Generating passive income is a key aspect of my early retirement strategy. I am working on making my sources of passive income so that I no longer have the stress of having to work for money. The most important aspect of my plan is to invest in companies that pay above average dividends that should grow steadily over the next few decades.
Real estate income (NYSE: O), Brookfield Infrastructure (NYSE: BIPC)(NYSE: BIP)And Enbridge (NYSE: ENB) are core components of my passive income generation strategy. This is why I own this beautiful dividend shares and I plan to continue to add to my positions in the coming years to generate even more dividend income.
A model of consistency
Realty Income has lived up to its name for years. The real estate investment trust (REIT) has paid its investors a sustainable and steadily growing stream of dividend income over the years. The company has 650 consecutive monthly dividends over the course of its history. It has increased its payout 126 times since going public in 1994, including 107 consecutive quarters. The REIT has increased its dividend at a compound annual rate of 4.3% over that three-decade period.
It is well positioned to continue paying a growing monthly dividend. The REIT has a highly sustainable real estate portfolio. About 90% of its rent comes from properties leased to tenants in sectors that are resilient to the impact of recessions or the threat of e-commerce. In the meantime, it is leveraging long-term net leaseswho deliver terribly stable rental income because tenants pay the building insurance, maintenance and property taxes. These leases also usually contain clauses for annual rent increases.
Realty Income has a very conservative financial profile, which allows it to continue investing in income-producing real estate. It has a huge opportunity set, with an estimated total addressable market of $14 trillion for net lease real estate in the U.S. and Europe. The REIT believes it can acquire enough properties every year to grow its cash flow per share by 4% to 5% annually. That should support a similar growth rate in its dividend yield of more than 5%.
High octane growth
Brookfield Infrastructure operates a globally diversified infrastructure platform focused on the utilities, midstream, transportation and data sectors. Most of his companies generate a stable cash flow supported by long-term contracts or government-regulated tariff structures, which account for about 90% of profits. Meanwhile, 85% of revenues are indexed Unpleasant or protected against inflation.
The company pays out 60% to 70% of stable cash flow in dividends. It will keep the remainder to help fund new revenue-generating infrastructure investments. Brookfield Infrastructure also has a strong investment-grade balance sheet. The company estimates its strong growth engines should be able to increase cash flow per share by more than 10% annually.
Brookfield Infrastructure’s growing cash flow should allow it to increase its dividend, which currently stands at around 4%, by about 5% to 9% annually. The company has increased its dividend every year since its IPO it has been growing at a compound annual rate of 9% since 2009.
Enough fuel to keep the streak alive
Enbridge has a great track record when it comes to paying dividends. The Canadian pipeline and utility operator has been paying dividends for more than 69 years. It increased its payout in each of for the past 29 consecutive years, with a compound annual growth rate of 10%.
While Enbridge likely will not grow its dividend so fast In the future it will still have enough fuel to further increase benefits. The company currently has approximately $17.7 billion of secured capital projects in its order book. These projects include oil storage and export capacity, natural gas pipeline expansion projects, an investment in a liquefied natural gas export terminal, gas utility expansions and renewable energy projects. The company’s current slate of capital projects is expected to come on stream through 2028, giving it strong visibility for future growth.
Enbridge estimates its growth engines will increase cash flow per share by 3% annually through 2026 and by about 5% per year afterwards. That drives her belief that she should be able to get her almost 7% return dividend with a maximum of 5% per year in the future.
Machines that generate income
Realty Income, Brookfield Infrastructure, and Enbridge have excellent records of increasing their high-yielding dividends. Given that this should continue in the coming years, I plan to continue adding to my positions in these elite passive income stocks. Their high yield and steadily increasing dividends should allow me Unpleasant possibly achieve my passive income goal.
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Matt DiLallo has positions in Brookfield Infrastructure Corporation, Brookfield Infrastructure Partners, Enbridge, and Realty Income. The Motley Fool has positions in and recommends Enbridge and Realty Income. The Motley Fool recommends Brookfield Infrastructure Partners. The Motley Fool has a disclosure policy.
3 Great Dividend Stocks I Plan to Keep Buying for a Lifetime of Passive Income was originally published by The Motley Fool
