Investing in dividend stocks is a popular strategy for generating passive income. Many companies pay dividends to their shareholders, providing them with a steady stream of income. Some companies offer very attractive payouts, with several high-quality dividend stocks currently yielding over 5%, significantly above the S&P 500’s average of around 1.3%.
Here are five great higher-yielding dividend stocks to consider for passive income:
1. Dominion Energy (NYSE: D) – Dominion Energy currently has a dividend yield of around 5.5%. The utility company generates stable income backed by government-regulated rate structures and stable electricity demand. Its focus is on providing dividend stability while investing in expanding its operations and transitioning its power generation fleet to lower-carbon energy. Dominion Energy’s investments are expected to grow its operating earnings at a 5% to 7% annual rate while reducing its dividend payout ratio, putting its payout on a stronger foundation for future growth.
2. Enbridge (NYSE: ENB) – Enbridge’s dividend yield is currently over 7.5%. The Canadian pipeline and utility company produces predictable income backed by long-term contracts and government-regulated rate structures. Enbridge has a multibillion-dollar backlog of expansion projects and routinely makes accretive acquisitions to grow its cash flow per share. The company expects its cash flow to grow by 3% annually through 2026 and by 5% per year after that, enabling it to continue increasing its dividend, which it has done for 29 straight years.
3. Realty Income (NYSE: O) – Realty Income offers a dividend yield approaching 6%. As a real estate investment trust (REIT), Realty Income owns a diversified portfolio of income-producing commercial properties, providing a steady stream of cash flow. The REIT has a track record of increasing its monthly dividend and expects to grow its cash flow per share by 4% to 5% annually, driven by rent growth and property acquisitions.
4. Pfizer (NYSE: PFE) – Pfizer currently offers a dividend yield above 6%. The pharmaceutical giant has paid 342 consecutive quarterly dividends and has increased its dividend for 15 straight years. Pfizer is investing in growing its business through acquisitions and research and development to expand its product offerings. These investments are expected to grow its earnings and cash flow, supporting future dividend increases.
5. Verizon (NYSE: VZ) – Verizon’s dividend yield is over 6.5%. The telecom giant generates significant cash flow, which it uses to reinvest in its business, pay dividends, and strengthen its balance sheet. Verizon has a history of increasing its dividend and has delivered its 17th consecutive annual dividend increase. The company’s investments in 5G technology, cost reductions, and debt repayment are expected to boost its free cash flow and support future dividend growth.
In conclusion, dividend stocks can be an excellent source of passive income. Dominion Energy, Enbridge, Realty Income, Pfizer, and Verizon are all solid options for investors seeking sustainable income streams. These companies offer above-average dividend yields with strong fundamentals, making them attractive choices for income-focused investors. Consider adding these dividend stocks to your portfolio for long-term income generation.
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