3 Great Dividend Stocks Retirees Can Buy Right Now

Peanut Butter and Jelly. March and college basketball. Retirees and Dividend Stocks. Some things just belong together.

But the challenge for retirees is finding the right dividend stocks. The search can be daunting, especially considering that more than 4,300 stocks traded on U.S. exchanges offer dividends. However, some alternatives stand out more than others. Here are three great dividend stocks retirees can buy right now.

1. Brookfield Infrastructure

Brookfield infrastructure (GDP 1.37%) (BIPC 1.54%) CEO Sam Pollock recently made a strong case for investing in infrastructure assets. He wrote in a letter to shareholders that infrastructure investments “typically perform well in all parts of the market cycle, and particularly outperform during economic downturns.” Pollock was right. History shows that infrastructure stocks are smart investments in times like these.

There are several reasons Brookfield Infrastructure is a good choice right now. For one, the company’s infrastructure assets generate steady revenue and cash flows. Brookfield Infrastructure charges to use its pipelines, electric utilities, cell towers, toll roads and many other assets, regardless of economic conditions. The higher inflation is even giving the company a tailwind.

For retirees, Brookfield Infrastructure’s main attraction is distribution. The company has increased its payout by a compound annual growth rate of around 10% since 2009. The return is currently almost 4.5% for the limited partnership shares.

Brookfield Infrastructure expects its payout to grow between 5% and 9% per year over the long term. With growth opportunities in data centers, cell towers, decarbonization, and more, the company should be able to meet that goal.

2. State property in the East

Real estate investment trusts (REITs) have long been favorites of retirees. They must pass on at least 90% of their taxable income to shareholders as dividends. This allows REITs to offer particularly attractive dividend yields.

That is certainly the case with Eastern Government Properties (DEA -1.12%). The company’s dividend yield is currently over 6.6%. Though Easterly hasn’t increased its dividend by much over the past five years, it has provided shareholders with steady income.

The REIT often notes that nearly all of its rental income is “backed by the full confidence and credit of the U.S. government.” That’s no exaggeration. Easterly leases most of its properties to federal agencies like the Food and Drug Administration and the Veterans Administration.

Easterly isn’t immune to macroeconomic headwinds. Higher interest rates make expansion financing more expensive for the company. On the other hand, the company’s leases have automatic increases that provide inflation protection. If interest rates fall (which they will sooner or later), Easterly’s stock could rise significantly. In the meantime, retirees can count on solid dividend payments.

3. Bridging

Enbridge (ENB -0.66%) is another excellent choice for relatively low-risk retirees. The company operates over 17,800 miles of liquid pipelines and over 76,500 miles of natural gas pipelines in North America. About 98% of Enbridge’s cash flow is either contracted or subject to service charge agreements, where rates are set by regulators.

Income investors should absolutely love Enbridge. The company has increased its dividend for 28 consecutive years. The dividend yield is currently over 6.8%.

But will switching from fossil fuels to renewable energy sources hurt Enbridge? Not nearly as much as you might think. The company continues to expand into renewable energy and carbon capture and storage. It currently owns 23 wind farms, 17 solar power plants, as well as other renewable energy plants. Enbridge is investing heavily in building this part of its business.

CEO Greg Ebel confirmed this transition during the company’s most recent quarterly update. He explained, “Enbridge is right in the center.” This ability to adapt and evolve should allow Enbridge to keep dividends flowing for a long time to come.

Keith Speights has held positions at Brookfield Infrastructure and Brookfield Infrastructure Partners. The Motley Fool has positions in Enbridge and recommends Enbridge. The Motley Fool recommends Brookfield Infrastructure Partners and Easterly Government Properties. The Motley Fool has a disclosure policy.

Source: www.fool.com