I received my first dividend payment when I was still in graduate school. I’ve been obsessed with collecting dividends ever since. That set me on a journey to grow my dividend income with the ultimate goal of eventually making a living off that income stream.
I still have a long way to go. That’s why I buy dividend stocks as often as I can. Three I can’t wait to buy in the new year are Brookfield Infrastructure Partners (GDP -0.96%), Brookfield Renewables (BEP -0.51%) (BEPC -0.97%) and Enbridge (ENB -0.43%).
An incredible bargain right now
Brookfield Infrastructure Partners shares were crushed in 2022. They lost about a quarter of their value and recently traded at a 52-week low. That’s a much steeper decline than its economically equivalent stocks Brookfield Infrastructure Corporation (BEPC-0.97%). For that reason, Brookfield Infrastructure Partners looks like an incredible buying opportunity right now, trading at a dirt-cheap valuation (about 11 times funds from operations, or FFO) and an attractive dividend yield (4.7% recently).
That’s a fantastic value proposition for a company with Brookfield Infrastructure’s growth profile. Thanks to elevated inflation rates, pending development project completions, and recent acquisitions, Brookfield Infrastructure is on track to grow its FFO per unit by 12% to 15% in 2023. Meanwhile, inflation, volume growth as the economy expands, and capital spending projects have picked up. Brookfield is on track to organically grow its FFO at the high end of its long-term target range of 6% to 9% per unit or above over the next several years. That easily supports Brookfield’s plan to grow its high-yield payouts by 5% to 9% annually. The company has an unbroken streak of 13 consecutive years of increased sales.
While Brookfield Renewable is already one of my top passive income producers, I plan to expand my sizable position in 2023. The combination of income and upside is too good to pass up right now.
Strong growth ahead
Brookfield Infrastructure’s renewable energy brother, Brookfield Renewable, offers an equally enticing passive income stream. With units plunging more than 35% in 2022, that makes for an enticing yield of 4.6%. That high yield is one of the many factors that make it look like a smart buy in 2023.
The company has a quartet of growth drivers — inflation, higher electricity prices, development projects, and mergers and acquisitions — that should result in annual FFO per share growth of over 10% through 2027. Brookfield Renewable has already secured a floor and is funded by 8% annual FFO growth. It now has an extensive development pipeline, an excellent track record of acquisitions and a top-notch balance sheet. These factors could give it the fuel for growth of up to 20% per year.
That outlook easily supports Brookfield Renewable’s plan to grow its dividend by 5% to 9% annually. That would continue his streak. The company has increased its payout by at least 5% annually for the past 11 consecutive years. This combination of income and growth at a lower price is compelling, which is why I plan to increase my position early in the new year.
The fuel to keep growing his big payout
Energy infrastructure giant Enbridge currently offers a big dividend yield of 6.8%. This monster dividend stands on one of the most sustainable foundations in the energy sector.
Enbridge’s diversified pipeline and utility assets business generates a steady cash flow. In the meantime, it pays out a reasonable amount (65% via dividend), allowing it to withhold billions of dollars each year to grow its energy infrastructure business. Enbridge also has a top-notch record.
The company currently has a multi-billion dollar backlog of projects under construction, including new natural gas pipelines, export capacity and renewable energy assets. Those projects should grow cash flow per share by 5% to 7% annually through at least 2024. That should support continued dividend growth. Enbridge recently gave investors another raise, marking its 28th straight year of rising dividends. With plenty of fuel to keep growing, I can’t wait to increase my exposure to Enbridge’s big dividend.
Activation of my passive income
Brookfield Renewable, Brookfield Infrastructure, and Enbridge have everything I’m looking for in a dividend stock investment. They pay above-average dividends on a sustainable basis, which should continue to grow in the years to come. Because of this, they will provide me with ever-increasing passive income streams that should help me reach my goal sooner. As a result, I can’t wait to add to my positions in these dividend stocks in the new year.
Matthew DiLallo has positions at Brookfield Infrastructure Partners, Brookfield Renewable, Brookfield Renewable Partners and Enbridge. The Motley Fool has positions in and recommends Brookfield Renewable and Enbridge. The Motley Fool recommends Brookfield Infrastructure Partners and Brookfield Renewable Partners. The Motley Fool has a disclosure policy.