This past year has been challenging for dividend investors. Hundreds of companies slashed or suspended their shareholder payouts due to the impact the COVID-19 pandemic had on their operations.
However, some dividends proved their durability this year. Two such standouts were Brookfield Infrastructure ( BIP 0.37% )( BIPC 1.37% ) and Clearway Energy ( CWEN -0.75% )( CWEN.A ). When combined with the growth they see ahead in 2021, that resilience makes these great dividend stocks to buy this December.
Expect more of the same in 2021
Brookfield Infrastructure has an exceptional dividend track record. The global infrastructure operator has increased its payout each year since its formation in 2009. The company grew it at an 11% compound annual rate during that time frame, including a 7% boost in 2020.
The current payout -- which yields 3.9% -- is on rock-solid ground. The company's stable cash flow, conservative payout ratio, and top-notch balance sheet are driving that view. Brookfield's cash flow durability was evident this year, as it's on track to grow on a per-share basis despite the economic turmoil. Meanwhile, it pays out a conservative 60% of that cash flow in dividends and has an investment-grade balance sheet with lots of liquidity.
Those factors give the company the financial flexibility to expand its infrastructure portfolio. It has already secured two needle-moving acquisitions that, along with organic investments, should fuel high-powered growth in 2021.
Brookfield should have no problem increasing its dividend again next year. Given its outlook, that raise could be toward the upper end of its 5% to 9% long-term target range for dividend growth.
More high-powered dividend growth ahead
While many companies cut their payouts in 2020, Clearway Energy delivered supercharged dividend growth this year. The renewable energy producer boosted its payout three times, growing it by an eye-popping 59% overall. That fast-paced growth pushed its dividend yield up to an attractive 4.3%.
A steady stream of new investments -- as well as a key customer's reemergence from bankruptcy that freed up associated cash flows -- powered the surge in Clearway's payout. On top of that, the company's clean energy assets generate steady cash flow backed by long-term contracts.
Clearway expects more dividend growth ahead in 2021. The company has secured several new investments in recent months, giving lots of visibility to its future cash flows. The renewable energy producer currently anticipates having enough power to increase its dividend toward the higher end of its 5% to 8% annual growth target range in 2021. Further supporting the company's outlook is that its payout ratio remains well below its 80% to 85% target range. It also has lots of financial flexibility to continue making new investments. Meanwhile, it has a strategic relationship with a renewable energy project developer, which should continue supplying it with a steady stream of investment opportunities in the coming years. Clearway should thus have plenty of power to deliver on its dividend growth plan.
Excellent income options for 2021
Brookfield Infrastructure and Clearway Energy treated dividend investors exceptionally well in 2020 as both gave their investors a raise. That upward trend in their dividends seems likely to continue in 2021 as both generate stable income and have visible growth on the horizon. They're great dividend stocks to buy in December as they'll set investors up with some attractive income streams in 2021.