The best dividend stocks have a long history of steadily increasing their payments. The top tiers are Dividend Aristocrats and Dividend Kings, companies that have delivered steady dividend growth for 25 and 50 years, respectively.
A lower-tier -- dividend achievers -- have increased their payouts for a decade or more. These dividend stocks are well on their way toward the dividend elite. Three of these up-and-comers are Brookfield Infrastructure (BIPC 1.21%) (BIP 0.36%), Brookfield Renewable (BEPC 2.75%) (BEP 2.85%), and Enterprise Products Partners (EPD -0.31%).
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A baker's dozen
Brookfield Infrastructure delivered its 13th consecutive year of dividend increases in 2022. That puts the global infrastructure owner on track to achieve Dividend Aristocrat status in a dozen more years. While a lot could happen between now and then, there's reason to believe it can join that elite group.
Brookfield's foundation is its diversified portfolio of high-quality infrastructure businesses. The company owns utilities, transportation, energy midstream, and data infrastructure assets that generate steadily growing cash flow backed by long-term contracts and government-regulated rate structures. The company complements that with a top-notch financial profile, including an investment-grade credit rating and solid dividend payout ratio. That gives Brookfield the financial flexibility to continue expanding its operations.
The company grows by investing in expansion projects and acquiring high-quality infrastructure businesses. It spent $3 billion last year on a range of deals, including buying a leading Canadian midstream company. The company sees a massive infrastructure investment opportunity ahead, given the global need to invest trillions of dollars in maintaining and developing infrastructure to support continued economic growth. In Brookfield's view, it can secure enough new investments to grow its dividend at a 5% to 9% annual rate over the long term.
Achieving great dividend growth already
Brookfield Renewable achieved its 11th straight year of growing its payout by at least 5% annually in 2022. That leaves Brookfield Infrastructure's renewable-powered sibling 14 years away from joining an elite class of dividend stocks. While that's a long way out, the company remains focused on a powerful growth trend.
The energy transition to renewable energy will require trillions of dollars of investment over the next thirty years. That plays right into Brookfield Renewable's strategy. The company has a vast pipeline of renewable energy development projects that should power its growth for years to come. It's also becoming a partner of choice for companies seeking to decarbonize their operations by supplying them with renewable energy.
Brookfield expects to grow its cash flow per share at a double-digit pace through at least 2026, powered by its development pipeline and higher power prices. That view easily supports the company's belief that it can grow its dividend at a 5% to 9% annual pace over the long term.
Closing in on a milestone
Enterprise Products Partners delivered its 23rd consecutive year of dividend increases this year. That puts it two years away from joining an elite group of dividend stocks. It seems like a lock that the energy midstream company will achieve that milestone.
Thanks to its diversified midstream business, the company generates lots of stable cash flow. It pays out a conservative amount of that cash flow via its dividends, enabling it to retain some money to finance its continued expansion. Meanwhile, Enterprise Products Partners has one of the strongest balance sheets in the midstream space, giving it additional financial flexibility.
Enterprise Products Partners recently used some of its financial strength to acquire Navitas Midstream for $3.25 billion. That deal will help boost its cash flow in the coming years, complementing its organic expansion projects. Those investments should give it the fuel to continue growing its payout over the next few years.
Building toward an elite dividend growth track record
Brookfield Infrastructure, Brookfield Renewable, and Enterprise Products Partners have achieved at least a decade of increasing their dividends every year. That has them on track toward becoming elite dividend growth stocks. With solid business models, strong financial profiles, and visible growth prospects, they look like great dividend stocks to buy and hold for the long haul.
