3 Top Dividend Stocks You Shouldn't Hesitate to Buy This February

Dividend stocks can be terrific investments. The best ones provide investors with passive income and upside potential. That adds up over the long term. Over the last 50 years, dividend stocks have outperformed non-payers by more than 2-to-1, according to data from Hartford Funds and Ned Davis Research.

Brookfield Renewable (NYSE: BEPC) (NYSE: BEP), MPLX (NYSE: MPLX), and Waste Management (NYSE: WM) stand out to a few Fool.com contributors as great dividend stocks to buy this month. Here's why they think investors should buy them without hesitation.

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Brookfield Renewable has a long runway for growth ahead

Reuben Gregg Brewer (Brookfield Renewable): Although Brookfield Renewable's unit price has moved a little higher over the past few weeks, it has plunged more than 50% since hitting a high-water mark in 2021. It is reasonable to fear catching a falling knife here. But there's a bigger story that investors need to understand.

First off, the price in 2021 was largely related to overenthusiastic investors who had decided that the clean energy tree was going to grow to the sky. Those mercurial investors have moved on to new stories, such as artificial intelligence (AI) -- the tree that's currently expected to grow to the sky.

Brookfield Renewable's business performance and business model haven't really changed. If anything, the globally diversified clean energy investor has managed to keep growing its business even as Wall Street's enthusiasm for clean energy stocks has waned. At this point, it has positions in hydroelectric, solar, wind, battery storage, and nuclear power. It is increasingly focused on ground-up development, even as it continues to recycle assets to help self fund its growth. And the distribution continues to be increased right in line with the stated 5% to 9% annual target.

If you are a contrarian income investor, Brookfield Renewable and its lofty 6.8% distribution yield (the corporate share class yields 5.5%) looks like a good investment opportunity today. The biggest reason for that, however, is that the global shift toward cleaner energy alternatives is a decades-long trend that is still in the early innings. With such a broad portfolio and global diversification, even a change in the U.S. government's commitment to clean energy spending isn't likely to derail the larger shift that is supporting Brookfield Renewable's long-term outlook.

A high-octane, high-yielding dividend

Matt DiLallo (MPLX): MPLX has been a terrific income investment over the years. The MLP has increased its distribution every year since its formation in 2012 and has grown its payment at a 10.7% compound annual rate since 2021. That's impressive, considering the master limited partnership (MLP) currently offers a more than 7% yield.

That big-time payout should continue heading higher in the future. MPLX generates very stable cash flow, backed by long-term fixed-rate contracts and government-regulated rate structures. Last year, the company produced nearly $5.7 billion in distributable cash flow, enough to cover its payout by a comfy 1.5 times. MPLX also has a strong balance sheet, ending last year with a leverage ratio of 3.1 (well below the 4.0 range its stable cash flows can support).

MPLX uses its excess free cash flow and balance sheet flexibility to invest in expanding its midstream network. The company recently added several new growth projects to its backlog. It currently has projects scheduled to come online and supply incremental cash flow through 2029. The MLP also has the financial flexibility to make acquisitions as opportunities arise. Last year, the company acquired an additional interest in several existing joint ventures and a gas-gathering system.

MPLX's stable cash flows, strong distribution coverage, and low leverage ratio put its high-yielding payout on a very solid foundation. Meanwhile, its growing backlog of expansion projects should give it the fuel to continue increasing its payout in the future. Given these features, investors can buy MPLX with confidence this month (as long as they're comfortable receiving the Schedule K-1 federal tax form the MLP sends its investors each year).

Turning trash into cash (for dividends)

Neha Chamaria (Waste Management): Waste Management, or WM as the company calls itself, is the kind of stock you can own at all times, but it looks even more appealing now amid the uncertainty about the new administration's tariffs and potential trade wars. WM is a resilient business, and the company recently made a big acquisition that should considerably boost its top line and cash flows and support big dividend increases.

After clocking 8% growth in revenue in 2024, WM expects its top line to grow at a much faster pace of 16% at the midpoint of its guidance range in 2025. It also projects nearly 18% growth in free cash flow (FCF) this year. The leader in waste management services made a solid growth move late last year when it acquired Stericycle for $7.2 billion. Since Stericycle is North America's largest medical waste management company, its acquisition has added a strong end market to WM's portfolio and should contribute healthily to its cash flow growth.

As its cash flows grow, so should WM's dividends. Do not let Waste Management stock's low yield of 1.4% deter you. The company has increased its dividend for 22 consecutive years, including a solid 10% hike announced in December 2024. And when accounting for dividends, the stock has almost doubled investors' money in five years.

Don’t miss this second chance at a potentially lucrative opportunity

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On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $336,677!*
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Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

Learn more »

*Stock Advisor returns as of February 3, 2025

Matt DiLallo has positions in Brookfield Renewable, Brookfield Renewable Partners, and Waste Management. Neha Chamaria has no position in any of the stocks mentioned. Reuben Gregg Brewer has positions in Brookfield Renewable Partners. The Motley Fool recommends Brookfield Renewable, Brookfield Renewable Partners, and Waste Management. The Motley Fool has a disclosure policy.