Investing in dividend stocks can be a great way to generate passive income. Many high-quality companies offer higher yields. Plus, several of these top-notch income producers are steadily increasing their payouts annualmaking them better than the fixed income you can get from a bond.
Brookfield Renewable (NYSE: BEPC)(NYSE: BEP), Children’s Morgan (NYSE: KMI)And Vici properties (NYSE: VICI) stand out as great income shares to buy now. They all offer dividend yields by at least 5%, which makes them several times higher than the S&P 500 index dividend yield of less than 1.5%. Meanwhile, they have a solid track record of increasing their payouts every year, which seems very will probably continue.
A powerful income stream
Brookfield Renewable is one of the world’s leading renewable energy producers. It has a globally diversified portfolio of hydro, wind and solar assets that generate clean electricity. It sells that energy to utilities and large corporate buyers under long-term power purchase agreements. Those contracts provide the company with stable and growing income (70% link electricity prices to inflation).
The company pays out a fair portion of its stable cash flow to support its high-yielding dividend (less than 75% of its Funds from operations (FFO) in the first half of this year). That gives it a nice cushion while also preserving cash to fund new investments. Brookfield Renewable also has a strong investment grade balance.
The leading renewable energy company expects its FFO per share to grow by more than 10% annually through at least 2028. This forecast is supported is a combination of inflation-related rate hikes, margin-enhancing activities, development projects and acquisitions. Those catalysts should give it enough power to realize its plan to increase its dividend by 5% to 9% each year. Brookfield has increased its payout by at least 5% for 13 directly years.
A lot of of fuel to grow this highly productive agricultural land dividend
Kinder Morgan operates the largest gas pipeline network in North America And other energy infrastructure assets. These companies generate very stable cash flow. About 68% comes from take-or-pay and hedging contracts, meaning it gets paid a fixed amount regardless of volumes and market prices. Fee-based agreements (fixed-price and variable-volume contracts) make up another 27% of the profit mix, leaving only 5% of earnings exposed to commodity prices.
The pipeline giant pays out a little bit more than half of its stable cash flow in dividends, keeping the rest to fund expansion projects, share buybacks and maintain a strong balance sheet. The company currently has $5.2 billion in expansion projects under construction, half of which are expected to come online by the end of next year and will generate revenue growth in the near term. Kinder Morgan can supplement its solid organic growth rate with accretive acquisitions.
The company’s growing cash flows would give it the fuel to continue increasing its dividend. Earlier this year, it implemented its seventh consecutive annual dividend increase.
A low-risk bet on a growing income stream
Vici Properties is a real estate investment trust (REIT) aimed at owning experience-driven properties such as gaming, hospitality and entertainment destinations. It leases these properties back to operators under long-term contracts net leasesThese leases provide predictable cash flow that increases over time thanks to contractual rent increase clauses.
The REIT pays out about 75% of its stable rental income in dividends, with the remainder held back to fund new income-generating real estate investments. It also has a strong balance sheet, giving it additional flexibility to make new investments.
Vici Properties has multiple growth engines beyond rental growth. It will acquire experience-oriented properties in sale-leaseback transactions with the operators, buy properties from other investors and even acquire rival REITs. In addition, it provides financing to partners for development and expansion projects, which can open the door to future property acquisitions.
The company’s growing cash flow helps support a steadily rising dividend. Vici Properties has increased its payout in all six years since it went public, and has grown its dividend at an industry-leading compound annual rate of 7.9%.
High Income Stocks
Brookfield Renewable, Kinder Morgan and Vici Properties offer high-yielding dividends that have grown steadily over the years. Of strong financial profiles and solid growth prospects, which should continue upward trends. That makes them great stocks to buy now for passive income.
Should You Invest $1,000 in Kinder Morgan Now?
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Matt DiLallo has positions in Brookfield Renewable, Brookfield Renewable Partners, Kinder Morgan, and Vici Properties. The Motley Fool has positions in and recommends Brookfield Renewable, Kinder Morgan, and Vici Properties. The Motley Fool recommends Brookfield Renewable Partners. The Motley Fool has a disclosure policy.
3 5% Yielding Dividend Stocks You Can Buy Now For Passive Income was originally published by The Motley Fool
