Investors looking to generate income are turning their attention to high-yield dividend stocks as an alternative to bonds. Three companies that offer higher income yields than many high-quality fixed income investments are Kinder Morgan (NYSE:KMI), Verizon (NYSE:VZ), and WP Carey. The dividends from these companies not only provide a stable income stream, but are also expected to increase in the future.
On Monday, Kinder Morgan, a pipeline giant listed on the NYSE, was spotlighted for its 6.6% dividend yield. This exceeds the returns of most high-quality bonds, including the 10-year U.S. Treasury bond and the average investment-grade corporate bond. Over the past six years, the company’s dividend has been on an upward trend, with a recent increase of 2% for 2023. After paying dividends, Kinder Morgan retains half of its stable cash flow, which is primarily reinvested in expanding its energy infrastructure activities. The company plans to invest approximately $2.1 billion this year in various capital projects, such as pipeline expansions and renewable natural gas production facilities.
Verizon, a NYSE-listed telecom giant, offers a dividend yield of 7.9%. The company recently marked its 17th consecutive year of dividend growth with an increase of 1.9%. After a $10 billion spending program to boost its 5G network plans, Verizon expects to release about $1.8 billion in cash flow each quarter. This will initially be used to strengthen the robust investment-grade balance sheet. The company’s investments in 5G and cost-saving initiatives are expected to increase revenue and reduce interest expense, respectively, leading to an increase in free cash flow.
WP Carey, a diversified Real Estate Investment Trust (REIT) listed on the NYSE, offers a dividend yield of 6.7%. Since its stock exchange listing in 1998, the company has increased its dividend payout every year. Through long-term net lease agreements with tenants, it generates steadily increasing rental income from its large-scale real estate portfolio. These rental agreements often contain an annual escalation clause for the rental price, linked to the inflation rate or a fixed rate. WP Carey’s growth is driven by the acquisition of income-producing properties through sale-leaseback transactions, build-to-suit development projects and single-tenant net rental properties.
In an environment where investors are looking for dividends with higher yields than many bonds, these three companies stand out. Their payouts are predicted to increase over time, potentially offsetting the impact of inflation on purchasing power.
This article was produced with the support of AI and reviewed by an editor. For more information see our General Terms and Conditions.
Related articles
High-yield dividend stocks outperform bonds: Kinder Morgan, Verizon and WP Carey in focus
UBS Group starts its first bond sale since taking over Credit Suisse
Moderna dismisses concerns about the introduction of the Covid booster
