2 stocks to buy with dividends above 3%

The dividend yield on the S&P 500 is currently around 1.3%. This is its lowest level in 20 years. With dividend yields falling as stock prices rise and companies prioritize other things, it becomes increasingly difficult for income investors to find attractive opportunities.

However, there are still some great options available. Two outstanding dividend stocks are Brookfield Renewable Power (NYSE: BEPC)(NYSE: BEP) and Crown Castle International (NYSE: CCI). Both return more than 3%, double that of the S&P 500.

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A powerful dividend growth plan

Brookfield Renewable is a leader renewable energy producer. The company has a globally diversified portfolio of hydroelectric, wind, solar and energy storage assets. It mainly sells the electricity produced by these facilities to end users such as utilities and large corporate customers under long-term, fixed-rate power purchase contracts. These contracts provide the business with a constant cash flow. Brookfield pays out some of that money via a dividend that currently pays 3.1%.

The company keeps the rest of its cash to help finance development projects. It currently has 36 gigawatts (GW) of renewable energy projects in the pipeline, more than its current operating portfolio of 21 GW. Along with other organic growth drivers like higher electricity prices, these development projects are expected to allow Brookfield to increase its cash flow per share at an annual rate of 6% to 9% until at least 2025. . Because of this, Brookfield believes that it can increase its high growth rate. yields at an annual rate of 5% to 9% over the long term.

Additionally, Brookfield sees significant upside potential for recycling capital. The company has a long history of selling mature assets and using the proceeds to invest in higher yielding opportunities. He estimates that mergers and acquisitions could add up to 9% to his cash flow per share each year. This would provide additional support to its dividend. Brookfield’s combination of yield and growing cash flow should allow it to continue to generate strong total returns for investors over the next several years.

Connected to a megatrend

Crown Castle is an infrastructure REIT focused on owning cell phone towers, small cells and fiber optic networks. The company rents space on this infrastructure to mobile phone operators under long-term contracts. This provides it with stable cash flow to support its 3.2% dividend.

The company sees a bright future for data infrastructure, in part thanks to the deployment of 5G networks. It envisions a decade-long investment cycle in 5G, which should allow it to continue investing capital in expanding its infrastructure portfolio.

This year, the company benefited from a record demand for space on its towers. Mobile carriers are upgrading their existing cell sites as part of the first phase of building their 5G networks. In the longer term, the REIT believes that the industry will need significant development of small cells and fibers to support the additional capacity of the 5G network.

Crown Castle estimates that these investments will support 7-8% annual dividend growth over the long term. However, that might be prudent as the company has exceeded that target range over the past two years, including increasing its payout by 11% this year. This growing dividend should enable Crown Castle to generate attractive total returns in the years to come.

World-class dividend-paying stocks

Brookfield Renewable and Crown Castle are excellent dividend paying stocks. They combine above-average returns with attractive growth prospects. These dual catalysts are expected to enable both companies to generate steadily growing revenue streams, potentially giving them the power to generate above-average total returns. This makes them great dividend paying stocks to buy right now.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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