The data on dividend growth stocks is eye-opening. Over the last 50 years, dividend growers and initiators have delivered average annual total returns of 10.7%, according to data from Ned Davis Research and Hartford Funds. They have outpaced the S&P 500 (8.2% annualized total returns), stocks with no change in their dividend policy (7.1%), and nonpayers (4.8%).

That data should convince investors to add dividend growth stocks to their portfolios. Brookfield Renewable (BEPC 0.55%) (BEP 0.37%) and NextEra Energy Partners (NEP 0.31%) are excellent choices. They should deliver high-powered dividend growth for the foreseeable future.

Lots of growth already locked in

Brookfield Renewable delivered its 11th straight year of increasing its dividend by at least 5% last year. That streak likely continues in the future. 

The renewable energy juggernaut has a quartet of growth drivers that should drive powerful growth over the next several years:

  • Inflation escalation: Brookfield sells most of the renewable energy it generates under long-term, fixed-rate power purchase agreements. These contracts have annual escalation clauses, often tied to the inflation rate. They should support 2% to 3% yearly growth in its funds from operations (FFO) per share.
  • Margin enhancement: The company should benefit from higher power prices on its uncontracted capacity and as legacy agreements expire and reprice to market rates. Brookfield sees this factor boosting its FFO per share by 2% to 4% per year.
  • Development pipeline: Brookfield has an extensive backlog of new renewable energy projects under development. It expects them to help power 3% to 5% annual FFO growth per share.
  • M&A activities: Brookfield sees its capital recycling strategy of selling mature assets and reinvesting the proceeds into higher-returning investments, bolstering its FFO per share by up to 9% per year.

Add it all up, and Brookfield could grow its FFO per share by as much as 20% annually. It has already secured and funded 8% annual FFO per share growth through 2027. That outlook easily supports Brookfield's plan to grow its 4.3%-yielding dividend at a 5% to 9% yearly rate.

Brookfield has also enhanced its growth prospects by investing in other clean energy sectors. It bought a stake in a leading nuclear services company and has invested in the potentially massive carbon capture and storage sector. The company is also looking to accelerate the energy transition by acquiring significant carbon emitters and transitioning them to clean energy. These moves put it in an even stronger position to grow its dividend in the future.

That should enable the company to continue producing powerful returns. Since its inception, the company has delivered a 17% annualized total return, significantly outperforming the S&P 500's 6% total annualized return. 

Ample power sources

NextEra Energy Partners has also delivered massive outperformance, thanks to its rapidly rising dividend. 

NEP Dividend Chart

NEP Dividend data by YCharts

Since its founding in 2012, the company has generated a 14.4% annualized total return, blowing past the S&P 500's 10.5% total annualized return during that time frame. 

The clean energy infrastructure company sees high-powered dividend growth ahead. It expects to increase its 4.2%-yielding payout at a 12% to 15% annual rate through at least 2025.

The primary factor powering that growth is the company's ability to continue acquiring cash-flowing clean energy infrastructure like wind farms, solar projects, and natural gas pipelines. The company has a vast set of acquisition opportunities thanks to its strategic relationship with leading utility NextEra Energy (NEE 1.10%). That company steadily drops assets to its affiliate.

These deals give NextEra the cash to invest in new projects while supplying the partnership with more cash flow to grow its dividend. The company can also make third-party acquisitions -- it acquired a portfolio of wind energy assets from Brookfield Renewable in 2021 -- and invest in organic expansions. 

NextEra Energy Partners has many ways to fund new investments, including convertible equity portfolio financing, new debt, and capital recycling. With ample funding sources, lots of liquidity, and a vast opportunity set, NextEra Energy Partners appears poised to deliver on its ambitious dividend growth target.

Powerful dividend growth stocks

Brookfield Renewable and NextEra Energy Partners have steadily grown their dividends over the years. That has given them the power to produce market-crushing total returns. Both companies have ample ability to continue expanding their payouts, which could fuel strong future returns. That makes them excellent dividend growth stocks to buy this year and hold for the long haul.