Got $5,000? 3 Top Dividend Stocks to Buy Right Now

Dividend stocks are proven wealth creators. They've historically produced higher total returns than non-payers, with less volatility. Meanwhile, the best returns have come from companies that have steadily increased their dividends over time. That enables investors to benefit from a rising passive income stream and price appreciation.

Three top-notch dividend stocks to consider buying if you have some money to put to work are Brookfield Infrastructure (BIPC 0.84%) (BIP 2.82%), Clearway Energy (CWEN.A 1.50%) (CWEN 1.12%), and W.P. Carey (WPC 2.13%). A $5,000 investment spread across those three stocks would produce more than $210 in annual passive income that should steadily rise in the coming years:

Data source: Google Finance.

Steady growth ahead

Brookfield Infrastructure has been a top-notch dividend stock over the years. The global infrastructure operator has increased its payout for 13 straight years -- every year since its formation -- growing it at a 10% compound annual rate. 

The company expects to continue increasing its dividend in the future. It generates very steady cash flow backed by long-term contracts and government-regulated rates. Meanwhile, it only pays out 60% to 70% of that stable income via the dividend, enabling it to retain a substantial amount to fund maintenance and expansion projects. Brookfield compliments that conservative payout ratio with a top-notch balance sheet, giving it additional financial flexibility for funding expansions.

The company estimates that a combination of expansion projects, inflation-driven rate increases, and higher volumes as the global economy expands will drive 6% to 9% annual cash flow per share growth. Meanwhile, it expects its capital recycling program -- selling mature assets to finance new investments -- to boost its bottom line further. This outlook leads Brookfield to believe it can grow its dividend at a 5% to 9% annual rate in the coming years. 

Visible growth ahead

Clearway Energy is a leading U.S. renewable-energy producer. The company sells the electricity it produces under long-term, fixed-price power purchase agreements to utilities and large corporate buyers, enabling it to generate steady cash flow. The company uses most of those funds to support its high-yielding dividend, retaining the remaining money to continue expanding its portfolio.

The company is currently in the midst of a large-scale capital recycling program. It sold its thermal assets earlier this year, netting $1.35 billion to reinvest in expanding its renewable energy operations. The company has been steadily putting that capital to work on acquiring cash-flowing renewable energy assets. 

Clearway Energy estimates these new investments will expand its cash flow to support dividend growth toward the high-end of its 5% to 8% annual target range through 2026. Meanwhile, the company has lots of growth potential beyond that timeframe because of the accelerating adoption of renewable energy. Its parent company is a leading renewable energy developer, while one of its top investors is a large-scale global energy company investing heavily in renewables. These strategic relationships should provide Clearway with plenty of opportunities to grow in the coming years. 

A pillar of consistency

W.P. Carey is a large real estate investment trust (REIT). It has a diversified real estate portfolio across the office, industrial, retail, warehouse, and self-storage sectors. It focuses on operationally critical facilities that it leases to tenants under long-term triple net leases. This lease structure provides W.P. Carey with steady rental income because they make the tenant responsible for variable expenses like maintenance, real estate taxes, and building insurance.

Most of those leases feature annual rental rate adjustments (either fixed or inflation-driven), enabling W.P. Carey to steadily grow its rental revenue. That's one factor driving the REIT's ability to increase its dividend, which it has done every year since 1998. The other big dividend growth driver is acquisitions, primarily sale-leaseback transactions with owner-operators.

W.P. Carey invested a record $1.73 billion into expanding its portfolio last year and sees the potential to buy between $1.5 billion and $2 billion of properties this year. The diversified REIT has a solid balance sheet to help it fund growth and a large opportunity given that there are trillions of dollars in owner-occupied real estate ripe for sale-leaseback transactions. Future deals should enable the REIT to continue growing its portfolio, rental income, and dividend. 

Excellent passive income producers

Brookfield Infrastructure, Clearway Energy, and W.P. Carey pay above-average dividends that they expect to continue growing in the coming years. As a result, they can turn an investment into a large and growing passive income stream. On top of that, the principal invested in these dividend stocks should also rise over time, helping grow that nest egg in the coming years.