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2 No-Brainer Dividend Stocks to Buy Right Now for Less Than $200

Motley Fool - Mon Mar 11, 4:28AM CDT

Investing a little money in dividend-paying stocks can really add up over time. The best ones can supply you with a steadily growing income stream and solid price appreciation. Further, because most brokers don't charge commission, you can easily buy a share or two whenever you have cash to spare.

Enbridge(NYSE: ENB) and Brookfield Infrastructure(NYSE: BIPC)(NYSE: BIP) are no-brainer buys for those with less than $200 to invest right now. Here's why they could turn that relatively small sum into a much bigger payday in the coming years.

Lots of fuel to grow shareholder value

Enbridge has done an excellent job growing value for its shareholders. The Canadian pipeline and utility company has delivered an 11.2% average annual total return over the last 20 years. That has outperformed the S&P 500 (9.7%) and its peers in the utility (8%) and midstream (7.7%) sectors. At that rate, it would have grown a $200 investment into nearly $1,700 (compared to almost $1,400 for an S&P 500 index fund).

The company should have plenty of fuel to continue enriching its investors in the future. Enbridge currently pays a monster 7.6%-yielding dividend, providing investors with a strong base return. That payout is on an extremely firm foundation. Enbridge's pipelines and utility assets generate very durable and predictable cash flows. It pays out a reasonable percentage of that stable income to investors (60%-70%), giving it a big cushion while enabling it to retain cash to fund new investments. Enbridge also has a strong investment-grade balance sheet.

Enbridge currently has a massive backlog of expansion projects and is in the process of closing three natural gas utility acquisitions. These catalysts will grow its cash flow per share by 3% annually through 2026 and by 5% per year over the medium term. Add that earnings growth to its big-time income stream, and Enbridge should have the fuel to produce 10%-12% average annual total returns over the coming years.

Powerful growth drivers

Brookfield Infrastructure has also done a fabulous job enriching its investors. The global infrastructure operator has delivered a 14.8% average annual total return since its formation in 2008, easily outpacing the S&P 500's 10.6% average annual total return during that period. That has given it the fuel to grow a $200 investment into nearly $1,900 (compared to slightly more than $1,000 for an S&P 500 index fund).

The company is also in an excellent position to continue growing value for investors. Brookfield pays an attractive 4.7%-yielding dividend, which provides a solid base return. Meanwhile, the company expects to organically grow its funds from operations (FFO) per share by 6% to 9% annually. Drivers include inflation-linked rate increases, volume growth as the global economy expands, and expansion projects. The company currently has several projects under development, including a large backlog of data centers and two semiconductor fabrication plants it's building with Intel.

Brookfield Infrastructure also routinely recycles capital by selling mature assets and redeploying the proceeds into higher returning opportunities. Over the past year, it has acquired several data center platforms and a leading intermodal shipping container leasing company. The company's capital recycling strategy should continue pushing its FFO per share growth rate into the double digits. Add that to its high-yielding dividend, and Brookfield could continue producing total returns in the mid-teens.

Proven money makers

Enbridge and Brookfield Infrastructure have a knack for creating value for their shareholders. That should continue in the future. They should have the fuel to grow a small investment into a much bigger amount over the coming years. And they're also no-brainer stocks to buy for those with a couple of hundred dollars (or less) to invest right now.

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Matt DiLallo has positions in Brookfield Infrastructure, Brookfield Infrastructure Partners, Enbridge, and Intel and has the following options: long January 2025 $30 calls on Intel, short January 2025 $30 puts on Intel, short March 2024 $50 calls on Intel, and short May 2024 $50 calls on Intel. The Motley Fool has positions in and recommends Enbridge. The Motley Fool recommends Brookfield Infrastructure Partners and Intel and recommends the following options: long January 2023 $57.50 calls on Intel, long January 2025 $45 calls on Intel, and short May 2024 $47 calls on Intel. The Motley Fool has a disclosure policy.

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