After declining slightly last year due to the pandemic, dividend payments by S&P 500 companies have jumped more than 8% this year. Over 300 members of that index have already given their investors a raise in 2021. 

Looking ahead, dividends should continue rising as companies grow their earnings. Two companies that stand out as great options for dividend growth investors for 2022 and beyond are American Tower (NYSE:AMT) and NextEra Energy Partners (NYSE:NEP).

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Connected to a megatrend

American Tower is a real estate investment trust (REIT) focused on communications and data infrastructure. The company operates a global cell tower business primarily built via acquisition. For example, earlier this year, it agreed to acquire Telxius Towers for $9.4 billion, adding more than 30,000 sites across Europe and Latin America. Over the last decade, acquisitions like that have helped American Tower grow its revenue and adjusted funds from operations (AFFO) at a mid-teens compound annual rate. They've also helped support more than 20% average annual dividend per share growth since 2012. American Tower's dividend yields around 2%, comfortably above the S&P 500's current average of about 1.3%.

The company likely won't grow its payout quite as fast in the future. However, it has taken steps to supercharge its growth rate by recently agreeing to acquire data center REIT CoreSite Realty (NYSE:COR) for $10.1 billion. That deal will immediately boost its AFFO and should be meaningfully accretive over the long-term as it expands CoreSite's data center operations in the U.S. and potentially globally. That complements the company's solid organic growth prospects, which includes the building-out of thousands of additional towers for Telxius Tower's main customer and the addition of more tenants on its existing tower sites. 

With two needle-moving deals in the past year, both of which boosted its organic growth prospects, American Tower should be able to continue growing its dividend at a double-digit pace for the next few years. That should help the REIT continue producing market-beating total returns.

Plugged into the future of energy

NextEra Energy Partners operates a diversified portfolio of clean energy infrastructure like natural gas pipelines and renewable energy assets. The company has also primarily built its portfolio via acquisition. It has steadily purchased energy infrastructure assets from its parent, leading utility NextEra Energy (NYSE:NEE). In addition, it has bought them from third-party sellers. These deals helped power more than 250% dividend growth since its formation in 2014, including a 15% increase over the past year.

NextEra Energy Partners expects to continue delivering high-powered dividend growth for the next several years. The company is targeting to grow its payout by 12% to 15% through at least 2024. The main driver is continued acquisitions from NextEra and third parties. During the third quarter, the company closed on a 400-megawatt (MW) wind portfolio from a third party and 590 MWs of wind and solar energy assets from NextEra. Meanwhile, it recently agreed to buy a 100-MW wind farm in California from a third party and a 50% interest in a 2.52-gigawatt renewable energy portfolio from NextEra. These deals will help it deliver high-powered dividend growth over the next year.

NextEra Energy Partners should be able to continue making needle-moving acquisitions. One fuels source is NextEra Energy's vast portfolio of clean energy assets that it can drop down to the partnership in the future. In addition, it should have no shortage of third-party purchase opportunities, given the need for capital in the industry to support the global race to decarbonize. Meanwhile, thanks to the support of private equity funds, NextEra Energy Partners has been able to continue financing these deals at attractive rates through convertible equity portfolio financing vehicles. These factors increase the company's conviction to deliver on its ambitious goal to grow its 3.2%-yielding dividend at a double-digit rate over the next few years.

Great dividend growth stocks for the long term

American Tower and NextEra Energy Partners have already done exceptional jobs growing their dividends at high rates over the years. They don't appear to be slowing down, with both expected to continue expanding their payouts at healthy clips for the next few years. That makes them stand out as excellent dividend stocks to buy heading 2022.


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.