2 Unstoppable Dividend Stocks Yielding More Than 4% That Income-Seeking Investors Will Want to Buy in October and Hold Forever

Key Points

• Realty Income has been offering a yield above 5% even though it's never missed a monthly dividend payment.

• Brookfield Infrastructure Corp. has raised its dividend at a speedy pace since its market debut 16 years ago.

• Brookfield Infrastructure Corp. and Realty Income are well-positioned for more payout raises.

• 10 stocks we like better than Realty Income ›

Income-seeking investors don't need to sacrifice yield for quality when searching for reliable dividend payers. While the average dividend-paying stock in the S&P 500 index offers a measly 1.2% yield, there are still some exceptional companies offering yields above 4% at recent prices.

Repeatable business models that allowed Realty Income (NYSE: O) and Brookfield Infrastructure Corp. (NYSE: BIPC) to consistently raise their dividend payouts in previous decades are still working. Read on to see how they could continue delivering a stream of passive income that never stops growing.

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1. Realty Income

With 15,606 properties leased to 1,630 clients, Realty Income is one of the most established and diversified real estate investment trusts (REITs) that trades on public markets. REITs are popular with investors because they're spared from paying income taxes as long as they distribute nearly all their earnings to shareholders as dividend payments.

Realty Income has consistently grown its monthly dividend payment. It's raised its payout for 111 consecutive quarters and 131 times since its initial public offering in 1994. At recent prices, it offers a big 5.4% yield.

Interest rates that rose rapidly a few years ago have been a thorn in Realty Income's side, but they haven't stopped it from growing or raising its dividend payout. In fact, it's risen by 3.54% annually over the past five years.

The Federal Reserve recently lowered interest rates by 0.25% and signalled a couple more cuts by the end of the year. A lower cost of capital will more than likely help Realty Income's profits and dividend payout grow significantly faster in the years ahead.

Shopping habits are changing, but Realty Income sticks to retail categories that still drive foot traffic, such as convenience stores, grocery stores, and home improvement stores. At the end of June, Realty Income boasted a 98.6% occupancy rate.

Realty Income's biggest tenant, 7-Eleven, is responsible for just 3.4% of the REIT's annualized rental revenue. Plenty of diversification and a decades-long track record give creditors so much confidence that the REIT boasts an A3 rating from Moody's.

All over the globe, companies that own the buildings they operate can use them as relatively inexpensive sources of capital with help from Realty Income or its peers. Its enviable credit rating recently allowed it to borrow $800 million at an average yield of just 4.41% over an average term of 5.3 years. Heaps of cheap capital for the REIT could allow it to offer competitive leases to well-established borrowers for generations to come.

2. Brookfield Infrastructure Corp

Since its market debut 16 years ago, Brookfield Infrastructure has increased its payout every year. Those dividend raises haven't been little ones either. The payout's risen by 9% annually, and at recent prices it offers a 4.2% yield.

Toll roads, railroads, and other transportation assets are responsible for about 48% of funds from operations, a proxy for earnings used to evaluate businesses with lots of depreciating assets. The rest of this company's profits come from utilities, pipelines, and data centers.

A diversified portfolio protects Brookfield Infrastructure from economic downturns. Long-term contracts, sometimes spanning decades, also protect its bottom line from economic speed bumps.

Brookfield Infrastructure is big on its own, but it's also a subsidiary of Brookfield Corporation, a giant alternative asset manager with a portfolio worth over $1 trillion. As such, it can scoop up distressed assets that few businesses are equipped to manage or improve.

In the second quarter alone, Brookfield Infrastructure deployed $1.3 billion into a refined products pipeline, a fleet of rail cars, and a provider of fiber internet services. Shareholders don't have to worry about sourcing capital either. So far this year, it's raised $2.4 billion by trimming assets from its portfolio.

Despite trimming its portfolio, management expects to raise its dividend payout by 5% to 9% annually in the years ahead. Buying some shares now and holding them for the long run looks like a smart move for most income-seeking investors.

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Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Brookfield, Brookfield Corporation, Moody's, and Realty Income. The Motley Fool has a disclosure policy.