These companies pay high-yielding and steadily rising dividends.
Dividend yields have been on a downward trend over the past year due to rising stock prices. The S&P 500‘s dividend yield is down to less than 1.2%, approaching its lowest level on record. Because of that, it’s getting harder to find stocks with attractive payouts.
However, it’s not impossible. Clearway Energy (CWEN 0.67%) (CWEN.A 0.89%), Realty Income (O 0.83%), and Verizon (VZ 0.55%) currently stand out for their high dividend yields. The trio pays sustainable and steadily rising dividends, making them appealing options for those seeking to generate passive income.
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A powerful dividend stock
Clearway Energy’s dividend currently yields 6.3%. The company owns one of the country’s largest clean power platforms. It sells the electricity generated by its wind, solar, energy storage, and natural gas assets to utilities and large corporations under long-term, fixed-rate power purchase agreements (PPAs). Those contracts supply Clearway with stable and predictable cash flow to support its high-yielding dividend.
The company aims to pay out between 70% and 80% of its steady cash flows in dividends, retaining the remainder to invest in new income-generating renewable energy assets. The company has already secured several new investments, including plans to repower some existing wind farms and agreements to purchase several renewable energy projects currently under development. These secured investments position Clearway to grow its cash flow per share by more than 20% over the next two years. That should support a dividend increase of more than 10% from the current level by the end of 2027.
Clearway has multiple drivers to support its continued growth beyond 2027. It can repower additional wind farms, add battery storage to existing facilities, buy development projects from a related company, and acquire operating assets from third parties. The company believes it has the financial capacity to support 5% to 8%+ annual cash flow per share growth beyond 2027, which could support dividend increases within that target range.
A very consistent dividend stock
Realty Income’s dividend yield is 5.4%. The real estate investment trust (REIT) pays dividends monthly, making it even more attractive to passive income-seeking investors.
The REIT also has a stellar record of increasing its dividend. It has raised its payment 132 times since its public market listing in 1994. Realty Income has increased its dividend for 112 consecutive quarters and more than 30 straight years. It has grown its payout at a 4.2% compound annual rate during that timeframe.
Realty Income backs its high-yielding and steadily rising dividend with a diversified real estate portfolio (retail, industrial, gaming, and other properties). It invests in high-quality properties secured by long-term triple net leases (NNN), which provide it with very durable and stable cash flow. The REIT pays out about 75% of its cash flow in dividends, retaining the rest to reinvest in additional income-generating properties. Realty Income sees a staggering $14 trillion investment opportunity in NNN real estate, giving it a long growth runway.
The streak continues
Verizon leads this group with a 6.4% dividend yield. The telecom giant backs its big-time payout with recurring cash flow as consumers and businesses pay their wireless and internet bills.
The company generates massive cash flows ($38 billion in operating cash flow is expected this year), providing it with the funds to invest in projects that maintain and expand its networks, pay dividends, make acquisitions, and repay debt. Verizon is currently using its strong financial profile to acquire Frontier Communications in a $20 billion deal aimed at enhancing its fiber network. The company’s growth investments should enable it to continue expanding its copious cash flows.
Verizon’s financial strength and growing cash flows have enabled it to continue increasing its dividend. The company recently delivered its 19th consecutive annual dividend increase, the longest current streak in the U.S. telecom sector. With more growth ahead, that streak should continue.
Big-time income boosters
Clearway Energy, Realty Income, and Verizon pay high-yielding dividends backed by strong financial profiles. They also have solid records of increasing their dividends, which seem likely to continue. That makes them great stocks to buy right now to boost your passive income.
Matt DiLallo has positions in Clearway Energy, Realty Income, and Verizon Communications. The Motley Fool has positions in and recommends Realty Income. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy.