Williams (WMB 0.57%) has been a very durable dividend stock over the years. The natural gas pipeline company has paid dividends every quarter since 1974 and has grown its payout in most years, including at a 6% compound annual rate since 2018. The company currently offers a 5.1% dividend yield, putting it toward the top end of payers in the S&P 500, where the average yield is 1.5%.

The pipeline giant's sizable payout is only part of its return. The company also has an excellent track record of growing earnings, which should continue.

Williams' combination of an attractive dividend and growing earnings could give it the fuel to produce a more-than-10% average annual total return in the coming years. That's a strong return for such a low-risk stock.

A strong foundational return

Williams' high-yielding dividend provides investors with a healthy base cash return, but that payout is on an extremely firm foundation. The pipeline company generates very stable cash flow backed by long-term contracts and government-regulated rate structures. Meanwhile, Williams pays out a conservative portion of its steady cash in dividends to investors.

Through the first nine months of 2023, Williams has produced nearly $3.9 billion of available funds from operations (FFO). That's enough cash to cover its dividend by a very comfortable 2.38x, even after factoring in a 5.3% increase earlier this year. As a result, the company has produced over $2 billion in post-dividend free cash flow.

It has used that excess cash to fund its continued expansion, while maintaining a strong investment-grade balance sheet. Williams has made more than $2 billion of capital investments this year.

Even with that heavy investment spending, the company has maintained a low leverage ratio (3.45x at the end of the third quarter, down from 3.68x in the year-ago period). That strong balance sheet has enabled Williams to make several bolt-on acquisitions over the past year.

These features put Williams' 5.1% yielding dividend on a rock-solid foundation.

The fuel to continue growing

Williams has been investing heavily to expand its natural gas infrastructure platform and has made several acquisitions over the past year. It most recently agreed to buy Cureton Front Range and its partner's 50% interest in their Rocky Mountain Midstream joint venture for nearly $1.3 billion.

The company is funding those acquisitions with its strong balance sheet and the $348 million sale of its Bayou Ethane system. These deals follow the acquisitions of MountainWest, NorTex Midstream, and Trace Midstream over the past year.

Williams is also investing in organic expansion projects and expects growth capital spending to be between $1.6 billion and $1.9 billion this year. It's continuing to expand its key Transco pipeline, build out additional gathering and processing capacity in key production basins, and support production growth in the Gulf of Mexico. Those projects provide the company with lots of visibility into its future earnings growth.

The growth runway for Williams extends all the way out to 2028. It should see the biggest boost in 2025 as its earnings from the Gulf of Mexico will double as producers bring new projects online that connect to its infrastructure in the region. Overall, Williams sees earnings growing at a 5% to 7% annual rate over the long term.

That visible earnings growth drives Williams' view that it can continue increasing the dividend at around that same annual pace. CEO Alan Armstrong discussed his outlook for the dividend on the company's recent third-quarter call when he stated, "I think the 5% to 7% growth rate is very achievable within our dividend growth rate."

Adding up to a nice total return

Williams pays a rock-solid 5.1%-yielding dividend, providing investors with a tangible base return. Meanwhile, the company has very visible growth coming down the pipeline. It could grow its earnings and dividend by 5% to 7% annually over the next several years.

The company's growing dividend income and earnings position it to produce total annual returns of 10% to 12% over the next few years. That's a solid return from such a low-risk company, making Williams look like a very attractive investment opportunity.