Some companies have a knack for enriching their investors. They can grow their earnings and dividends at above-average rates, enabling them to produce prodigious total returns over the long term. For example, a company that can deliver an average annual rate of return of 11.5% could triple an investor's money in about 10 years.
While it's hard to project how fast any company can grow that far into the future, several have lots of visible growth lined up for the next several years. Those include Brookfield Infrastructure (BIPC 0.79%) (BIP 0.22%), Enbridge (ENB 0.06%), Prologis (PLD -0.03%), and NextEra Energy (NEE -0.74%). That increases the probability they can deliver the returns needed to triple an investor's money over the next decade.
Hitting the accelerator
Brookfield Infrastructure has been a phenomenal investment over the years. In the last decade, Brookfield Infrastructure has grown its funds from operations (FFO) per share at an 11% annual rate. Meanwhile, it has increased its dividend at a 9% compound yearly pace during that period. That's helped power a total return of more than 328%, or 15.7% annualized.
Brookfield could grow even faster in the future. It sees its FFO per share rising 12% to 15% in 2023, driven by recent investments. Meanwhile, those investments set it up to organically grow its FFO at a more than 10% annual rate for at least the next five years. That outlook easily supports Brookfield's plan to increase its 3.6%-yielding dividend at a 5% to 9% yearly pace. Because of that, Brookfield is on track to surpass the 11.5% annual total return threshold needed to triple an investor's money over the next decade.
Lots of fuel to continue growing
Enbridge has been a compounding machine over the years. The pipeline and utility giant has delivered total shareholder returns averaging 11.7% annually since 2008. The company's ability to steadily grow its high-yielding dividend is a big return driver. Enbridge has increased its payout for 27 straight years.
The company should be able to continue growing its cash flow and dividend at attractive rates in the coming years. It currently expects to grow its distributable cash flow per share at a 5% to 7% annual rate through 2024. Meanwhile, it has a large pipeline of expansion projects lined up that should enable it to continue strong growth for years to come. Add in a dividend yielding more than 7%, and Enbridge could deliver total returns of over 12% annually over the next several years.
Multiple growth drivers
Prologis has delivered a more than 300% total return over the last decade (15% annualized). The industrial REIT has produced those outstanding returns by growing its core FFO and dividend at above-average rates. Over the last five years, the company has grown both at a more than 10% annual rate.
Prologis could grow even faster in the coming years. Thanks to robust demand for warehouse space, the REIT sees the net operating income of its existing warehouse portfolio expanding at an 8% to 10% annual rate for the next several years as current leases expire and it signs new ones at higher market rates.
Meanwhile, the company has the financial strength to expand its portfolio by making value-enhancing acquisitions and completing high-return development projects. Prologis recently acquired its next-closest peer Duke Realty in a $26 billion deal that will immediately boost its FFO while enhancing its long-term growth prospects. With a dividend yield of over 3% and a business organically growing at a more than 8% annual rate, Prologis could produce the returns needed to triple an investor's money over the next 10 years.
Plugged into a powerful growth trend
NextEra Energy has an exceptional track record of growing value for its investors. The clean energy-focused utility has increased its adjusted earnings per share at an 8.4% compound annual rate over the last 15 years. Meanwhile, it has grown its dividend at an even faster rate of 9.8% per year. That has helped power a more than 500% total return over the last decade (nearly 20% annually).
NextEra Energy expects to grow at an accelerated pace for the next several years. It sees its adjusted earnings per share expanding by a roughly 10% annual rate through 2025 at the high end of its forecast range, and operating cash flow growth at or above that level. That should support dividend growth of around 10% per year through at least 2024. Meanwhile, the company should be able to continue growing at a healthy rate for years to come, given the enormous investment opportunities for clean energy. Add that upside to the company's more than 2%-yielding dividend, and it could deliver total returns of more than 12% annually in the coming years.
Great wealth creators
Brookfield Infrastructure, Enbridge, Prologis, and NextEra Energy have proven their ability to enrich investors over the long term. Meanwhile, all four have the growth prospects and dividend yield to deliver the returns needed to triple an investor's money over the next decade. Because of that, they look like great stocks to buy and hold for the long haul.