2 dividend-free stocks to buy right now for less than $200

Buying dividend stocks is a no-brainer investment. They generate dividend income and have historically generated higher total returns with lower volatility than the broader market. Over the past 50 years, the average dividend stock has delivered an average annual total return of 9.2%, compared to 7.7% for an equal weight. S&P 500 indexaccording to data from Ned Davis Research and Hartford Funds. Meanwhile, dividend growth stocks delivered even higher total returns (10.2% annualized).

Kinder Morgan (KMI -1.63%) and Brookfield Renewables (BEPC -2.88%) (BEP -2.45%) are no-hassle dividend stocks to buy right now. Their shares sell for less than $30 each. They can turn less than $200 into a more attractive income stream than an investment in one S&P 500 Index Fund.

Putting cash in investors’ pockets

Kinder Morgan is one of the largest energy infrastructure companies in the country. It owns a diversified portfolio of pipelines, processing plants, storage terminals and export facilities. These midstream assets generate very stable cash flow supported by government-regulated rate structures, commission-based contracts and hedging arrangements. About 68% of the company’s cash flow has no price or volume risk, 27% has some variability due to volumes, and only about 5% is based on commodity prices.

gas PIPE giant pays little more than half of its stable cash flow in dividends. Kinder Morgan’s dividend yield is about 5.4% at its current payout level and recent share price. At that rate, it could turn every $100 invested in its stock into an annual dividend income stream of $5.40. For comparison, the S&P 500 has a yield of about 1.3%, meaning that a $100 investment would produce dividend income of about $1.30 per year.

Kinder Morgan uses the rest of its cash flow to invest in expansion projects, buy back stock and maintain a strong balance sheet. The company currently has $5.2 billion of committed growth capital projects under construction that are expected to be operational by the end of 2028. The projects include new gas pipelines, renewable natural gas production facilities and improved oil recovery projects. The company also has a solid balance sheet, giving it flexibility to make purchases as opportunities arise.

These factors give it a lot of visibility into its ability to grow its cash flow and dividends. This year marked Kinder Morgan’s seventh consecutive year of dividend growth.

A dividend-growing powerhouse

Brookfield Renewable is a global leader renewable energy producer. It sells about 90% of the power it generates through long-term, fixed-price contracts. Those agreements provide she with stable and growing cash flow (70% inflation linked). The company uses this money to pay an attractive dividend (currently yielding around 5%).

Brookfield raised its high-yield payout by at least 5% per year since 2011 and at a compound annual rate of 6% over the past two decades. It plans to increase its dividend by about 5% to 9% annually over the long term.

The company should have enough power to carry out this plan. Inflation-linked rate increases should increase funds from operations (FFO) per share by 2% to 3% annually through at least 2028. Meanwhile, other Organic growth initiatives, such as margin improvement activities and development projects, should increase FFO per share by 5% to 9% annually. Add in incremental acquisitions, and Brookfield expects to deliver FFO per share growth of 10%+ through 2028. It has ample financial flexibility to achieve this plan thanks to its growing post-dividend cash flow, strong and active balance sheet. capital recycling strategy.

No-brainer dividend growth stocks

Kinder Morgan and Brookfield Renewable have increased their high-yield dividends for several years in a row. Given their stable cash flows, strong balance sheets and visible growth profiles, these trends should continue. Because of this, they are smooth dividend stocks to buy right now. They should produce growing streams of dividend income and attractive total profits as their share prices rise with their earnings.