This past year was a surprisingly good one for dividend investors. While hundreds of companies slashed or suspended their payouts due to the pandemic, 2020 was a record year for dividend payments to investors for stocks in the S&P 500 as they rose 0.7% above 2019's record level.

Meanwhile, 2021 appears poised to be an even better year for dividend growth as forecasters expect that companies in the S&P 500 will give their investors an even bigger raise in the coming year. 

While lots of stocks pay growing dividends, three that stand out as top buys this month are water utility American Water Works (NYSE:AWK), global infrastructure operator Brookfield Infrastructure (NYSE:BIP)(NYSE:BIPC), and diversified real estate investment trust (REIT) W.P. Carey (NYSE:WPC).

A roll of $100 bills next to a sign reading dividends.

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A fast-growing income stream

American Water Works has been an excellent dividend stock over the years. Since 2015, the water utility has delivered top-tier dividend growth while maintaining a top-notch financial profile, including A-rated credit and a low dividend payout ratio between 50% to 60% of its cash flow. Because of that financial strength, American Water Works has the flexibility to continue expanding its operations, cash flow, and dividend in the coming years.

The company currently expects to grow its earnings per share at a 7% to 10% annual pace through at least 2024, driven primarily by investments to expand its regulated water utility operations. Because of that and its conservative financial profile, it sees dividend growth coming in at the high end of that range.

While its current yield of 1.5% might not be all that appealing to dividend investors, its fast-paced growth will push the payout much higher in the coming years. That should enable American Water Works to continue delivering market-crushing total returns, which has been the case over the last five years.

Supercharged growth ahead in 2021

Brookfield Infrastructure has increased its dividend each year since its formation in 2009, growing it at an impressive 11% compound annual rate overall. Fueling that growth has been a steady string of infrastructure acquisitions and expansions of existing businesses. Meanwhile, it has also achieved that fast-paced growth while maintaining a strong financial profile, including A-rated credit and a reasonably conservative payout ratio between 60% and 70% of its cash flow.

That growth should continue in 2021. The company secured more than $1 billion of new investments in late 2020, which should help power its cash flow in 2021. Add that to its organic growth drivers and the expected rebound of the global economy, and its cash flow should surge in the coming year. Because of that, Brookfield should have no problem achieving its goal of growing its nearly 4%-yielding dividend at a 5% to 9% annual pace in 2021.

As a result, it should have the power to continue outperforming the market, which it has done since its formation more than a decade ago.

A shopping spree should keep pushing this dividend higher

W.P. Carey has increased its dividend every year since its IPO in 1998. Driving the REIT's steadily growing income stream has been its ability to continuously build and buy cash-flowing commercial real estate leased to financially strong tenants. That upward-trending dividend has enabled W.P. Carey to significantly outperform the market since its formation.

The company should have no problem continuing to grow its payout in 2021. While it paused its acquisition strategy early on in the pandemic, it has gone on a shopping spree in recent months. As a result, it's on track to buy $1 billion of properties this year, which is at the top end of its $750 million to $1 billion range. Meanwhile, it expects its investment momentum to continue in 2021.

With a solid, investment-grade balance sheet and a reasonable payout ratio, W.P. Carey has the financial flexibility to continue expanding. Because of that, its 6%-yielding dividend seems destined to head higher over the coming year.  

Great income stocks to buy to start the new year

American Water Works, Brookfield Infrastructure, and W.P. Carey have been excellent dividend stocks over the years. All three have a long history of growing their payouts, which seems likely to continue in 2021. Because of that, they should have the power needed to continue generating market-beating total returns in 2021, making them great stocks to buy this January.

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.