Buying dividend stocks is always a smart plan. They have historically outperformed non-dividend payers by more than two-to-one (9.2% annualized return compared to 4.3% over the last 50 years, according to data from Hartford Funds and Ned Davis Research). The best returns have come from dividend growers (10.2% annual returns).
This data suggests that investing in companies with histories of growing their dividends would be a wise idea. Four top dividend growers are Realty Income (O +0.27%), Brookfield Infrastructure (BIPC +2.58%)(BIP +1.68%), PepsiCo (PEP +1.63%), and Medtronic (MDT +3.06%). They all have great records of increasing their dividends, which should continue. Meanwhile, thanks to their higher dividend yields, they can turn $2,000 into a lucrative income stream:
|
Dividend Stock |
Investment |
Current Yield |
Annual Dividend Income |
|---|---|---|---|
|
Realty Income |
$500.00 |
5.57% |
$27.85 |
|
Brookfield Infrastructure |
$500.00 |
4.74% |
$23.70 |
|
PepsiCo |
$500.00 |
3.81% |
$19.05 |
|
Medtronic |
$500.00 |
3.32% |
$16.60 |
|
Total |
$2,000.00 |
4.36% |
$87.20 |
Data source: Google Finance. Note: current yield as of April 23, 2025.
Here's a closer look at what makes them shrewd dividend stocks to buy right now.
Realty Income
Realty Income built its business to pay dependable dividends that steadily rise. The real estate investment trust (REIT) has made 658 consecutive monthly dividend payments throughout its history. It has raised its payout 130 times since its public market listing in 1994, including for the last 100 quarters in a row. Overall, the REIT has grown its dividend at a 4.3% compound annual rate, which has helped support an impressive 13.4% annualized total return over the past 30 years.
NYSE: O
Key Data Points
That dividend growth should continue. Realty Income owns a diversified portfolio of net lease real estate, which produces very stable rental income. Meanwhile, it has a reasonable dividend payout ratio (less than 75% of its cash flow) and an elite balance sheet (it's one of only eight REITs with two bond ratings of A3/A- or higher). That gives it the financial flexibility to invest billions of dollars each year into acquiring more income-producing real estate.
Brookfield Infrastructure
Brookfield Infrastructure has increased its dividend for 16 straight years (every year since its formation). The global infrastructure operator has grown its payout at a 9% compound annual rate during that period.
The company aims to increase its dividend by 5% to 9% annually in the future. It produces steadily rising cash flow. About 85% of its cash flow comes from contractual or regulated frameworks, 70% of which link rates to inflation. Brookfield also invests heavily in developing and acquiring infrastructure that produces stable and growing cash flow. It has a very healthy financial profile to support its growth. Meanwhile, the world needs to invest a staggering $100 trillion into maintaining, expanding, and building infrastructure over the next 15 years, which should provide Brookfield with plenty of attractive investment opportunities. These factors all help support the company's forecast that it can grow its cash flow per share at a more than 10% annual rate in the coming years.
PepsiCo
PepsiCo announced earlier this year that it's extending its dividend growth streak to 53 straight years. That kept it in the elite group of Dividend Kings, companies with 50 or more years of growing their dividends. The beverage and food giant has grown its payout at a 7.5% compound annual rate since 2010.
NASDAQ: PEP
Key Data Points
The company invests heavily in product innovation, productivity enhancements, and other factors to support its long-term growth targets. PepsiCo aims to organically expand its revenue by 4% to 6% annually while delivering high single-digit earnings-per-share growth. It also has a very strong balance sheet, supporting its ability to make acquisitions as opportunities arise to enhance its ability to continue growing. For example, it's buying Poppi for $1.7 billion to expand its better-for-you beverage offerings.
Medtronic
Medtronic extended its dividend growth streak to 47 consecutive years last May. The medical technology giant has grown its payout at an impressive 16% compound annual rate during that period. The company has a strong commitment to returning cash to shareholders, aiming to send them at least half of its annual free cash flow, primarily through dividends.
NYSE: MDT
Key Data Points
The healthcare company is in a strong position to continue growing its dividend. It sees multi-billion-dollar total addressable market opportunities for many of its existing products, which should drive healthy earnings growth in the coming years. Meanwhile, Medtronic invests heavily in research and development to expand its product portfolio and growth prospects. The company also has a healthy balance sheet, which gives it the financial flexibility to make acquisitions as compelling opportunities arise.
Smart long-term investments
Realty Income, Brookfield Infrastructure, PepsiCo, and Medtronic have terrific records of growing their dividends, which should continue. Their rising income streams position them to deliver strong total returns over the long term. Because of that, they look like wise investments right now.
