Several companies are currently offering high-yielding dividends that are steadily increasing, which can serve as a means to generate passive income. Accumulating passive income can contribute to greater financial freedom, reducing reliance on active income and potentially lowering stress levels over time. One popular method for boosting passive income is investing in dividend stocks. Notable examples of these investments include Realty Income, Kinder Morgan, and Verizon Communications.
Realty Income, a real estate investment trust (REIT), specializes in delivering reliable monthly dividends that grow progressively. The company has consistently increased its payout for 30 consecutive years, including over the past 108 quarters. Realty Income offers a yield exceeding 5%, significantly higher than the average dividend yield of the S&P 500, which is below 1.5%. The company’s growth prospects in adjusted funds from operations (FFO) are expected to remain steady at roughly 4% to 5% per share annually, driven by rent growth and acquisitions of income-generating properties. With a robust financial structure and extensive investment opportunities in the U.S. and Europe, Realty Income is well-positioned to continue expanding its dividend offerings.
Kinder Morgan, a leading pipeline company in the U.S., manages the largest natural gas pipeline network in the country. The company’s midstream assets generate stable cash flows, underpinned by government-regulated rates and long-term contracts. Kinder Morgan allocates a little more than half of its cash flow to dividends, using the remainder for expansion projects and financial maintenance. The company currently has $5.2 billion worth of expansion initiatives underway, including a notable $1.7 billion natural-gas pipeline project slated for completion in late 2028. Such initiatives bolster the company’s cash flow, thus supporting future dividend increases, which have occurred over the past seven years.
Verizon Communications recently announced its 18th consecutive annual dividend increase, maintaining the longest current streak in the U.S. telecom sector. The company’s dividend yield stands at 6.5%, bolstered by its capacity to generate more cash than needed for capital expenditures and dividends. Verizon is using this surplus cash to reinforce its financial stability. Furthermore, the company plans to acquire Frontier Communications in a $20 billion all-cash transaction to expand its fiber offerings, enhancing earnings and free cash flow. Although this deal will temporarily elevate the company’s debt, Verizon anticipates repaying it within a few years.
Overall, Realty Income, Kinder Morgan, and Verizon present attractive opportunities with higher-yielding dividends complemented by solid financial metrics and visible growth prospects. These attributes suggest that these companies are well-positioned to sustain dividend increases, making them appealing stock options for passive income investments.
