Investing in dividend-paying stocks, even with a small amount of money, can yield significant returns over time. The best dividend stocks offer investors a combination of a steadily growing income stream and solid price appreciation. Additionally, the absence of commission fees from most brokers makes it convenient to buy shares in small increments whenever you have spare cash available.
Enbridge (NYSE: ENB) and Brookfield Infrastructure (NYSE: BIPC)(NYSE: BIP) present compelling investment opportunities for individuals with less than $200 to invest at present. Here’s why these stocks have the potential to generate substantial returns in the future.
Lots of fuel to grow shareholder value
Enbridge has a strong track record of value creation for its shareholders, boasting an impressive average annual total return of 11.2% over the past two decades. This performance has outpaced not only the S&P 500 but also its peers in the utility and midstream sectors. With such growth, a $200 investment in Enbridge could have ballooned to nearly $1,700, compared to around $1,400 for an S&P 500 index fund.
The company’s ability to continue enriching its investors appears promising, given its substantial dividend yield of 7.6%. This dividend is supported by the robust cash flows generated by Enbridge’s pipelines and utility assets, providing a reliable income stream for shareholders. Additionally, Enbridge maintains a strong investment-grade balance sheet and typically pays out a reasonable percentage of its stable income to investors, leaving room for both dividends and reinvestment in growth opportunities.
Enbridge’s future growth prospects look bright, with a significant backlog of expansion projects and ongoing natural gas utility acquisitions. These initiatives are expected to drive cash flow per share growth by 3% annually through 2026 and by 5% per year over the medium term. Coupled with its attractive dividend, Enbridge is positioned to deliver average annual total returns of 10%-12% in the years ahead.
Powerful growth drivers
Brookfield Infrastructure has a stellar track record of creating value for its investors, boasting an impressive average annual total return of 14.8% since its formation in 2008. This performance has far exceeded the average annual total return of the S&P 500 during the same period, demonstrating its ability to deliver substantial growth. With such success, a $200 investment in Brookfield Infrastructure could have grown to nearly $1,900, compared to just over $1,000 for an S&P 500 index fund.
The company’s outlook for continued value creation remains strong. Brookfield offers an attractive dividend yield of 4.7%, providing investors with a solid base return. Moreover, the company anticipates organic growth in its funds from operations (FFO) per share by 6% to 9% annually. This growth is supported by various factors, including inflation-linked rate increases, volume growth driven by global economic expansion, and ongoing expansion projects. Brookfield Infrastructure is actively developing several projects, including data centers and semiconductor fabrication plants in collaboration with Intel, which should further contribute to its growth trajectory.
Additionally, Brookfield Infrastructure implements a capital recycling strategy, selling mature assets and reinvesting the proceeds into higher returning opportunities. This approach has enabled the company to acquire strategic assets such as data center platforms and intermodal shipping container leasing companies, further bolstering its growth prospects. With its robust dividend yield and capital recycling strategy driving double-digit FFO per share growth, Brookfield Infrastructure is well-positioned to continue delivering total returns in the mid-teens.
Proven money makers
Enbridge and Brookfield Infrastructure have demonstrated a consistent ability to create significant value for their shareholders, a trend expected to persist in the future. With their strong growth prospects and reliable dividend payouts, these companies are well-positioned to turn a small investment into a substantial sum over the coming years. As such, they represent attractive investment opportunities for individuals with limited capital to allocate.