In a market where the S&P 500’s dividend yield has fallen to just 1.18%—approaching record lows—finding reliable income has become increasingly challenging. The index’s 17.5% rally over the past year has compressed yields across the board, leaving income investors with fewer attractive options.
But some opportunities remain. While most dividend stocks have seen their yields shrink, a select group combines meaningful current income with the financial strength to grow those payouts consistently over decades. These aren’t just high-yield traps waiting to cut distributions—they’re businesses with sustainable competitive advantages and growing cash flows that support rising dividends year after year.
Lockheed Martin Corporation (LMT)
Market Cap: $110 billion | Dividend Yield: 2.8%
Defense spending provides one of the most reliable revenue streams in the stock market. Governments need advanced military technology regardless of economic conditions, and Lockheed Martin has positioned itself as an indispensable supplier to the world’s largest defense budgets.
The company has increased its dividend for 22 consecutive years, more than doubling the S&P 500’s current yield at 2.8%. This track record isn’t luck—it reflects the predictable nature of defense contracts and Lockheed’s dominant position in critical military programs.
The financial foundation is rock solid. Lockheed expects over $8.5 billion in operating cash flow this year, providing ample coverage for its $3 billion annual dividend commitment while funding $1.9 billion in capital investments and $3 billion in share repurchases. This cash generation model has proven durable through multiple economic cycles.
Lockheed’s competitive moat comes from its technological expertise in complex defense systems. The company invests heavily in research and development, maintaining its edge in emerging technologies like hypersonic weapons and space-based defense systems. Programs like the Golden Dome initiative showcase how Lockheed continues winning next-generation defense contracts.
The geopolitical environment supports continued growth. Rising tensions globally have increased defense spending across NATO allies and other partner nations. Lockheed’s international sales provide geographic diversification while leveraging the same technological advantages that dominate U.S. defense programs.
At current levels around $470, Lockheed offers a rare combination: a yield that significantly exceeds the market average backed by one of the most predictable business models in corporate America.
Brookfield Infrastructure Partners (BIPC/BIP)
Market Cap: $5 billion | Dividend Yield: 4.3%
Infrastructure assets generate the kind of steady cash flows that support growing dividends over decades. Brookfield Infrastructure owns a globally diversified portfolio of essential infrastructure—utilities, transportation networks, data centers, and energy systems that economies depend on regardless of short-term market conditions.
The company has increased its dividend every year since formation in 2008, growing the payout at a 9% compound annual rate. Management targets continued dividend growth of 5% to 9% annually, supported by multiple growth drivers that compound over time.
Inflation protection is built into many of Brookfield’s assets. Utility rates, pipeline fees, and toll road charges often adjust automatically with inflation, providing natural hedges against rising prices that erode the purchasing power of fixed dividends. This inflation linkage becomes increasingly valuable as central banks maintain accommodative monetary policies.
The growth pipeline is substantial. Brookfield has nearly $8 billion in expansion projects underway, including funding for major U.S. semiconductor fabrication facilities and data center developments worldwide. Recent acquisitions like Colonial Pipeline, Hotwire Communications, and Wells Fargo Rail demonstrate management’s ability to identify and integrate value-creating assets.
Three global megatrends drive demand for Brookfield’s infrastructure: decarbonization requires massive investments in clean energy systems, deglobalization demands more resilient supply chains, and digitalization needs expanded data infrastructure. Brookfield positions its investments to capitalize on all three trends simultaneously.
The company expects funds from operations per share to grow at over 10% annually, providing substantial cushion for dividend increases while funding continued expansion. At 4.3% yield, investors get meaningful current income with built-in protection against inflation and secular growth trends.
NextEra Energy Inc. (NEE)
Market Cap: $145 billion | Dividend Yield: 3.2%
NextEra Energy has increased its dividend every year for more than three decades, growing the payout at a 10% compound annual rate over the past 20 years. The company plans to continue growing its dividend by roughly 10% annually through at least next year, with strong prospects extending well beyond that timeframe.
The utility operates in Florida and serves growing markets that provide natural tailwinds for electricity demand. Population growth, economic development, and increased electrification drive steady increases in power consumption that support rate base expansion and dividend growth.
But NextEra’s real advantage comes from its leadership in renewable energy development. The company is the world’s largest developer of wind and solar projects, giving it unmatched expertise in the fastest-growing segments of the power industry. This renewable focus positions NextEra to benefit from the ongoing energy transition while maintaining cost advantages over fossil fuel competitors.
The growth outlook is compelling. Power demand is expected to surge over the coming decades driven by AI data centers, manufacturing reshoring, and electrification of transportation and heating. As utilities invest trillions in grid modernization and clean energy capacity, NextEra’s development expertise becomes increasingly valuable.
The company expects adjusted earnings per share to grow near the top of its 6%-8% annual target range through 2027. This earnings growth, combined with NextEra’s conservative payout ratio, supports management’s confidence in continued double-digit dividend increases.
At current levels around $70, NextEra offers a 3.2% yield from one of the utility sector’s highest-quality growth stories. The combination of regulated utility stability and renewable energy growth creates a unique investment profile for dividend-focused portfolios.
The Income Investing Advantage
These three companies represent different approaches to sustainable dividend growth. Lockheed Martin leverages defense spending predictability, Brookfield Infrastructure capitalizes on essential asset ownership, and NextEra Energy combines utility stability with renewable energy growth.
What unites them is financial strength sufficient to grow dividends consistently regardless of short-term market conditions. Each company generates substantial free cash flow, maintains conservative payout ratios, and operates in markets with secular growth drivers that support long-term expansion.
For investors focused on building reliable income streams, these stocks offer yields significantly above market averages backed by business models designed to compound wealth over decades. While dividend cuts make headlines, companies with multi-decade track records of increases rarely break those streaks without fundamental business deterioration.
In a low-yield environment, finding sustainable income requires focusing on quality over absolute yield levels. These three companies demonstrate how strong competitive positions and growing cash flows create the foundation for decades of rising dividend income.
