I carefully select stocks to add to my portfolio each month, using the cash I receive from dividend payments and the added funds I deposit into my account. Here are the five stocks I'm most excited about buying these days.
Brookfield Infrastructure
Brookfield Infrastructure (BIPC 3.83%) (BIP 2.10%) is a global infrastructure operator with a diverse portfolio of utility, energy midstream, transportation, and data infrastructure businesses. These assets generate stable and growing cash flow, backed by government-regulated rate structures and long-term inflation-linked contracts.
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The company pays 60% to 70% of its stable cash flow as dividends (current yield: 4.4%), retaining the rest for growth projects. Brookfield also acquires new infrastructure assets to enhance its growth, focusing on opportunities benefiting from the decarbonization, deglobalization, and digitalization megatrends.
Brookfield expects to grow its per-share funds from operations (FFO) by more than 10% annually in the coming years. That easily supports its plan to increase its dividend at a 5% to 9% annual rate. This combination of growth and income could fuel robust returns for investors like me.
EQT
EQT (EQT -0.26%) is a leading natural gas producer with a premier position in the low-cost Appalachian region (Pennsylvania, Ohio, and West Virginia). It also has an integrated midstream business that helps further reduce costs while providing greater access to higher-value gas markets. EQT's large-scale and low-cost operations enable it to produce higher and more durable cash flow compared to its peers.
The gas producer's differentiated strategy puts it in a strong position to capitalize on the coming surge in U.S. gas demand. The U.S. has become a leading liquefied natural gas (LNG) exporter over the past decade, with 18 billion cubic feet per day (Bcf/d) currently in service. An additional 13 Bcf/d of capacity is currently under construction or nearing approval.
And surging power demand from AI data centers could fuel an additional 10 to 18 Bcf/d of gas demand by 2030. These catalysts should drive up gas prices, enabling leading low-cost producers like EQT to generate significantly more free cash flow in the coming years. That should give it a lot of fuel to increase its 1.2%-yielding dividend.
Realty Income
Realty Income (O -1.11%) is one of the world's largest real estate investment trusts (REITs). The company's diversified portfolio features retail, industrial, gambling, and other properties, including data centers, which it rents under net leases to many of the world's leading companies.
The REIT's long-term net leases provide it with very stable rental income because tenants cover all property operating costs, including routine maintenance, real estate taxes, and building insurance.
The landlord sits at the crossroads of two megatrends. There's a nearly $50 trillion need for stable and growing income to support an aging global population in retirement. Meanwhile, corporations currently have $14 trillion of real estate sitting on their balance sheets.
Realty Income's attractive monthly dividend (5.4%) can help more retirees meet their income needs. The REIT has consistently increased its dividend, raising it for 111 straight quarters. Meanwhile, its strategy of partnering with the world's leading companies by acquiring their real estate in sale-leaseback transactions should enable it to continue this record of increases.
Main Street Capital
Main Street Capital (MAIN -0.85%) provides debt and equity capital to lower middle-market companies ($10 million to $150 million in annual revenue) and debt funding to middle market companies (over $150 million in revenue). The company helps provide financing to growing businesses that are often overlooked by banks. This private credit market is massive at more than $2 trillion and growing rapidly, with a more than $30 trillion total addressable market opportunity.
The business development company's (BDC) private credit investments generate high income yields (in the low double digits). And many of its private equity investments also generate dividend income.
These investments provide Main Street Capital with lucrative sources of recurring income to pay dividends. The company pays a stable and growing monthly payout, which it has increased 132% since its initial public offering in 2007.
It also periodically pays supplemental quarterly dividends (with a 6.6% yield, based on its last payments). Given the growth ahead in private credit, Main Street's dividend payments should continue rising.
Mid-America Apartment Communities
Mid-America Apartment Communities (MAA 1.34%) is a leading apartment REIT. The landlord owns over 100,000 apartments across Sun Belt markets that benefit from strong population and employment growth.
Recently, many of these markets saw a lot of new apartment construction as developers took advantage of low interest rates after the pandemic. This increase in supply has kept rent growth in check.
However, with the peak in new supplies now past, and renter demand remaining robust, rent growth should reaccelerate in the coming years. Mid-America is further capitalizing on this upward trend by investing about $1 billion in new apartments that it expects to complete over the next few years.
This combination of accelerating rent growth and the incremental income from new communities should provide a meaningful boost to the REIT's bottom line, allowing it to continue increasing its 4.3%-yielding dividend.
Cashing in on clear catalysts
Each of these five companies is in a strong position to benefit from clear growth trends. As their earnings grow, I expect them to continue increasing their dividends, which should enable them to deliver strong total returns. That is why they are at the top of my buy list right now.
