bigger dividend

Industrial REIT Prologis currently yields an above-average 2.3%. That's a well-supported payout despite all the turmoil in the real estate sector this year. While some real estate subsectors are under pressure because of the economic downturn, logistic properties have remained in high demand as they support the fast-paced growth of e-commerce. As a result, Prologis recently increased its earnings forecast for this year, which has it on pace to generate $1 billion in free cash after paying its dividend. 

When combined with its A-rated credit, that excess cash gives Prologis the financial flexibility to continue expanding its portfolio. The company currently expects to start between $800 million to $1.2 billion of new logistics projects this year and spend $500 million to $600 million on acquisitions. Those investments should enable the company to keep growing its cash flow, which should allow it to continue increasing its dividend at an above-average pace. That's been the case over the last five years as the REIT has grown its dividend at a 10% compound annual rate, which is ahead of the S&P 500's 9% growth rate.  

Dividend stocks to build a better retirement

Investing in dividend stocks can be a great way to generate income in retirement. Three excellent ones are NextEra Energy, American Water Works, and Prologis. Not only should their payouts endure the economy's inevitable downturns, but they should also keep rising in the years ahead, helping a retiree offset some of their inflating expenses.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.