The stock market's continued rise is compressing dividend yields. Over the past year, the S&P 500's 17.5% rally has driven its dividend yield from 1.33% down to 1.18%, a level that is now approaching a record low. As a result, investors focused on income are left with fewer appealing choices.
However, there are still some compelling higher-yielding dividend stocks. Lockheed Martin (LMT -0.55%), Brookfield Infrastructure (BIPC 0.78%) (BIP 1.00%), and NextEra Energy (NEE 2.83%) are top-notch dividend stocks that you can buy this month and hold for a potential lifetime of dividend income.
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A well-defended dividend
Lockheed Martin's dividend yield of 2.8% is more than double that of the S&P 500. The defense contractor has increased its dividend for 22 straight years. That growth should continue.
The company generates lots of cash, with over $8.5 billion in operating cash flow expected this year. This cash lets the company invest in business growth ($1.9 billion in capital expenses), pay dividends (over $3 billion annually), and repurchase shares ($3 billion planned in 2025).
Lockheed's research and development investments drive innovation, helping it offer advanced defense technologies to meet its customers' evolving demands. For example, Lockheed is investing in emerging technologies needed for programs like the Golden Dome in America. These investments support future growth in cash flow and dividends.
Pursuing powerful growth trends
Brookfield Infrastructure's dividend yields 4.3%. The global infrastructure operator has increased its payment every year since its formation in 2008, growing it at a 9% compound annual rate over that period. Brookfield plans to increase its dividend at a 5% to 9% annual rate in the coming years.
The company should have plenty of fuel to achieve its dividend growth outlook. Brookfield expects to grow its funds from operations (FFO) per share at a rate exceeding 10% annually in the coming years. Growth catalysts include inflation-driven rate increases, volume growth as the global economy expands, growth capital projects, and acquisitions.
Brookfield currently has nearly $8 billion of expansion projects in its backlog, including funding for two major U.S. semiconductor fabrication facilities and multiple data center development projects worldwide. The company has also made several recent acquisitions, including pipeline company Colonial, data infrastructure company Hotwire, and Wells Fargo Rail. Brookfield is focusing its investments to capitalize on global megatrends such as decarbonization, deglobalization, and digitalization to drive above-average growth for years to come.
Ample growth ahead
NextEra Energy currently offers a dividend yield of 3.2%. The utility has increased its dividend every year for more than three decades. It has grown the payout at a 10% compound annual rate over the past 20 years.
The energy company plans to grow its dividend by about 10% annually through at least next year, with strong growth prospects beyond that. The company expects its adjusted earnings per share to rise near the top of its 6%-8% annual target range through 2027.
NextEra Energy should be able to continue growing at a strong rate well beyond that time frame. One catalyst is the expected surge in power demand over the coming decades, driven by the growth of AI data centers, the onshoring of manufacturing, and increased electrification. As a leader in low-carbon energy, NextEra Energy should capture a meaningful share of the anticipated growth in power demand in the coming years.
Durable dividend stocks
Lockheed Martin, Brookfield Infrastructure, and NextEra Energy each offer high-yield dividends backed by solid financials. They're also benefiting from enduring growth trends that position them to consistently raise their payouts. For investors seeking long-term, reliable passive income, these three stocks stand out as top buys this September.
