One of the many things I've learned as an investor is that winning companies tend to keep winning. While there are times when a laggard will turn things around, some companies know how to consistently enrich their investors.
Three stocks with winning track records are Brookfield Infrastructure (BIPC 0.32%) (BIP 2.12%), Realty Income (O -0.72%), and NextEra Energy (NEE -0.34%). While past success is no guarantee they'll keep winning, they seem likely to continue growing shareholder value in the future. That makes them great stocks to buy and hold for the long haul. If you have $3,000 to invest (or any other amount), consider splitting that money evenly across all three.
Cashing in on the global infrastructure boom
Brookfield Infrastructure has been a wonderful long-term investment. The globally diversified infrastructure operator has produced a more than 850% total return (17% annualized) since its formation in 2008. That's significantly ahead of the S&P 500's nearly 270% total return (9.5% annualized) during that time frame.
A couple of factors have helped power those returns. Brookfield Infrastructure has grown its funds from operations (FFO) per share at a 15% compound annual rate since its formation. That's helped fuel 10% compound annual growth in its dividend, with Brookfield boosting its payout for 13 straight years. This steadily rising income stream has helped power its returns.
Brookfield should be able to maintain its winning ways in the future. It should benefit from inflation-driven rate increases, higher commodity prices, rising volumes, and expansion projects, which should give it the fuel to grow its FFO per share by at least a 6% to 9% annual rate. That should support 5% to 9% annual dividend growth.
Meanwhile, future acquisitions could provide a further earnings boost. With a strong balance sheet and conservative dividend-payout ratio, Brookfield has the financial flexibility to continue making investments that grow its portfolio, FFO per share, and dividend in the future.
Durable dividend growth
Realty Income has an amazing track record. The real estate investment trust (REIT) has paid 623 consecutive monthly dividends over its 53-year operating history. The company has increased its payout 115 times since going public in 1994, including the last 98 straight quarters. Overall, Realty Income has grown its payout at a 4.4% compound annual rate, helping drive 15.3% total annual returns.
There's plenty more growth ahead for this REIT. Realty Income estimates that there's $12 trillion of owner-operated real estate in its core U.S. and European markets. That provides it with an enormous opportunity to continue acquiring operationally critical real estate via sales-leaseback transactions.
Realty Income has ample financial capacity to continue capitalizing on this opportunity. It has one of the best balance sheets in the REIT sector and a conservative dividend payout ratio. That gives it the financial firepower to continue acquiring income-producing real estate.
Powerful growth is still ahead
NextEra Energy has done an excellent job creating value for its investors over the years. Since 2006, the utility has grown its adjusted earnings per share at an 8.4% compound annual rate. Meanwhile, it has increased its dividend by a 9.8% yearly rate. Those two growth drivers have helped power total returns approaching 1,000% over the last 15 years, almost three times the S&P 500.
A big growth driver for the company has been its pivot toward clean energy. NextEra is one of the largest power producers from wind and sun. The company currently has an enormous backlog of wind and solar-energy projects that should power growth for the next several years.
NextEra expects to grow its earnings by 6% to 8% per year through 2025. This forecast supports the company's view that it can increase its dividend by around 10% annually through at least 2024.
The company has ample financial flexibility to continue investing in renewable energy. It still has a relatively conservative dividend-payout ratio, despite the steady growth, to go along with a top-notch balance sheet. On top of that, it has a relationship with NextEra Energy Partners, which has steadily acquired cash-flowing renewable energy assets from NextEra to power its dividend. Because of that, NextEra should be able to continue growing shareholder value in the future.
These stocks appear poised to continue winning
Brookfield Infrastructure, Realty Income, and NextEra Energy have been winning investments over the years. All three stocks appear poised to continue growing value for their shareholders in the future. They have ample opportunities to grow and the financial capacity to finance investments. Because of that, they're great stocks to consider buying and holding for the long haul.