7 Dividend Growth Stocks That Could Double Your Income by 2024

Slow and steady wins the race. That saying is perfect for the stock market. Buying good companies at reasonable prices and holding onto them for the long term is a proven winning investment strategy. I tend to juice my returns by also buying dividend stocks with growth potential.

Dividend investing is arguably the best way to make money on Wall Street. A decade ago, J.P. Morgan Asset Management found companies that initiated and grew their dividend over the four decades between 1972 and 2012 outperformed non-dividend-paying stocks by a wide margin. Dividend payers generated annual average returns of 9.5% over the 40-year period. In contrast, non-dividend-paying stocks could only muster a paltry 1.6% annualized return over the same time frame.

That’s likely because dividend stocks are associated with profitable, well-managed and financially stable companies. They’ve gone through periods of economic and market turmoil and survived. 

If you want to buy the best dividend stocks for income, then the following seven companies deserve your attention. These high-income dividend stocks generally pay superior yields compared to the S&P 500, can generate significant wealth over time and just may double your income by 2024.

Arcos Dorados (ARCO)

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Arcos Dorados (NYSE:ARCO) is the largest operator of McDonald’s (NYSE:MCD) restaurants in Latin America. It’s also the world’s biggest independent franchisee of the fast food giant’s restaurants. It operates more than 2,300 restaurants in 20 Latin American and Caribbean countries.

It represents a golden opportunity for investors looking for dividend growth stocks to buy. By focusing on McDonald’s 3D growth strategy — digital, delivery and drive-thru — Arcos Dorados generates superior returns.

Yet, the stock is cheap, with shares trading at just 14.8 times trailing earnings and 11.3 times next year’s estimates. They also go for a fraction of sales and an even smaller percentage of the company’s forecasted earnings growth rate. Over the next five years, Wall Street expects earnings to grow at a whopping 43% compounded annual growth rate.

Arcos Dorados pays a modest annual dividend of $0.20 per share that yields 1.5% annually after the stock’s nearly 30% advance this year. That puts it in line with the S&P 500’s yield, but with a payout ratio of just 22%, the distribution is plenty safe and has lots of room to grow.

Brookfield Infrastructure Partners (BIP)

Brookfield Infrastructure logo on a phone screen in front of a blurred computer screen. BIPC stock.

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There’s good reason utilities have long been seen as the ultimate widow-and-orphan stocks. They provide ballast for a portfolio during troubled times and perform well when the storm passes. Brookfield Infrastructure Partners (NYSE:BIP) has risen steadily over the past 15 years despite financial and housing market turmoil, recession and a global pandemic.

Brookfield is one of the largest owners and operators of critical global infrastructure networks. It includes traditional utility operations,  railroads, toll roads, ports, data centers, data transmission assets and two semiconductor manufacturing foundries. Its diversified portfolio of critical assets provides investors with a margin of safety. It is willing to buy and sell assets in what it calls its “buy, enhance, sell, repeat” strategy. 

Yet shares are down 20% over the past year. That gives investors an excellent entry point into this unique utility play. The 38.25-cent quarterly dividend yields a lucrative 4.7% annually. The company targets annual dividend growth of 5% to 9%.

Clearway Energy (CWEN)

solar and wind power in coastal saline and alkaline land, develop shoals background representing solar stocks.

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Clean energy developer and operator Clearway Energy (NYSE:CWEN) is a renewable energy stock the market loves to hate. As interest rates rise, Clearway’s stock falls. Shares are down 21% this year and 34% over the past 12 months. Yet, like Brookfield, it has a long runway for future growth and is among the best dividend stocks for income.

Clearway has great insight into how to expand cash flows and grow its distribution. In May, the company raised its payout for the 12th consecutive quarter to 38 cents. The clean energy company expects to grow its dividend between 5% and 8% annually. 

Clearway’s parent company, Clearway Energy Group, boasts an extensive backlog of renewable energy projects under development. Global energy giant TotalEnergies (NYSE:TTE) also acquired a 50% stake in the parent, potentially providing expansion opportunities.

