Our favorite dividend stocks for 2022 and beyond

DDividend stocks have historically been great investments. They’ve routinely outperformed non-payers, with the best returns coming from companies that consistently increase their dividend payments.

Because of this, we’re always on the lookout for great dividend stocks. With that in mind, we asked some of our contributors what their favorite is Dividend Stocks for 2022 and beyond. Here’s why Enbridge (NYSE:ENB), NextEra energy partner (NYSE:NEP), and Partner for Enterprise Products (NYSE: EPD) climbed to the top of their lists.

Image source: Getty Images.

Investing in Dividend Growth

Reuben Gregg Brewer (Enbridge): North American midstream giant Enbridge recently announced a 3% annual dividend increase. That’s not particularly exciting, but over the past 27 years, the dividend has grown about 10% annually. That is exciting! Annual increases will vary and depend in part on other options for cash generated by the company. For example, the yield today is a historically high 6.6%, management explained meanwhile Enbridge’s third quarter earnings conference call that it doesn’t feel the company’s dividend growth is being recognized by investors. Therefore, it makes more sense to use this money in other ways.

ENB diagram

ENB data through YCharts

That background means Enbridge instead repurchase his shares, which management believes are undervalued, and invest capital in his various shops. On the investment front in particular, it has invested an increasing amount of cash in its own Operation with renewable energies, which positions it well for the changing future of the energy sector. And while it’s doing all of those things, the company’s payout ratio will fall as the business grows and its share count shrinks. That, in turn, will give Enbridge room to restart dividend growth when the market finally recognizes the value on offer here. So for now, this is an earnings story, but it could soon turn back into a dividend growth story. However, if you buy now, you can enjoy both high yield and dividend growth.

Strong dividend growth ahead

Matt DiLallo (Partners of NextEra Energy): NextEra Energy Partners offers income investors the best of both worlds: income and growth. The clean energy infrastructure company has an attractive offer dividend yield. At a current rate of nearly 3.6%, it’s more than double that S&P500.

This payout is on reasonably solid ground. NextEra Energy Partners generates relatively stable revenue backed by long-term, fixed-rate contracts renewable energy fortune and natural gas piping. It pays out a fair amount of that cash flow to support its profitable dividend, expected a dividend payment Ratio in the low range of 80% in 2022. In addition, it has a solid balance sheet with great financial flexibility.

Meanwhile, NextEra Energy Partners sees significant growth ahead of it. The company currently expects to grow its dividend by 12% to 15% annually through at least 2024. That’s the highest rate among dividend-focused clean energy infrastructure companies.

The Company has multiple growth drivers including the acquisition of clean energy assets from third parties and its parent company, utility NextEra Energy. NextEra has a vast and growing portfolio of clean energy infrastructure assets to donate to the partnership. As demand for clean energy grows as the global economy tries to offset the potential impact of climate change, NextEra Energy Partners shouldn’t be short of additional investment opportunities. It also has the financial flexibility to continue to expand, with multiple funding partners willing to provide low-cost capital to close deals.

NextEra Energy Partners is one of my favorite dividend stocks because it offers a high dividend yield and a high growth rate. Those two factors should give it the power to generate above-average returns in 2022 and beyond.

High yield, strong growth potential

Neha Chamaria (Enterprise Product Partners): In a year when oil prices soared, Enterprise Products Partners received little support from the market — the stock ended 2021 with a modest 12% gain. It’s not really difficult to understand why this happened. Energy investors shifted focus, pumping money into upstream oil and gas stocks that, unlike a midstream company like Enterprise Products Partners, will benefit directly from higher oil prices.

However, the market overlooked the fact that Enterprise Products Partners was also steadily increasing its distributable cash flow (DCF), which could provide regular support and higher dividends in 2021. Earlier this month, the company increased its dividend by 3.3%, marking its 23rd consecutive annual dividend increase. That dividend increase percentage might not tempt investors, but keep in mind that the stock is also yielding a massive 7.7% right now and generating enough cash flow to comfortably cover its dividends.

In fact, Enterprise Products Partners could very well close out its 2021 fiscal year with one of its highest DCFs ever. And 2022 could be an even bigger year given the company’s latest move: Enterprise Products Partners is about to be acquired Navitas Midstream Partners for $3.25 billion in cash in a deal expected to have an immediate positive impact on its DCF. The growth prospects make Enterprise Products Partners one with its high dividend yield compelling dividend stocks for 2022 and beyond.

10 Stocks We Like Better Than Enbridge
When our award-winning team of analysts have a stock tip, it can be worth listening. After all, the newsletter they’ve been running for over a decade is Motley Fool stock advisor, has tripled the market.*

They just revealed what they believe are the The ten best stocks for investors who can buy now… and Enbridge wasn’t one of them! That’s right — they think these 10 stocks are even better buys.

Check out the 10 stocks

*Stock Guide returns as of January 10, 2022

Matthew DiLallo owns Enbridge, Enterprise Products Partners, NextEra Energy and NextEra Energy Partners. Neha Chamaria has no position in any of the stocks mentioned. Reuben Gregg Brewer owns Enbridge. The Motley Fool owns shares of and recommends Enbridge. The Motley Fool recommends Enterprise Products Partners and NextEra Energy. The Motley Fool has one confidentiality policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Virginia C. Taylor