Some dividend stocks are so reliable that you don't need to give them much thought. You can just buy shares and sit back and watch the dividend income consistently flow into your account.
Brookfield Infrastructure (BIPC 0.08%) (BIP -0.56%), Enterprise Products Partners (EPD 0.85%), and Clearway Energy (CWEN.A -1.05%) (CWEN -0.58%) stand out to a few Fool.com contributing analysts for their resilient dividend payments. Here's why they think you can park a few hundred dollars into these excellent dividend stocks this August and never look back.
Image source: Getty Images.
Brookfield Infrastructure is focused on cash cows
Reuben Gregg Brewer (Brookfield Infrastructure): A $300 investment will get you roughly seven shares of Brookfield Infrastructure Corp. and a roughly 4.4% dividend yield. Or it will get you around nine shares of Brookfield Infrastructure Partners and a 5.4% yield. They represent the same entity, with the only difference being the structure. The corporate share class is more popular, which is why it trades at a higher price and, thus, has a lower yield. That said, Brookfield Infrastructure Partners, the older of the two classes, has increased its distribution annually for 18 years.
Brookfield Infrastructure owns a globally diversified collection of infrastructure assets. There is a lot going on here, with the portfolio containing transportation and distribution utility assets, railroads, toll roads, transportation terminals, midstream assets (such as pipelines), and data transmission and storage assets. That's a lot of ground, and it positions Brookfield Infrastructure to produce reliable, recurring revenue backed by necessity businesses. The goal is to grow funds from operations by around 10% a year, with distributions pegged to grow between 5% and 9% a year.
Brookfield Infrastructure is an active portfolio manager, however, constantly buying and selling assets. The big-picture plan is to acquire infrastructure assets while they are cheap, improve the value of assets via capital investment and astute operations, and then, if a good price can be had, sell the assets and repeat the process. Given the distribution record, this has been a solid playbook. If you are looking for a high yield backed by hard assets, this could be the pick for you in August.
This 7% yield looks safe
Neha Chamaria (Enterprise Products Partners): Enterprise Products Partners yields a solid 7%. However, that's not the reason to buy this dividend stock. It is the dividend track record, growth, and stability that make it one of the top 10 dividend stocks to buy now.
Enterprise Products has increased its dividend for 27 consecutive years now. It's an oil and gas company, so one would expect Enterprise Products' cash flows to be volatile. That's not the case, though. As a pipeline company, Enterprise Products enjoys relatively inelastic demand, as it provides services under long-term contracts. While that ensures steady cash flows, the company prioritizes reinvesting into growth to grow its cash flows while returning capital to its shareholders. The judicious mix has made Enterprise Products' dividends very reliable over the years.
Better yet, its dividends have grown consistently over the years, backed by growing cash flows. For instance, Enterprise Products' distributable cash flow (DCF) grew by 7% year over year in the second quarter. The company increased its dividend by 3.8%, and its DCF comfortably covered its dividend by 1.6 times.
Management is excited about 2025 and beyond, as major projects worth $6 billion are expected to come online in the coming months, including a significant expansion of Enterprise Products' gas infrastructure in the Permian Basin. Meanwhile, Enterprise Products just struck a deal to acquire some of Occidental Petroleum's natural gas-gathering systems in the Midland Basin.
With $300 now, you can buy roughly nine shares of Enterprise Products Partners and enjoy its dividend growth and high yield, likely for years to come.
Clear growth visibility through 2027 and beyond
Matt DiLallo (Clearway Energy): Clearway Energy is a leading clean energy producer. The company operates a vast portfolio of wind, solar, energy storage, and natural gas assets. It sells the power generated by these clean energy assets under long-term contracts to utilities and large corporate customers. Those agreements provide it with stable, predictable cash flow, the bulk of which it pays to shareholders via dividends (nearly 6% current yield). At that rate, every $100 invested in Clearway would produce almost $6 of dividend income each year.
The company uses its balance sheet flexibility and the cash it retains after paying dividends to invest in additional income-generating clean energy assets. Clearway has lined up several investments that provide it with significant visibility into its ability to grow its cash flow in the coming years.
For example, it has agreed to invest in several wind repowering projects (replacing legacy turbines with larger ones that produce more power) it expects to complete in 2026 and 2027. It has also agreed to buy some renewable energy development projects as they enter commercial service over the next couple of years.
Clearway's secured investments power its view that it can generate at least $2.50 per share of cash available for dividends (CAFD) in 2027 (up from $2.08 per share this year). That supports its plan to increase its dividend by 5% to 8% annually in the coming years. It recently raised its payment by another 1.6% to an annualized rate of $1.7824 per share.
The company has an abundance of future growth opportunities, partly due to its strategic relationship with a leading renewable energy development company. It also has the financial capacity to continue making new investments. These factors drive its confidence that it can continue growing its CAFD and dividends per share at a rate of 5% to 8% annually, well beyond 2027.
With visible growth through 2027 and more growth likely beyond that timeframe, you can confidently buy and hold Clearway for dividend income.
