This has been an amazing year for stocks. From the end of 2023 through Nov. 12, the benchmark S&P 500 index climbed 25% higher.
The benchmark index rose much faster than most dividend payers have been able to raise their dividend payouts. As a result, the average stock in the S&P 500 offers an uninspiring 1.2% yield.
Most dividend payers offer uninspiring yields, but Brookfield Infrastructure(NYSE: BIPC)(NYSE: BIP), Realty Income(NYSE: O), and Royalty Pharma(NASDAQ: RPRX) provide yields above 3% at recent prices, and you don't need to be rich to take advantage of them. Just $130 is enough to buy one share of each.
Here's why there's a good chance the high yields they offer will continue growing throughout your retirement.
1. Brookfield Infrastructure
There are two ways to invest in this high-yield dividend payer. Brookfield Infrastructure Corp. (BIPC) shares offer a 3.8% dividend yield. If you're prepared for the complex tax implications that come with master limited partnerships, Brookfield Infrastructure Partners (BIP) offers a more enticing 4.7% yield at recent prices.
Whether you're talking about energy, water, freight, or data, Brookfield Infrastructure operates global assets that facilitate their movement and storage. With heaps of data and energy assets, it's one of the safest ways to invest in a surprisingly inefficient artificial intelligence (AI) revolution that guzzles heaps of electricity.
Despite a strong AI tailwind, Brookfield Infrastructure is relatively inexpensive at a price of just 5.1 times trailing funds from operations (FFO). Third-quarter FFO rose 7% year over year, and management expects more growth. The company's backlog of growth projects was up to nearly $8 billion at the end of September.
2. Realty Income
Realty Income is a large real estate investment trust (REIT) with over 15,000 commercial properties leased out by companies like Walgreens and Dollar General. At recent prices, it offers a big 5.5% dividend yield.
This REIT is perfect for investors who appreciate reliability. It recently made its 653rd consecutive monthly dividend payment. Income-seeking investors will also be glad to learn Realty Income has raised its payout for 30 consecutive years.
One reason Realty Income is so predictable is its large and diverse portfolio. Dollar General is its largest client but is responsible for only 3.3% of total rent payments expected in the year ahead. It's also geographically diverse, with 14.6% of its portfolio in Europe.
Realty Income's monthly dividend program is on sound financial footing and positioned to deliver gains in the years ahead. Third-quarter adjusted FFO rose 2.9% year over year to $1.05 per share. That's heaps more than it needs to meet a commitment currently set at $0.7905 per share, per quarter.
An A3 credit rating from Moody's allows the REIT to borrow at low rates that most of its competitors can only dream of. With resources that can keep Realty Income one step ahead of the competition, even cautious investors can confidently scoop up some shares to hold for at least the next 10 years.
3. Royalty Pharma
If there's one corner of the economy investors can count on for steady growth it's pharmaceutical sales. Prescription-drug spending in the U.S. grew 8.4% in 2022 to $406 billion, and this figure could continue rising at a high-single-digit percentage for the foreseeable future.
Developing new drugs can be an extremely risky venture, but not the way Royalty Pharma does it. This specialized lender makes relatively small loans to drugmakers that develop new products but don't have enough capital to execute a successful launch. The company offers upfront cash for drugs still in development and ones that are already approved, in return for a royalty percentage.
Royalty Pharma's track record is commendable. It's acquired royalty stakes in over 80 drugs since its inception in 1996. Some of its investments haven't paid off, but 15 products it has royalty rights for are generating over $1 billion in annual sales.
Royalty Pharma offers a 3.2% dividend yield at recent prices, and investors can expect much more a decade from now. The company's winners contribute more than enough to offset occasional losses, and portfolio growth is accelerating.
In 2022, Royalty Pharma announced a plan to complete acquisitions worth between $10 billion and $12 billion by 2027. The company has already announced $10.1 billion in royalty acquisitions. All those new investments could keep pushing portfolio receipts higher.
A larger portfolio doesn't guarantee accelerating gains. Given this specialty lender's track record, though, adding some shares to a diverse portfolio now and holding them for at least a decade looks like the right move.
Should you invest $1,000 in Brookfield Infrastructure Partners right now?
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Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Realty Income. The Motley Fool recommends Brookfield Infrastructure Partners. The Motley Fool has a disclosure policy.
