5 Top Dividend Stocks Yielding 5% or More to Buy Right Now for Passive Income
They back their payouts with recurring cash flows and high-quality balance sheets.
These companies also have solid records of increasing their dividends.
10 stocks we like better than Realty Income ›
The S&P 500's (SNPINDEX: ^GSPC) dividend yield is approaching record lows at around 1.2%. However, that doesn't mean passive income seekers are out of luck. Several high-quality companies currently offer dividends with yields of 5% or more.
Here's a look at five top dividend stocks to buy for passive income right now.
Realty Income (NYSE: O) currently has a dividend yield above 5.5%. The real estate investment trust (REIT) backs that payout with a high-quality real estate portfolio and financial profile.
The company owns a diversified portfolio (retail, industrial, gaming, and other properties) net leased to many of the world's leading companies. Net leases produce very stable rental income because tenants cover all property operating expenses, including building insurance, real estate taxes, and routine maintenance.
The REIT has an exceptional record of paying dividends. It has declared 661 consecutive monthly dividends since its formation. Meanwhile, Realty Income has increased its dividend 131 times since its initial public listing in 1994. It has raised its payout 111 straight quarters and for 30 years in a row.
With a durable portfolio and fortress financial profile, Realty Income should have no trouble continuing to increase its high-yielding dividend in the future.
Clearway Energy (NYSE: CWEN.A) (NYSE: CWEN) has a dividend yield currently just below 5.5%. The clean power producer generates lots of stable cash flow to cover its dividend by selling electricity to utilities and large corporate customers under long-term, fixed-rate power purchase agreements.
The company uses its financial flexibility to invest in additional income-generating clean energy assets. Clearway has lined up several new investments that it expects to close over the next few years. That gives it a clear line of sight to grow its cash available for dividends from $2.08 per share this year to over $2.50 per share by 2027. That supports the company's plan to increase its high-yielding payout within its 5% to 8% annual target range.
Healthpeak Properties (NYSE: DOC) yield is over 6.5%. The healthcare REIT has recently switched to a monthly dividend payment schedule, making it an ideal choice for those seeking to generate passive income. It backs its payout with a high-quality portfolio of healthcare properties (outpatient medical buildings, purpose-built labs, and senior housing communities).
The healthcare REIT's portfolio produces stable and growing income to support its high-yielding dividend. Healthpeak also has a very strong financial profile, featuring a conservative dividend payout ratio and investment-grade balance sheet. It currently has $500 million to $1 billion of capacity on its balance sheet to support additional accretive investments and opportunistic share repurchases. As the REIT utilizes its spare investment capacity to grow its cash flow per share, it will be able to continue increasing its healthy dividend.
Oneok's (NYSE: OKE) dividend yield exceeds 5%. The energy infrastructure company backs that payout with very stable cash flows. About 90% of its earnings come from fee-based sources.
Its stable cash flow profile has enabled Oneok to deliver more than a quarter-century of dividend stability and growth. While the pipeline giant hasn't increased its payout every year, it has nearly doubled its dividend payment over the past decade.
The midstream giant aims to increase its high-yielding dividend by 3% to 4% annually over the coming years. Fueling that growth will be a combination of acquisition synergies and expansion projects. Oneok has made several deals over the past few years, including closing its merger with EnLink earlier this year, that will boost its bottom line as it captures cost savings and new commercial opportunities. Additionally, Oneok has several organic expansion projects under construction, including a joint venture to build a new export terminal that should come online in early 2028.
Verizon (NYSE: VZ) has a dividend yield approaching 6.5%. The telecom giant generates lots of recurring cash flow as customers pay their wireless and broadband bills. Last year, Verizon generated $19.8 billion in free cash flow after funding $17.1 billion in capital expenditures to expand its 5G and fiber networks. That easily covered its $11.2 billion in dividend payments to shareholders, enabling the company to retain cash to strengthen its already rock-solid balance sheet.
The company's free cash flow should grow over the long term as its capital investments expand its network (and revenue) and it closes its accretive acquisition of Frontier Communications. That should enable Verizon to continue increasing its dividend. Last year, it delivered its 18th consecutive annual dividend increase, the longest current streak in the U.S. telecom sector.
Realty Income, Clearway Energy, Healthpeak Properties, Oneok, and Verizon all pay dividends with yields above 5%, backed by recurring cash flow and strong balance sheets. Those factors put their high-yielding payouts on rock-solid ground and enable them to invest in growing their businesses, which supports dividend growth. That makes them great stocks to buy and hold to generate passive income.
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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 Healthpeak Properties, Oneok, and Verizon Communications. The Motley Fool has a disclosure policy.
5 Top Dividend Stocks Yielding 5% or More to Buy Right Now for Passive Income was originally published by The Motley Fool
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