Investing in dividend stocks is a great way to do that start collecting passive income. Many companies pay dividends, and some also offer dividends very attractive payouts. Several high-quality dividend stocks are currently yielding more than 5%, significantly above the S&P500s on average around 1.3%.
Here are five great, higher-yielding dividend stocks to buy now for passive income.
Generate a lot of income
Dominion energy (NYSE:D) currently has a dividend yield of approximately 5.5%. The utility generates terribly stable income supported by government-regulated rate structures and stable electricity demand to support the high payout. Its current focus is on providing dividend stability while investing in expanding its operations and transitioning its power generation fleet to lower-carbon energy.
These investments should grow operating income by 5% to 7% annually, while declining steadily dividend payout ratio (from the current level of around 80% down to the target of 60%). That will put the payout at one stronger foundation and ultimately put Dominion in a position where it could grow its dividend again.
More growth ahead
Enbridge‘S (NYSE: ENB) dividend yield currently more than 7.5%. The Canadian pipeline and utility company produces terribly predictable revenues supported by long-term contracts and government-regulated rate structures. That gives the country the fuel to pay dividends and invest in expanding its infrastructure portfolio.
It currently has a billion-dollar backlog of expansion projects underway. It also routinely makes accretive acquisitions (it is currently working on closing one one-time purchase of three gas companies from Dominion).
Enbridge expects these catalysts to grow cash flow per share by 3% annually through 2026, and 5% per year thereafter. The growing cash flow should allow the company to continue increasing its dividend, which Enbridge has done for 29 years straight away year.
Living up to his name
Real estate income (NYSE:O) currently offers a dividend yield of almost 6%. The real estate investment trust (REIT) owns a diversified portfolio of income-generating commercial real estate, which delivers it with a fixed one flow of cash flow.
The REIT stands out for its ability to routinely grow its assets monthly dividend. It recently announced its 126th dividend increase since going public in 1994, during which time it has increased its payout by 4.3% annually.
Realty Income should be able to continue increasing its dividend. It expects to grow cash flow per share by 4% to 5% annually, driven by rental growth and additional property acquisitions. It has expanded the opportunities presented in recent years by adding new property types (e.g. gaming and data centers) and regions (additional European countries) to increase its ability to continue growing its dividend.
A healthy dividend
Pfizer (NYSE:PFE) currently offers a dividend yield of over 6%. The pharmaceutical giant has paid 342 consecutive quarterly dividends. Late last year marked the 15th consecutive year in which it increased its dividend.
The company also invests heavily in the growth of its activities. It bought Seagen late last year in a blockbuster $43 billion deal to boost its ability to develop new cancer treatments. It also invests heavily in research and development. Pfizer wants to double the number of cancer patients it treats by 2030 by bringing several more blockbuster drugs to market.
These investments should increase revenues and cash flow so that it is possible continue to increase its dividend.
A free cash flow machine
Verizon‘S (NYSE: VZ) the dividend yield is over 6.5%. The telecom giant generates a lot of cash flow, which it uses to reinvest in its business, pay dividends and strengthen its balance sheet.
Last year, Verizon generated $18.7 billion in free cash flow after financing capital expenditures. That easily covered the $11 billion in dividend payments. It diverted its excess free cash flow continue pushing it’s already solid leverage ratio lower (from 2.7 times to 2.6 times over the past year).
The telecom giant has an excellent track record when it comes to increasing its dividend. It achieved its 17th consecutive annual dividend increase late last year, the longest current streak in the U.S. telecom sector. This upward trend must continue. Verizon’s investments in 5G are driving an increase in revenue. In the meantime, cost cuts and debt repayments should boost free cash flow.
Excellent income shares
Dividend stocks can be an excellent source of passive income. Dominion, Enbridge, Realty Income, Pfizer and Verizon stand out for their above-average revenue streams. Their payouts are all on solid footing and should move higher in the future, making them great options for those looking for sustainable income streams.
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Matt DiLallo has positions at Enbridge, Realty Income and Verizon Communications. The Motley Fool holds and recommends positions in Enbridge, Pfizer, and Realty Income. The Motley Fool recommends Dominion Energy and Verizon Communications. The Motley Fool has a disclosure policy.
5 Dividend Stocks Yielding At Least 5% To Buy Now For Passive Income was originally published by The Motley Fool
