High-yield dividend stocks can make great investments. They provide investors with a solid base return via their dividend income. Because of that, they don't have to grow that fast to produce an attractive total return. They also tend to be less volatile investments.
Black Hills (BKH +2.56%), Brookfield Renewable (BEPC 3.37%)(BEP 2.11%), and Brookfield Infrastructure (BIPC 0.06%) (BIP 0.32%) stand out to a few Fool.com contributors as no-brainer high-yield dividend stocks to buy this year. Here's what makes them look like such smart investments for 2025 and beyond.
Black Hills is a boring utility with a historically high yield
NYSE: BKH
Key Data Points
Reuben Gregg Brewer (Black Hills): As 2025 gets underway, Black Hills is offering investors a 4.5% dividend yield. That's toward the high end of the electric and gas utility's historical yield range over the past decade. This suggests the stock is on sale right now. That yield also happens to be well above the 2.7% yield of the average utility.
BKH Dividend Yield data by YCharts.
What's even more attractive is that Black Hills has an investment-grade rated balance sheet. A capital investment plan of $4.3 billion over the next five years, with potential upside in the out years. And management expects to be able to grow earnings at roughly 4% to 6% a year for the foreseeable future. The dividend, meanwhile, is likely to grow in line with the utility's earnings over time. Add 5% to 4.5%, and you get 9.5%, which is very close to the historical total return investors expect from the broader market.
And all this from one of the few utilities to have achieved Dividend King status, thanks to its 54-year history of annual dividend increases. Black Hills is a boring company that's a little off the radar of most investors. But if you are looking for a reliable, high-yield stock to buy to start the new year, you should do a deep dive today.
A powerful combination
NYSE: BEPC
Key Data Points
Matt DiLallo (Brookfield Renewable): Brookfield Renewable generates lots of stable cash flow by selling renewable power to utilities and large corporate buyers under long-term, fixed-rate power purchase agreements (PPAs). That gives it the cash to pay a very lucrative dividend. At around 5.2%, its dividend yield is several times higher than the S&P 500's (currently about 1.2%).
The company has grown its payout at a 6% compound annual rate over the last 20 years. That trend should continue, with Brookfield targeting 5% to 9% annual dividend growth.
Brookfield should have ample fuel to achieve that target. It's benefiting from accelerating demand for renewable energy, driven by falling costs, net-zero targets, and catalysts like artificial intelligence (AI) data centers. That's pushing up power prices while driving demand for additional capacity.
The company believes its existing portfolio will deliver 4% to 7% annual funds from operations (FFO) per share growth from inflation-linked rate increases and margin enhancement activities, like securing higher market power prices when legacy PPAs expire. In addition, Brookfield has an enormous backlog of renewable energy projects in the pipeline (about 200 gigawatts [GW]).
It expects to commission about 10 GW of projects annually, which should drive another 4% to 6% growth in its FFO per share. On top of all that, the company expects to continue completing accretive mergers and acquisitions (it's currently evaluating over $100 billion of acquisition opportunities). Add it all up, and Brookfield believes it can grow its FFO per share by more than 10% annually for the next several years.
That combination of a high dividend yield and high growth rate could enable Brookfield Renewable to produce powerful total returns. Those features make it look like a no-brainer buy for income and upside potential.
A great income and growth combination
NYSE: BIPC
Key Data Points
Neha Chamaria (Brookfield Infrastructure): Formed in 2008, Brookfield Infrastructure is one of the world's largest owners and operators of infrastructure assets today, spread across utilities, transport, midstream energy, and data infrastructure. The company, which is the infrastructure-focused sibling of Brookfield Renewable, has also turned out to be a rock-solid dividend stock, raising its dividend payout every year since 2009 and growing it by a compound annual growth rate (CAGR) of 9% through 2024.
For income investors, there are solid reasons to buy Brookfield Infrastructure stock in 2025, and it isn't just about its dividend track record. Brookfield Infrastructure grew its FFO per unit by 7% during the nine months that ended Sept. 30, 2024, paving the way for another strong year for the company.
In terms of investment, 2024 was also a strong year for Brookfield Infrastructure. Key moves included acquiring 76,000 telecom tower sites in India, a stake in a Brazilian rail and ports logistics company, and data centers in North America. The infrastructure giant's backlog is at record highs, and it appears well positioned to exploit megatrends, like digitalization, while earning toll-like income from its existing businesses, such as utilities and pipelines.
Backed by a growing backlog, Brookfield Infrastructure is targeting 5% to 9% annual dividend per share growth. With the stock (BIPC) yielding 4% -- and units of the partnership (BIP) yielding 4.9% -- Brookfield Infrastructure is a no-brainer buy.
