The dividend yield on the S&P 500 currently sits around 1.3%. That's its lowest level in 20 years. With dividend yields compressing as stock prices rise and companies prioritize other things, it's getting harder for income investors to find attractive opportunities.
However, there are still some excellent options available. Two stand-out dividend stocks are Brookfield Renewable (BEPC 0.32%) (BEP 0.07%) and Crown Castle International (CCI -1.39%). Both yield more than 3%, double that of the S&P 500.
A powerful dividend growth plan
Brookfield Renewable is a leading renewable energy producer. The company has a globally diversified portfolio of hydroelectric, wind, solar, and energy storage assets. It primarily sells the power those facilities produce to end users like utilities and large corporate customers under long-term, fixed-rate power purchase agreements. Those contracts supply the company with a steady stream of cash flow. Brookfield pays out a portion of that money via a dividend that currently yields 3.1%.
The company retains the rest of its cash flow to help fund development projects. It currently has 36 gigawatts (GW) of renewable energy projects in the pipeline, more than its current 21 GW operating portfolio. Along with other organic growth drivers like higher power rates, those development projects should enable Brookfield to grow its cash flow per share at a 6% to 9% annual rate through at least 2025. Because of that, Brookfield believes it can increase its high-yielding payout at a 5% to 9% annual rate over the long term.
In addition, Brookfield sees significant upside potential from capital recycling. The company has a long history of selling mature assets and using the proceeds to invest in higher-returning opportunities. It estimates that mergers and acquisitions could add up to 9% to its cash flow per share each year. That would provide further support for its dividend. Brookfield's combination of yield and growing cash flow should enable it to continue generating strong total returns for investors in the coming years.
Connected to a megatrend
Crown Castle is an infrastructure REIT focused on owning cell towers, small cells, and fiber-optic networks. The company leases space on this infrastructure to mobile carriers under long-term contracts. That provides it with steady cash flow to support its 3.2%-yielding dividend.
The company sees a bright future for data infrastructure, driven in part by the roll-out of 5G networks. It envisions a decade-long investment cycle ahead in 5G, which should enable it to continue investing capital in expanding its infrastructure portfolio.
The company has been benefiting from record demand for space on its towers this year. Mobile carriers are upgrading their existing cell sites as part of the first phase of building out their 5G networks. Longer-term, the REIT believes the industry will require a significant build-out of small cells and fiber to support additional 5G network capacity.
Crown Castle estimates that these investments will support 7% to 8% annual dividend growth over the long term. However, that might be conservative as the company has exceeded that target range in the last two years, including boosting its payout by 11% this year. That growing dividend should enable Crown Castle to produce attractive total returns in the coming years.
Top-notch dividend stocks
Brookfield Renewable and Crown Castle are excellent dividend stocks. They combine above-average yields with enticing growth prospects. Those dual catalysts should enable both companies to produce steadily growing income streams, potentially giving them the power to generate above-average total returns. That makes them great dividend stocks to buy right now.