Enterprise Products Partners (EPD)

A magnifying glass zooms in on the website of Enterprise Product Partners (EPD)

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Midstream energy stock Enterprise Products Partners (NYSE:EPD) is one of the largest publicly traded partnerships in the U.S. It takes its role as an energy industry middleman seriously.

Enterprise Products has over 50,000 miles of pipelines, 14 billion cubic feet of natural gas storage, and over 260 million barrels of storage capacity for natural gas liquids, crude oil, refined products and petrochemicals. It locks customers into long-term, fixed-fee, or take-or-pay contracts. That means EPD gets paid regardless of whether customers accept delivery of its product or not.

The company’s $2 annual dividend is also lucrative, as shares currently yield 7.5%. Despite the high yield, the dividend is safe. A distribution coverage ratio should not fall below 1 and ideally should be much higher. Enterprise Products Partners’ ratio is 1.6 times.

There are complex tax issues that need to be considered when investing in master limited partnerships (MLPs), but EPD is one investors should look closely at.

AT&T (T)

A photo of an AT&T office building.

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Telecom giant AT&T (NYSE:T) is a steal. The stock is trading at levels not seen in almost three decades and the market is almost valuing the stock as if the company is going out of business.

Shares trade for just 5.7 times next year’s earnings estimates and less than 1x revenue and book value. That is a bargain-basement valuation. 

As I wrote recently, “With analysts already concerned about its ability to generate free cash flow, a recent Wall Street Journal story about old, buried lead-lined cables created a new cloud of worries.”

AT&T says the fear-mongering is overwrought. With the telecom’s stock down 22.5% year to date, the annual dividend yield is 7.8%. 

The rollout of 5G networks is a major long-term growth catalyst. This could be a unique opportunity to buy AT&T stock at prices you may never see again in your lifetime.

Realty Income (O)

realty income logo highlighted by a magnifying glass on a web browser

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Real estate investment trust (REIT) Realty Income (NYSE:O) is another battered dividend growth stock waiting to break out. The stock has lost 19% over the past year as concerns over the commercial real estate market grew.

While the worries shouldn’t be dismissed out of hand, they do seem a tad overblown. Realty Income primarily owns single-tenant properties. The tenants pay the taxes, insurance and maintenance, in addition to the rent, in what is called a triple-net lease. It relieves the landlord of the burden. 

The businesses Realty Income is leasing to are also top-notch. The REIT counts 7-Eleven, Dollar General (NYSE:DG) and Walgreens (NYSE:WBA) among its top tenants.

When other REITs were cutting their distributions to unitholders during the pandemic, Realty Income was raising its payout. The REIT has raised its dividend 121 times since 1994 and made 637 consecutive monthly payments. It also offers the benefit of paying its dividend monthly. With an annualized payout of $3.07 per share, O stock currently yields 5.2%.

York Water (YORW)

vats of water

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York Water (NASDAQ:YORW) is a utility every investor should consider, as its services are essential. The company provides clean water and wastewater services to 54 municipalities in south-central Pennsylvania.

York Water is an under-the-radar dividend growth powerhouse. It hasn’t missed a single dividend payment in more than 200 years.

YORW yields 2% annually. That’s barely above the S&P 500, which might make it hard to double your income by the end of next year. However, York Water’s consistency, reliability and safety are head and shoulders above any other stock on the market. That makes it one of the top dividend stocks for 2024.

On the date of publication, Rich Duprey held a LONG position in T and O stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Rich Duprey has written about stocks and investing for the past 20 years. His articles have appeared on Nasdaq.com, The Motley Fool, and Yahoo! Finance, and he has been referenced by U.S. and international publications, including MarketWatch, Financial Times, Forbes, Fast Company, USA Today, Milwaukee Journal Sentinel, Cheddar News, The Boston Globe, L’Express, and numerous other news outlets.

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