Buying and holding dividend stocks is an easy way to start generating passive income. Many companies pay their investors a share of their profits every quarter (or every month, in some cases). These payments often increase as companies increase their profits.
There are many high-quality dividend stocks that pay reliable and steadily increasing dividends. Here are five top companies that offer higher yielding dividends this is expected to grow in 2024 and beyond.
|
Business |
Current performance |
Annual dividend on an initial investment of $1,000 |
|---|---|---|
|
Energy transfer (AND 0.14%) |
9.02% |
$90.20 |
|
6.08% |
$60.80 |
|
|
Real estate income (Oh 1.08%) |
5.42% |
$54.20 |
|
4.28% |
$42.80 |
|
|
Verizon (VZ -0.27%) |
7.07% |
$70.70 |
|
Total |
6.37% |
$318.70 |
Data source: Google Finance and author’s calculations.
As this chart shows, $5,000 invested evenly in these five companies could produce more than $300 in dividends next year. And they’re great options for those looking to generate a steadily growing passive income stream.
Energy transfer
Energy transfer is a master limited partnership (MLP) which operates midstream energy assets such as pipelines and processing plants. These assets produce stable cash flows backed by long-term contracts and government-regulated pricing structures. This provides Energy Transfer with predictable cash flow to pay dividends.
The MLP typically distributes a little more than half of its cash flow to investors. It retains the rest to finance expansion projects and maintain a strong financial profile. Energy Transfer currently has several projects under construction that are expected to begin contributing to its cash flow in 2024. In addition to this, the company recently completed two significant acquisitions. These growth drivers will give the MLP enough fuel to achieve its goal of increasing its already massive payouts by 3-5% per year.
Clearway Energy
Clearway Energy owns and operates renewable energy and natural gas power generation facilities. It sells the electricity produced by these assets to utilities and businesses under long-term, fixed-rate agreements. These contracts provide it with predictable cash flows.
The company has set a goal of increasing its already high yield by 5% to 8% annually, and expects its increases to be near the upper end of that target range through 2026. It has already secured all the necessary investments and funding to achieve this. It profited from its thermal business in 2022, giving it funds to recycle into higher-yielding renewable energy investments. It has already made several acquisitions that are expected to fuel growth in 2024. At the same time, it has reached agreements to purchase several other renewable energy projects currently under development, giving it a clear vision of how it will position itself to cover the dividend growth it is currently achieving. targeting.
Real estate income
Confidence in real estate investment (REIT) Realty Income focuses on commercial real estate. It has a diverse portfolio of properties (primarily commercial, industrial and gaming) leased on a long-term basis. net leases. This rental structure ensures constantly increasing rental income, with rates often increasing each year.
The REIT is gradually expanding its portfolio by investing in additional income-generating real estate. He recently agreed to buy another REIT Real Estate Spirit in $9.3 billion deal, which will boost its adjusted revenue funds from operations by more than 2.5% per share next year. This represents more than half of the targeted annual growth rate of 4-5%. The company has many ways to continue growing as it has gradually expanded its reach to new types of properties (data centers and vertical farming), countries (Italy and Ireland), and investment platforms (credit). Its steady growth should allow Realty Income to continue increasing its monthly payouts, which it has done 123 times since its 1994 IPO.
Brookfield Infrastructure
Brookfield Infrastructure has a diversified portfolio of infrastructure businesses in the utilities, midstream energy, transportation and data infrastructure sectors. These businesses generate steadily increasing cash flows, supported by long-term contracts and government-regulated rate structures that typically feature inflation-linked rate increase provisions. This gives it the funds to pay a growing dividend. Brookfield has increased its payouts for 14 consecutive years, and at an annualized rate of 8% over the past decade.
The company aims to continue increasing its payouts by 5-9% per year. Its revenue growth drivers include inflation-related rate increases, development projects and acquisitions. Brookfield has closed four needle-moving deals this year (three data center investments and a leading global container rental company). These acquisitions should give it the fuel to once again grow its funds from operations per share at a double-digit pace in 2024.
Verizon
Telecommunications giant Verizon needs no introduction. It is a leading provider of mobile and broadband services. These businesses generate huge cash flow, giving the company the funds to invest in growing its business (5G), pay a constantly increasing dividend and maintain a solid balance sheet. Verizon has made its 17th consecutive annual dividend increase in 2023.
This steady upward trend is expected to continue. The telco recently passed the peak investment phase for its 5G network, which will free up additional cash flow it can use to reduce debt. Lower debt and cost-cutting initiatives should further boost its cash flow. Meanwhile, its investments in 5G are driving revenue growth as more customers upgrade to this faster network. Verizon’s growing cash flow and lower debt load will put it in an even better position to continue increasing its dividends in the future.
High quality income stocks
Energy Transfer, Clearway Energy, Realty Income, Brookfield Infrastructure, and Verizon are great dividend stocks. They offer investors high-yield payouts that are expected to continue to increase in the future. For this reason, these would be great ways to start generating passive income in 2024.
Matthew DiLallo holds positions in Brookfield Infrastructure, Brookfield Infrastructure Partners, Clearway Energy, Energy Transfer, Realty Income and Verizon Communications. The Motley Fool posts and recommends Realty Income. The Motley Fool recommends Brookfield Infrastructure Partners and Verizon Communications. The Mad Motley has a disclosure policy.
