Investing in dividend stocks is a proven way to grow wealth. Over the last 50 years, dividend stocks have delivered more than double the average annual total return compared to non-dividend payers, according to data from Ned Davis Research and Hartford Funds. The highest total returns have come from companies that steadily increase their dividend payments.
Brookfield Renewable (BEPC 1.29%)(BEP 0.90%), Realty Income (O +0.35%), and Medtronic (MDT 1.79%) have terrific track records of increasing their dividends. That's one reason why I plan to buy a lot more shares in the coming year.
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A powerful dividend growth stock
Brookfield Renewable's stock currently yields 4%. The leading global renewable energy producer has increased its payment by at least 5% in each of the past 14 years. It expects to deliver dividend growth in the range of 5% to 9% annually in the coming years.
The company's extensive renewable energy portfolio produces very stable cash flow backed primarily by long-term fixed-rate contracts with built-in inflation-linked rate escalation clauses. As a result, it should deliver steadily growing cash flow.
NYSE: BEPC
Key Data Points
Brookfield also invests capital to expand its portfolio via development projects and acquisitions. It has a vast pipeline of projects under construction or in advanced stages of development. The company also has ample liquidity to fund acquisitions that it routinely replenishes by recycling capital. These catalysts drive Brookfield's view that it can grow its funds from operations (FFO) at a more than 10% annual rate in the coming years.
A consistent dividend growth stock
Realty Income pays a monthly dividend that currently yields 5.7%. The real estate investment trust (REIT) has a terrific record of increasing its payout. It has raised its payment 133 times since its public market listing in 1994, including the last 113 quarters in a row. The REIT has grown its payout at a 4.2% compound annual rate during this time frame.
NYSE: O
Key Data Points
The landlord is in a strong position to continue increasing its dividend. It has a conservative dividend payout ratio for a REIT at around 75% of its adjusted FFO. That enables it to generate around $850 million in free cash flow each year to reinvest in new income-generating properties. Realty Income also has one of the 10 best balance sheets in the REIT sector, giving it additional funding flexibility.
The REIT has increasingly diversified its platform, which has given it more flexibility to invest where it sees the best opportunities. For example, $1 billion of the $1.4 billion it invested in the third quarter was in Europe because those investments had a higher initial cash yield (8% compared to 7% in the U.S.). Meanwhile, the REIT recently made an $800 preferred equity investment in CityCenter Las Vegas, expanding two recently added platforms (gaming and credit investments). Realty Income's ability to continue finding attractive investment opportunities will support future dividend increases.
A very healthy dividend stock
Medtronic pays a dividend yielding 2.9%. The medical technology giant has increased its payment for 48 straight years.
NYSE: MDT
Key Data Points
The company is very profitable and produces lots of cash. It generated $7 billion of cash from operations in its last fiscal year and $5.2 billion of free cash flow. It returned $6.3 billion to shareholders, paying $3.6 billion in dividends and repurchasing $2.7 billion of its stock.
Medtronic produces an abundance of cash, even though it invests heavily in research and development ($2.7 billion in its most recent fiscal year) to continue developing innovative new products. These investments help drive revenue and earnings growth to support its steadily rising dividend. While some headwinds will cause its earnings-per-share growth rate to slow to around 1% this fiscal year, Medtronic expects to deliver high-single-digit earnings-per-share growth in fiscal 2027 as its headwinds fade and new growth tailwinds emerge.
Top-notch dividend growth stocks
Brookfield Renewable, Realty Income, and Medtronic have long track records of increasing their higher-yielding dividends. I have high confidence that this trend will continue in 2026 and beyond. That's why I plan to buy even more shares of those top dividend stocks in the coming year.
