Some things truly are mutually exclusive. You can't jump in the water without getting wet. You can't flip a coin and get both heads and tails. But not everything that seems mutually exclusive actually is.
For example, many investors buy dividend stocks and completely write off the possibility of achieving tremendous share appreciation. While it is often true that dividend stocks grow slower than other stocks, you can still have the best of both worlds. Here are three great dividend stocks that are also fantastic growth stocks.
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1. AstraZeneca
Most big pharmaceutical companies offer solid dividends.AstraZeneca (AZN -1.09%) is no exception, with its dividend currently yielding 2.6%. Big pharma stocks don't usually deliver tremendous growth, but AstraZeneca is an exception.
Over the last three years, AstraZeneca stock has soared more than 60% -- well above the S&P 500 index's performance during the period. Wall Street analysts project the company will generate average annual earnings growth topping 19% over the next five years.
How can a stodgy British drugmaker achieve such impressive growth? AstraZeneca has a star-studded lineup of blockbuster drugs with strong momentum. In the third quarter, for example, sales for four of the company's top blockbusters increased by at least 29%.
AstraZeneca also claims a pipeline loaded with potential winners. This pipeline includes 172 clinical-stage programs, with 24 of them in late-stage testing. It won't take very many successes from this group for AstraZeneca to continue delivering solid dividends and growth for many years.
2. Brookfield Renewable
Brookfield Renewable (BEP -0.13%) (BEPC) has grown its dividend distribution by a compound annual growth rate (CAGR) of 6% over the last two decades. You can invest in Brookfield Renewable in two ways: buy shares of the limited partnership (BEP) or buy shares of the traditional corporation (BEPC). Both stocks have the same underlying business. The limited partnership stock offers a higher dividend yield of 3% (because of share price differences), but BEP and BEPC pay out the same dividend amounts.
There's an even better reason to buy either Brookfield Renewable stock than just the dividend, though. The company is a leader in renewable energy. The future is bright for renewable energy as countries across the world work toward hitting carbon reduction goals. It also helps quite a bit that solar and wind are now the cheapest sources of bulk energy generation, with costs likely to continue trending downward.
Brookfield Renewable intends to capitalize on its huge opportunity. The company currently can produce over 19 gigawatts of energy. Its development pipeline will add another 18 gigawatts to that total.
Over the last 20 years, Brookfield Renewable has given investors an average annual total return of 18% -- triple the return of the S&P 500. The company estimates that it will deliver a total return of close to 15% going forward. It's reasonable to assume Brookfield Renewable will achieve this goal, and if it does, this stock will continue to be a dividend and growth winner.
3. Innovative Industrial Properties
Real estate investment trusts (REITs) must return at least 90% of their taxable income to shareholders in the form of dividends. That's exactly what medical cannabis-focused REIT Innovative Industrial Properties (IIPR -0.19%) does. Its dividend has increased by nearly 370% over the last three years. IIP's dividend yield now stands at 3%.
The company's dividend yield has been much higher than that in the past. However, IIP stock has skyrocketed, more than doubling in 2020 alone. This has pushed its yield lower despite the steady rise of its dividend payouts.
IIP's growth story stems from the company's rinse-and-repeat business model. It buys properties from medical cannabis operators and leases the properties back to the operators -- and then does this again and again. Basically, IIP is a money machine as it repeats this process, fueling earnings growth that drives its dividends higher in turn.
Keeping this momentum up shouldn't be a problem. IIP currently operates in 16 states, several of which have early stage, fast-growing markets. Another 19 states where the company doesn't own properties yet have legalized medical cannabis. IIP should be a great pick for investors looking for both dividends and growth.
Keith Speights owns shares of Brookfield Renewable Inc., Brookfield Renewable Partners L.P., and Innovative Industrial Properties. The Motley Fool owns shares of and recommends Innovative Industrial Properties. The Motley Fool has a disclosure policy.
