Dividend Stocks Outperform Non-Payers in Long-Term Returns

Investors are advised to prioritize dividend growth stocks for better returns. Over 50 years, dividend-paying stocks have outperformed non-payers significantly, suggesting future gains for companies like Realty Income and Brookfield Infrastructure.

Date: 25-01-2025

AI Rating: 7

Dividend Performance Compared
The report highlights that dividend-paying stocks have significantly outperformed non-payers over the past 50 years, generating average annual total returns of 9.2% versus 4.3% for non-payers. This information suggests a strong investment case for dividend stocks.

Realty Income Analysis
Realty Income (NYSE: O) shows a robust dividend growth history with 128 increases over 30 years and a 4.2% compound annual growth rate in payouts. The REIT has a track record of delivering a 14.1% compound annual total return. This performance indicates strong fundamentals that are likely to continue, especially given their resilient portfolio and stable cash flow. The 75% FFO payout ratio allows for continued investment in growth, supporting future dividend increases.

Brookfield Infrastructure Insights
Brookfield Infrastructure (NYSE: BIPC, NYSE: BIP) also illustrates solid dividend growth, with a 9% compound annual rate since its inception, resulting in total annual returns of 13.3%. With a focus on stable cash flow from long-term contracts and a conservative payout ratio of 60%-70%, Brookfield is poised for continued dividend growth, aiming for 5% to 9% annual increases. The almost $8 billion backlog of capital projects shows strong investment potential moving forward.

Both companies exhibit strong financial health, implying that they will likely sustain their dividend growth trajectory in the coming years. Their current yields of 6% for Realty Income and 4% for Brookfield Infrastructure further enhance their attractiveness, as the forecasts suggest that they could deliver double-digit total annual returns.

Stocks: O BIPC BIP