Forever Dividend Stocks: 5 Income Stocks I Plan to Never Sell

As I've grown older, I've steadily shifted my investment focus from growth to income. I want to become financially independent. My yardstick will be when my passive income exceeds my basic living expenses.

I've built a core income portfolio of companies I believe can supply me with growing dividend income for the rest of my life. Here are five of those forever dividend stocks that I don't plan to ever sell.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

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1. Brookfield Renewable

Brookfield Renewable (NYSE: BEPC)(NYSE: BEP) is a leading global renewable energy producer. It sells the electricity it generates to utilities and large corporate customers primarily under long-term, fixed-rate power purchase agreements (PPA), most linking rates to inflation (70% of its revenue). Those agreements supply Brookfield with stable and growing cash flow to support its dividend, which currently yields over 4.5%.

The company has increased its payout at a 6% compound annual rate since 2001. It aims to continue growing its dividend, with a target of 5% to 9% per year. It has multiple growth drivers.

Brookfield expects a combination of inflation-linked rate increases, margin enhancement activities, development projects, and acquisitions to power more than 10% annual FFO per share growth over the next decade. Given the growing need for renewable power, I believe the company can continue increasing its dividend for decades to come.

2. Brookfield Infrastructure

Brookfield Infrastructure (NYSE: BIPC) (NYSE: BIP) is the infrastructure-focused sibling of Brookfield Renewable. It operates a globally diversified portfolio of critical infrastructure networks in the utilities, energy midstream, transportation, and data sectors. Roughly 85% of its FFO comes from contracted or regulated assets that either index rates to inflation or protect Brookfield from the impact of inflation. Because of that, the company generates very stable and growing cash flow, which supports its more than 4%-yielding dividend.

The company has increased its payout every single year since its formation (16 years), growing it at a 9% compound annual rate. It also aims to raise its payout at a 5% to 9% yearly rate in the future. Growth drivers include inflation-linked rate increases, volume growth as the global economy expands, expansion projects, and acquisitions. Brookfield Infrastructure also expects to deliver 10% annual FFO per-share growth in the coming years to support a rising dividend.

3. Realty Income

Realty Income (NYSE: O) is a leading real estate investment trust (REIT). It owns a diversified portfolio (retail, industrial, gaming, and other properties) net leased to many of the world's leading companies. That lease structure requires that tenants cover all property operating costs, including routine maintenance, real estate taxes, and building insurance. This means that the REIT generates very stable rental income that steadily rises as its long-term leases escalate rental rates.

The company has one of the 10 best balance sheets in the REIT sector. That provides it with the financial flexibility to continue expanding its portfolio. It invests several billion dollars in new properties each year. These investments help grow its FFO per share, which allows Realty Income to steadily increase its dividend. The REIT has raised its monthly payout, which yields over 5.5%, 130 times since coming public 30 years ago.

4. Enterprise Products Partners

Enterprise Products Partners (NYSE: EPD) is a master limited partnership (MLP). It owns an integrated network of energy infrastructure assets, including pipelines, processing plants, storage terminals, and export facilities. Most of its assets generate stable cash flow backed by long-term fee-based contracts or government-regulated rate structures, which support its more than 6.5%-yielding distribution.

The MLP has raised its distribution for 26 straight years. That steady growth should continue. The company has one of the strongest financial profiles in the energy midstream industry. That gives it ample financial flexibility to invest in organic expansion projects and make accretive acquisitions. With one of the more diversified platforms in the sector, the company has multiple avenues to grow in the future.

5. Verizon Communications

Telecom giant Verizon Communications (NYSE: VZ) produces lots of recurring cash flow as customers pay their wireless and internet bills. The company reinvests some of that cash to maintain and expand its networks. It's currently focusing on building faster 5G and fiber networks.

Verizon typically has plenty of cash left over to cover its dividend, which yields over 6%. It uses any remaining excess free cash flow, which can be substantial, to strengthen its already rock-solid balance sheet. Its strong balance sheet gives it the flexibility to make acquisitions as opportunities arise, like its pending deal for Frontier Communications to bolster its fiber business.

Verizon's investments position it to grow its cash flow in the future. That will give it more room to raise its dividend. Verizon has increased its payout for 18 straight years, the longest current streak in the U.S. telecom sector.

A lifetime of dividend income

I'm building a core income portfolio that will eventually supply me with enough recurring cash flow to cover my basic living expenses. The foundation of that portfolio includes Brookfield Infrastructure, Brookfield Renewable, Enterprise Products Partners, Realty Income, and Verizon. Those five companies produce durable and growing cash flows, which should support sustainable, rising dividend payments. That bankable income is why I plan to hold on to these dividend stocks for the rest of my life.

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Matt DiLallo has positions in Brookfield Infrastructure, Brookfield Infrastructure Partners, Brookfield Renewable, Brookfield Renewable Partners, Enterprise Products Partners, Realty Income, and Verizon Communications. The Motley Fool has positions in and recommends Realty Income. The Motley Fool recommends Brookfield Infrastructure Partners, Brookfield Renewable, Brookfield Renewable Partners, Enterprise Products Partners, and Verizon Communications. The Motley Fool has a disclosure policy.