Despite unsettling market turbulence, now looks like a great time to invest in two well-managed businesses that deliver growing dividend payments to their grateful shareholders.
The Federal Reserve lowered interest rates by a full percentage point in 2024, but markets aren't responding as you might expect. Anticipation of stronger economic growth, higher inflation, and rising debt levels pushed the yield on 10-year Treasury notes up a whopping 27.9% since the middle of last September.
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Now that investors can receive a risk-free 4.3% from a two-year Treasury, dividend stocks that could rise or fall in response to an unknowable economic future are significantly less attractive. For long-term-minded investors, though, this could be a great time to buy beaten-down dividend stocks at a price that is more than fair.
Shares of Brookfield Infrastructure Corporation (NYSE: BIPC), and Realty Income (NYSE: O) offer an average yield that's much higher than you'd receive from a 10-year Treasury note. While Treasuries deliver super safe payments at a fixed rate, payments you could receive from this pair of stocks will likely keep rising for at least the next decade and probably longer.
If you want to invest in the artificial intelligence (AI) revolution but don't want to risk money on hard-to-understand tech stocks, consider Brookfield Infrastructure Corporation. Demand for the data centers and telecom towers in its portfolio will most likely rise as more businesses employ AI agents in their day-to-day workflows.
Training new large language models intended to support next-generation AI applications will require a heap of electricity. With ports and pipelines that deliver the necessary goods, this company stands to benefit regardless of which company's software becomes most popular.
Brookfield Infrastructure doesn't necessarily need any more AI investment to produce heaps of passive income for patient investors. At recent prices, the stock offers a well-supported 4.3% dividend yield, and it's raised its payout by 25.3% over the past five years.
Investors can look forward to many more years of dividend growth from this infrastructure giant. The company believes the world will need roughly $100 trillion to maintain, upgrade, and build infrastructure by 2040. With a record backlog of growth projects worth nearly $8 billion at the moment, at least another decade of dividend growth from this stock isn't an unreasonable expectation.
With buildings worth $40.6 billion at the end of November, Realty Income is one of the largest publicly traded real estate investment trusts (REITs) around. At recent prices, it offers a 6.1% dividend yield, and there's a very high chance you'll receive much more by the time you're ready to retire.
Realty Income's cash flows are highly predictable because it locks tenants, such as Dollar General and Walgreens Boots Alliance, into long-term net leases. Those leases make the tenant responsible for taxes, maintenance, and other unpredictable expenses that come with building ownership.
Changing interest rates are an obstacle, but they aren't one this company doesn't know how to navigate while meeting its dividend obligations. Its shareholders have received a dividend payment every month since 1969.
Realty Income has raised its dividend payout every quarter since it became a publicly traded business in 1994. The past five years have been turbulent ones to own lots of commercial property, but that didn't stop the company from raising its dividend payout 13.3%.
Maintaining an annual growth rate in the single digits should be a breeze for this well-established REIT. European businesses that own their properties are learning that Realty Income and its peers are a great way to finance their businesses.
There's a lot of room for growth across the Atlantic. Publicly traded net lease REITs account for less than 0.1% of the addressable European market. And heaps of room to grow give this reliable dividend stock a great chance to deliver an income stream that grows throughout your retirement.
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*Stock Advisor returns as of January 13, 2025
Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Realty Income. The Motley Fool has a disclosure policy.