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These 3 Dividend Stocks Are Practically Money Machines

By Keith Speights – Updated Nov 22, 2021 at 11:34AM

Key Points

  • Brookfield Infrastructure is virtually inflation-proof.
  • Easterly Government Properties is about as safe of a dividend stock as you'll find.
  • Innovative Industrial Properties has delivered jaw-dropping growth and still has room to run.

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Steady, attractive dividends. Strong growth prospects.

What's the last thing in the world income-seeking investors want? Inconsistency. If you can't count on sure and steady dividends from the stocks you buy, you need to look for better alternatives.

The best way to ensure that you get consistency with dividend payouts is to pick stocks of companies with business models built for the long run. Here are three such dividend stocks that are practically money machines.

A smiling person pointing to a chalkboard drawing of a light bulb surrounded by money.

Image source: Getty Images.

1. Brookfield Infrastructure

Inflation stands out as a big risk for income investors. If a company doesn't regularly increase its dividend to keep up with inflation, your money won't go as far. But you don't have anything to worry about on this front with Brookfield Infrastructure (BIP -2.07%) (BIPC -2.84%). It's one of the most inflation-proof dividend stocks on the market.

As its name indicates, Brookfield Infrastructure owns infrastructure assets. The company's portfolio includes cell towers, data centers, natural gas pipelines, railroads, ports, toll roads, and utilities. Many of these businesses have inflation escalators built into their contracts with customers. Nearly all of Brookfield Infrastructure's assets generate steady, dependable cash flow every quarter.

Brookfield Infrastructure's distribution (equivalent to a dividend) currently yields close to 3.5%. The company has increased its distribution by a compound annual growth rate of 10% since 2009.

In addition to the attractive distribution, Brookfield Infrastructure also offers investors solid growth prospects. With an infrastructure super-cycle underway, the company should be able to continue outperforming the market. 

2. Easterly Government Properties

Let's briefly put dividend stocks aside. U.S. Treasury bills are viewed by many as one of the safest investments around. Why? They're backed by the U.S. government. Easterly Government Properties (DEA -0.12%) is a money machine for a similar reason.

Easterly isn't as safe as T-bills, but you're not going to find many dividend stocks with less risk. The company is a real estate investment trust (REIT) that leases properties to the U.S. government. It currently owns 88 properties to federal agencies including the Drug Enforcement Administration, Federal Bureau of Investigation, and Veterans Administration. 

As a REIT, Easterly must return at least 90% of taxable income to shareholders in the form of dividends. Its dividend yield currently stands at nearly 5%. 

The company has more growth opportunities than you might think. Easterly expects the U.S. government will expand the number of properties that it leases in the future due to budget constraints. The federal real estate market is highly fragmented and has high barriers to entry. Easterly is well-positioned to add more properties to its portfolio. 

3. Innovative Industrial Properties

There's another REIT that is also a great pick for income investors who want growth potential. Innovative Industrial Properties (IIPR -1.34%) focuses on buying properties from medical cannabis operators then leasing those properties back to the operators.

This has been a lucrative business model for IIP. Over the past five years, the company's revenue has skyrocketed more than 4,000%. Earnings have soared around 2,750% during the same period. 

With that kind of growth, you'd expect IIP's share price would have also gone up a lot. And you'd be right: The stock has vaulted more than 1,300% higher over the last five years and is up close to 50% so far in 2021. IIP should have more growth ahead as the U.S. cannabis industry expands.

The company's dividend yield of a little over 2% might not seem all that great. However, the yield is low solely because IIP stock has delivered such big gains. Since late 2016, IIP's dividend has grown by 10X. Money machine? Definitely.

Keith Speights owns shares of Brookfield Infrastructure Corporation, Brookfield Infrastructure Partners, and Innovative Industrial Properties. The Motley Fool owns shares of and recommends Innovative Industrial Properties. The Motley Fool recommends Brookfield Infra Partners LP Units, Brookfield Infrastructure Corporation, Brookfield Infrastructure Partners, and Easterly Government Properties. The Motley Fool has a disclosure policy.

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