Here are my top 3 dividend stocks to buy in October

I’m a big fan of dividend stocks. I like to collect the passive income they send me. Additionally, dividend stocks have historically outperformed non-paying ones by a wide margin (9.2% average annual total return vs. 4.3% since 1973, according to Ned Davis Research and Hartford Funds).

Dividend producers had the best returns (10.2%). That’s why I focus on companies with excellent dividend growth histories that look very likely to continue. Brookfield Infrastructure (BIPC 1.23%) (BEEP 1.70%), NextEra Energy (NO -1.41%)and Prologue (PLD 0.31%) currently sitting at the top of my shopping list. Here’s why they are great dividend stocks to buy in October.

An extremely attractive value proposition

Brookfield Infrastructure has been a terrific dividend stock over the years. The global infrastructure operator has grown its payout at a compound annual rate of 9% over its 15-year history. It currently offers approx 4% yield dividend covered by a conservative weight of 67% the dividend-payment ratio.

The company expects to increase its dividend further. It aims to grow it at an annual rate of 5% to 9%. Supporting this view is its robust growth profile. Brookfield Infrastructure expects to grow its funds from operations (FFO) per share by more than 10% annually, fueled by organic growth and increased acquisitions.

Investors are getting that strong growth profile at an attractive value in October. Brookfield Infrastructure currently trades at around 14.1 times FFO. That’s well below its historical average of 15.5 times and the 16.5 times multiple it’s traded at over the past five years. With a high yield, strong growth prospects and a cheap Brookfield Infrastructure could produce robust total returns in the coming years.

Strong dividend growth should continue

NextEra Energy is an elite dividend growth stock. He has increased his pay for 30 consecutive years. The utility increased its dividend by about 10% annual rate in the last 20 years. It expects to grow its payout (which currently yields nearly 2.5%) by around 10% per year at least until 2026.

Two factors are fueling NextEra’s dividend growth plan. It has a low dividend-payout ratio (59% compared to the peer group average of 65%). Additionally, adjusted earnings per share (EPS) growth is expected to be at or near the top of its annual range of 6% to 8% through 2027.

Several catalysts are helping to generate a healthy earnings growth outlook. Benefit from operating the largest electric grid in Florida, which has plenty of sun (great for solar energy) and a growing population. In addition, it is investing heavily to expand its renewable energy business outside the state, where it is capitalizing on strong demand. As a leader in renewables, NextEra Energy should continue to grow at a healthy pace for years to come to come.

Lots of built-in growth

Prologis has seen above-average dividend growth over the years. The leader Industrial Real Estate Investment Trust (REIT) has grown its dividend at a compound annual rate of 13% over the past five years. This is more than double the average S&P 500 (5%) and other REITs (5%).

The REIT should be able to continue to grow its more than Dividends with a yield of 3%. at an above average rate. Capitalize on the strong demand for storage space, which is maintaining high occupancy levels and increasing rental rates. The company expects only rent growth (annual rent escalation and higher market rates as existing leases expire) to drive high single-digit annual same-store revenue growth through 2026. Add Development Projects (which include data center investments) and the REIT should grow its basic FFO per share by 9% to 11% annually. Meanwhile, there is additional upside potential from the completion of increased acquisitions, which have added an average of 1.5% to the FFO per share growth rate over the past few years.

Income and more

Brookfield Infrastructure, NextEra Energy and Prologis all offer attractive dividends. In addition, they all have strong growth prospects, which should allow them to continue to grow their payouts at a healthy pace. This puts them in a great position to produce above-average total returns, making them great dividend stocks to buy this month.