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Whether you’re already retired or decades away, it’s never too early (or too late) to start saving. It can be tough to know what to invest in, but reliable dividend-paying stocks have been shown to outperform their nonpaying peers, on average, over the long term. 

With thousands of dividend payers to consider, which ones are the best? Here are three smart investments that should help you grow your retirement nest egg.

Growing fast: Brookfield Infrastructure

This infrastructure-focused subsidiary of the Brookfield family can be purchased by buying shares of traditional stock in Brookfield Infrastructure Corporation (NYSE: BIPC), or by buying units of its master limited partnership (MLP) Brookfield Infrastructure Partners (NYSE: BIP). Dividend investors could buy either (or both), but there are a couple of things to be aware of. 

First of all, while MLPs are similar to stocks, they’re not exactly the same. For one thing, an MLP pays distributions to unitholders rather than dividends to stockholders. Because MLPs have been given preferred tax status in exchange for paying out almost all their cash flow to unitholders, those distributions tend to be comparatively large. Indeed, the yield on Brookfield Infrastructure Partners is currently 4.6%. 

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However, MLP ownership requires some extra work around tax time (including filing a K-1 form), and MLPs don’t play well with certain types of tax-advantaged retirement accounts like Roth IRAs. Depending on whether you’re in retirement or funding a retirement account, you may want to go with shares of Brookfield Infrastructure Corporation instead.

Either pick will give you ownership in a diversified set of fast-growing infrastructure assets around the globe, with a secure and growing payout. Brookfield Infrastructure is a top pick. 

A new old company: Dow Chemical

Chemical giant Dow Chemical(NYSE: DOW) has been around for more than a century, but if you look up its ticker symbol, you’ll find less than two years of history. That’s because Dow merged with fellow U.S. chemical behemoth DuPont in 2017 to form the massive DowDuPont. That merger allowed the companies to reshuffle their product offerings before Dow was spun off in 2019. 

Dow ended up with the Performance Chemicals portfolio, which primarily consists of chemicals that aren’t sold to consumers by themselves, but are instead components of other products or industrial processes. These include lubricants, coatings, packaging materials, and adhesives to name a few. The good news for Dow is that such chemicals are used in a wide variety of industries and products, so weak demand in one of the company’s businesses is often offset by strength elsewhere in the portfolio.

This portfolio generates reliable cash flow, which has grown over the company’s brief stint as a stand-alone entity to about $6.5 billion per year. That’s more than enough to cover Dow’s current 5.8% dividend yield. The company isn’t likely to grow its payout as quickly as Brookfield Infrastructure, but it remains a solid choice for retirement portfolios.

A necessary service: Republic Services

Trash is big business in North America, and most of that business goes to the continent’s top two landfill operators and trash haulers, Waste Management (NYSE: WM) and Republic Services (NYSE: RSG). Both have been on major growth streaks, seeing their share prices more than double over the last five years. And both should experience even more growth as the population continues to increase and as they’re able to adjust their contract terms to account for the changing economics of recycling, which is now seen as a necessary service.

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Waste Management’s current dividend yield of 1.7% just edges out Republic’s 1.6%, but Republic looks like the better buy right now for dividend investors. After a series of positive earnings reports, Waste Management’s stock is currently trading at 34.9 times earnings, which is near an all-time high for the company and at the upper end of its five-year range. 

Republic, on the other hand, is trading at a slightly lower valuation of 32 times earnings, which is still on the higher end of its five-year history, but not quite as far out of the norm as Waste Management. While either stock should provide long-term value to a retiree’s portfolio, Republic edges out its larger rival right now.

Growth and value

It’s tempting to only look at dividend stocks by their yields, specifically high yields like Dow’s. However, a lot of the value that dividend payers generate can also come from growth, which has been the case at Republic Services and Brookfield Infrastructure. Combining the power of the two is a great way to supercharge a dividend portfolio.

John Bromels owns shares of Brookfield Infrastructure Partners, The Dow Chemical Company, and Waste Management. The Motley Fool recommends Brookfield Infrastructure, Brookfield Infrastructure Partners, and Waste Management. The Motley Fool has a disclosure policy.

The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.

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