3 Best Dividend Stocks I Expect to Buy in 2023

I received my first dividend payment while still in graduate school. I have been collecting dividends ever since. This set me on a journey to live off this source of income with the ultimate goal of maximizing my dividend income.

I still have a ways to go. That’s why I buy dividend stocks as often as I can. Here are three he can’t wait to get in the new year Brookfield Infrastructure Partners (BIP -0.96%), Brookfield Renewable (BEP -0.51%) (BEPC -0.97%)and Enbridge (ENB -0.43%).

Now that’s an incredible bargain

Units of Brookfield Infrastructure Partners were crushed in 2022. They lost a quarter of their value and recently traded at 52-week lows. This is a much steeper decline than economically equivalent stocks Brookfield Infrastructure Corporation (BEPC -0.97%). That’s why Brookfield looks like Infrastructure Partners incredible buying opportunity right now as it trades at a cheap price (about 11 times funds from transactions or transactions FFO) and an attractive dividend yield (4.7% recently).

For a company with the growth profile of Brookfield Infrastructure, this is a fantastic value proposition. Brookfield Infrastructure is on track to increase FFO per unit by 12% to 15% in 2023 thanks to high inflation rates, upcoming development project completions and recent acquisitions. Meanwhile, with inflation, volume expansion as the economy grows, and capital projects, Brookfield is on track to organically grow FFO at or above the upper end of its long-term target range of 6% to 9% per unit over the next several years. That easily supports Brookfield’s plan to raise its high-yield payout to 5% to 9% annually. The company has had an uninterrupted streak of 13 years growing its distribution.

While Brookfield Renewable is already one of my top passive income producers, I plan to add to my large position in 2023. Its combination of income and upside is too good to pass up right now.

Strong growth ahead

Brookfield Infrastructure renewable energy sibling Brookfield Renewable offers an equally attractive passive income stream. With units falling more than 35% in 2022, this yields an attractive 4.6%. This great time productivity is one of the many factors that make it a A smart buy in 2023.

The company has quadruple growth drivers — inflation, higher energy prices, development projects, and mergers and acquisitions — that should deliver more than 10% annual growth in FFO per share through 2027. Brookfield Renewable has already secured and financed a floor. 8% annual FFO growth. At the same time, it has an extensive development pipeline, an excellent acquisition track record and a strong balance sheet. These factors can ensure its growth up to 20% annually.

This outlook easily supports Brookfield Renewable’s plan to increase its dividend by 5% to 9% per year. This will continue his streak. The company has increased its payouts by at least 5% annually for the past 11 consecutive years. This combination of income and growth at a lower cost is attractive, so I plan to add my position early in the new year.

Fuel will continue to pay big time

Energy infrastructure giant Enbridge currently offers a hefty dividend yield of 6.8%. This monster dividend is one of the most durable fundamentals in the energy sector.

Enbridge’s diversified business of pipeline and utility assets generates steady cash flow. At the same time, it pays a reasonable amount (65% through dividends) that allows it to keep billions of dollars annually to expand its energy infrastructure business. Enbridge also has a top-notch balance sheet.

The company currently has multibillion-dollar projects under construction, including new natural gas pipelines, export capacity and renewable energy facilities. These projects should increase cash flow per share by 5% to 7% through at least 2024. This should support continued dividend growth. Enbridge recently gave investors another boost, marking its 28th year of dividend growth. With plenty of fuel to continue growing, I look forward to exposure to Enbridge’s large dividend.

Boosting my passive income

Brookfield Renewable, Brookfield Infrastructure and Enbridge have everything I look for in a dividend stock investment. They pay above-average dividends on a sustainable basis that should continue to grow in the coming years. Therefore, they will provide me with an ever-increasing stream of passive income, which will help me reach my goal faster. So I can’t wait to increase my positions in these dividend stocks in the new year.

Matthew DiLallo has held positions at Brookfield Infrastructure Partners, Brookfield Renewable, Brookfield Renewable Partners and Enbridge. The Motley Fool owns and recommends positions in Brookfield Renewable and Enbridge. The Motley Fool recommends Brookfield Infrastructure Partners and Brookfield Renewable Partners. The Motley Fool has a disclosure policy.

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