Publicly traded shares of successful companies have long been a way to reliably build wealth, and when you add in dividends, they can provide steady streams of income along the way as well, allowing you to profit from your investment without cashing it in.
That kind of cash flow is called passive income, but actively seeking out stocks that do both well -- simultaneously grow their share price and shareholder payouts -- can be a profitable venture that will pay dividends for years to come.
That combination of share-price movement and dividend payouts is called total return. Below, in alphabetical order, is a look at stocks of five very different companies whose total return has surpassed that of the S&P 500 over the past 10 years.
American Tower
American Tower (AMT -0.93%) is both one of the world's largest real estate investment trusts (REITs) and owner/operators of mobile towers and other infrastructure critical to the vast telecommunications industry. AMT has posted a total return of about 334% in the past 10 years compared to about 288% for the S&P 500. Its stock is trading at about $230 a share, and it has raised its dividend for 12 straight years, giving it a current yield of about 2.43% compared with about 1.4% for the broad index. The company's growing portfolio and modest payout ratio of 55% based on 2022 estimated earnings lend optimism for continued growth in share price and dividends.
Best Buy
Best Buy (BBY 0.76%) is synonymous with computers, mobile phones, appliances, and all those other consumer electronics that are such an integral part of modern life. Best Buy has posted a total return of about 409% in the past 10 years compared to about 288% for the S&P 500. Its stock is trading at about $91 a share, and it has raised its dividend for 19 straight years, giving it a current yield of about 2.87% compared with about 1.4% for the broad index. The company's success in reducing store space while competing with online sellers along with its payout ratio of only 29% based on 2022 estimated earnings point to continued solid performance.
Brookfield Infrastructure Partners
Brookfield Infrastructure Partners (BIP 0.36%) is one of the world's largest owners of combined assets involved in the delivery of people, freight, water, energy, and data. Brookfield has posted a total return of about 374% in the past 10 years compared to about 288% for the S&P 500. Its stock is trading at about $60 a share, and it has raised its dividend for 15 straight years, giving it a current yield of about 3.41%. The company's growing presence in energy and telecom markets, along with a payout ratio of only 45% based on 2022 estimated earnings, should allow this infrastructure giant to keep on pumping out profits.
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Duke Realty
Duke Realty (DRE) calls itself the nation's leading pure-play, domestic-only, industrial property REIT. The stock has posted a total return of about 450% in the past 10 years compared to about 288% for the S&P 500. Its stock is trading at about $53 a share, and it has raised its dividend for 12 straight years, good for a current yield of about 2.43%. Duke Realty's strong spot within the red-hot industrial sector (which includes keeping fully occupied while raising rents), along with a modest payout ratio of 53% based on 2022 earnings estimates, position this real estate investment well for continued market-beating performance.
Illinois Tool Works
Finally, Illinois Tool Works (ITW 0.11%) is a global manufacturer and distributor of industrial products. It has posted a total return of about 381% in the past 10 years compared to about 288% for the S&P 500. Its stock is trading at about $215 a share, and it has raised its dividend for 51 straight years -- that's not a typo -- good for a current yield of about 2.26% compared with about 1.4% for the broad index.
A reasonable payout ratio of 49% based on 2022 earnings estimates, along with its position as a provider of critical commodities across multiple industries, position this company for steady performance to continue even through inflationary times. And that's especially true if supply issues diminish in the automotive industry, which was the only one of Illinois Tool Works' seven business segments not to see organic growth in the fourth quarter.
No guarantee of future performance, but a promising start
Not all companies pay dividends, of course, and even fewer do reliably year after year -- and fewer still regularly raise them. These do. And each of these companies has a long record of performance that speaks to the ability to leverage opportunities to recover from the current market downturn and then continue growing both share price and dividends for years to come.
