2 No-Brainer Dividend Stocks to Buy for Income This May

Matt DiLallo, The Motley Fool

Sat, May 3, 2025, 6:13 PM 5 min read

• NextEra Energy has grown its dividend at a 10% compound annual rate over the past 20 years.

• Realty Income has increased its dividend 130 times since its public market listing in 1994.

• The companies should have no trouble continuing to increase their dividends.

Many companies pay dividends. However, some dividend stocks are better suited for investors seeking income than others because of the durability of their cash flows and the strength of their financial profiles. Those features enable them to pay attractive dividends that steadily grow, even through more challenging periods.

NextEra Energy (NYSE: NEE) and Realty Income (NYSE: O) are two such dividend stocks. They've grown their dividends for 30 straight years, which includes three major economic downturns. That growth should continue in the future, even if we have more economic turbulence. Because of that, they're no-brainer income stocks to buy this May.

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NextEra Energy has done an amazing job of growing its dividend over the years. The utility has increased its payout for more than 30 straight years. It has grown its dividend at a rather brisk 10% compound annual rate over the past two decades. That's much faster than the average utility and the S&P 500 (SNPINDEX: ^GSPC).

A few factors have contributed to its strong dividend growth. The company's businesses, a Florida-based electric utility (FPL) and a power generation and transmission platform (NextEra Energy Resources), generate very stable earnings backed by government-regulated rate structures and long-term, fixed-rate contracts. That gives it the stable cash flow to pay a lucrative dividend (nearly 3.5% current yield, compared to less than 1.5% for the S&P 500) and invest in growing its businesses. NextEra also has a strong balance sheet, which gives it additional financial flexibility.

NextEra's businesses also have built-in growth drivers. Florida's power demand is rising as the population grows, and sunshine is abundant for producing low-cost solar energy. Meanwhile, demand for renewable energy is surging, driving robust growth opportunities for its energy resources segment.

Given the growing demand for power, especially from renewable sources, NextEra expects to continue growing at a healthy rate (at or near the high end of its 6% to 8% annual guidance range through at least 2027). That growth rate and a lower dividend payout ratio for a utility should support continued dividend growth of around 10% per year through at least next year.