Dividend stocks make fantastic investments. They've historically produced higher total returns than nonpayers, with less volatility. Meanwhile, the best performance has traditionally come from dividend growers and initiators.
Three dividend stocks that offer an exceptional combination of income and growth are Brookfield Asset Management (BAM +0.00%), Broadcom (AVGO 4.39%), and Camden Property Trust (CPT +4.26%). They all pay a dividend yielding more than 3% (nearly double the S&P 500's 1.6% dividend yield) that they should grow at attractive rates in the future.
High-powered dividend growth ahead
Brookfield Asset Management recently became public after its parent, Brookfield Corporation (BN 1.41%), spun out a 25% stake in its asset management business and distributed it to shareholders. Brookfield Asset Management immediately initiated a dividend, which yields about 3.8% at the company's recent share price.
NYSE: BAM
Key Data Points
Brookfield Asset Management expects to grow that already attractive payout at a 15% to 20% compound annual rate over the next several years. That aligns with the expected growth in its fee-related earnings as the company invests capital raised by investors in its various funds. It raised a record $93 billion in capital from investors last year, giving it lots of visibility into the future growth of its management fees.
The company continues to launch new flagship funds and expand into new categories. Last year, it raised $22 billion for its fifth flagship infrastructure fund and $9 billion for its sixth flagship private equity fund. Meanwhile, it recently launched its first energy transition fund, raising $15 billion. The company expects to raise new funds, which should drive strong fee-related earnings growth to support its plan to rapidly increase its already sizable dividend.
A big-time dividend growth stock
Broadcom currently yields slightly more than 3%. The semiconductor supplier and infrastructure software solutions company has an excellent track record of growing its dividend. It recently increased its payout by 12%, marking its 12th straight year of growth since initiating a dividend in 2011. It has delivered eye-popping growth since making that first payment:
AVGO Dividend data by YCharts
The company's dividend policy sees it pay out 50% of its prior fiscal year's free cash flow to shareholders via the dividend. It uses the other half to maintain a strong balance sheet, finance growth, and repurchase shares.
The company should be able to continue growing its free cash flow and dividend in the future. It's working to accelerate its software scale and growth opportunities by acquiring VMWare (VMW +0.00%) for $61 billion of cash and stock. The company hopes to close that deal this year, which should help drive growth over the next few years.
A great home for dividend seekers
Camden Property currently yields 3.2%. The apartment REIT recently declared its latest dividend payment, giving investors a 6.4% raise compared to the prior payout level. That continued its steady growth:
Image source: Camden Property Trust Investor Relations Presentation.
With its latest raise, Camden has more than doubled its dividend payment since 2011.
The apartment owner should be able to continue growing its payout in the future. It focuses on owning apartment communities in the fastest-growing cities in the country's southern half that benefit from above-average employment and population growth rates. That drives demand for apartments, keeps occupancy rates high, and pushes strong rent growth.
Camden Property also benefits from its investments to grow its portfolio. The REIT is investing $661 million to construct six more rental communities, including two single-family home rental communities. It also has the land bank to build several more communities in top markets as demand grows. The company has ample liquidity to fund new investments, with $1.2 billion in cash and borrowing capacity on its credit line and only $306.7 million left to finance in its current construction pipeline. Along with rent growth, these developments should help increase its FFO, enabling Camden to continue growing its dividend.
Top-tier dividend stocks
Brookfield Asset Management, Broadcom, and Camden Property Trust offer investors the best of both worlds. They pay high-yielding dividends that should grow at attractive rates in the coming years. That makes them exceptional dividend stocks to buy without hesitation right now.
