Some companies have a knack for enriching their investors. They can consistently grow their earnings and dividends, giving them the fuel to produce market-beating total returns.
Brookfield Infrastructure (BIP -0.80%) (BIPC -1.04%), Enterprise Products Partners (EPD 0.45%), and NextEra Energy (NEE -1.36%) stand out as tried-and-true value creators. While their past success is no guarantee of future returns, they're in an excellent position to continue creating value for their investors. That makes them no-brainer stocks to buy for those with around $500 they want to invest right now.
1. Brookfield Infrastructure: High-end growth secured
Brookfield Infrastructure has generated a 16% annualized total return since its formation in 2008. That has absolutely pulverized the S&P 500's 10% annualized total return during that period.
Brookfield's excellent growth track record has helped power those strong total returns. Since its formation, the global infrastructure operator has increased its funds from operations (FFO) per share at an 11% compound annual rate. That has given it the fuel to grow its dividend (which currently yields an attractive 4.2%) at a 9% compound annual rate.
The company has ample fuel to continue growing at an above-average rate in the future. Brookfield's organic growth drivers (inflation-linked rate increases on its contracts, volume growth as the global economy expands, and expansion projects) should increase its FFO per share by 6% to 9% per year. That supports the company's plans to raise its dividend by 5% to 9% annually. Meanwhile, its capital recycling program of selling mature assets to fund new higher-return investments can further boost its bottom line.
Brookfield expects to deliver 10%-plus FFO per share growth this year, powered by elevated inflation levels and the $2.4 billion of new acquisitions it has closed in the past year. Meanwhile, the company has recently secured a trio of new investments that should help drive accelerated growth in 2024 and beyond.
Add Brookfield's high-yielding dividend to its high-end earnings growth, and it could continue producing double-digit total returns.
2. Enterprise Products Partners: The next growth wave is coming
Enterprise Products Partners has produced a 13.8% average annual total return since its initial public offering nearly a quarter-century ago. That has outpaced the S&P 500's 10.1% average annual total return. Powering the energy master limited partnership's (MLP) returns has been its steadily rising cash flow and distribution to investors. The MLP has increased its payout (which currently yields 7.4%) for 24 straight years.
The company has more growth coming down the pipeline. It expects to finish $3.8 billion of expansion projects this year, boosting its cash flow. These projects are part of a $6.1 billion expansion backlog that should enter service and drive earnings growth through 2025.
Enterprise Products Partners has ample financial capacity to fund these investments (and sanction new projects) while also growing its dividend. It produces excess cash after paying its distribution and funding capital projects, further enhancing its already elite balance sheet. That gives the MLP additional flexibility to make accretive acquisitions as opportunities arise and return additional cash to investors through unit repurchases.
3. NextEra Energy: Powerful growth ahead
NextEra Energy has produced a 669% total shareholder return over the last 15 years, crushing the S&P 500's 255% total return. Powering the utility's strong returns has been consistent earnings (8.3%) and dividend (9.9%) growth rates. Its focus on investing in renewable energy is a major factor fueling its above-average growth.
The company expects to continue growing at an above-average clip in the coming years. It sees earnings growing in the upper end of its 6% to 8% annual target range through 2026. Meanwhile, it expects to increase its 2.5%-yielding dividend by around 10% through at least next year.
Powering that growth is the company's continued investments in renewable energy. In addition to wind, solar, and energy storage, NextEra is also investing in electricity transmission and green hydrogen projects. With $4 trillion of investment needed to decarbonize the U.S. economy, NextEra Energy should have plenty of opportunities to expand in the coming decades.
Visible growth ahead
Brookfield Infrastructure, Enterprise Products Partners, and NextEra Energy have been exceptional investments over the years. They've steadily grown their earnings and dividends, helping them produce market-crushing total returns.
Given the growth they've already lined up, they should have plenty of power to continue producing strong returns. That visibility makes them seem like no-brainer stocks to buy right now.
