These 3 Stocks Are Passive Income Warriors
Investing in dividend-paying stocks can be a great way to earn passive income. Many companies have a long history of paying their investors a share of their profits, allowing them to receive a steady stream of income.
Three leading passive income stocks are Consolidated Edison (NYSE:ED), Enbridge (NYSE: ENB)and Real estate income (NYSE:O). They offer above-average income streams with a track record of elite dividend growth.
An elite passive income generator
Consolidated Edison has the best dividend growth history in the utility sector. The company achieved its 48th consecutive year of dividend increases earlier this year, the longest period of consecutive annual dividend growth for a utility in the S&P500 index. There are only two years left before joining the elite group of Dividend Kings.
Consolidated Edison currently offers an attractive income stream with a dividend yield of around 3.6%. That’s well above the S&P 500’s 1.4% dividend yield. The New York City-focused utility should have the power to continue raising its dividend in years to come. It expects to grow its adjusted earnings per share at an annual rate of 5% to 7% over the next five years, fueled by $15.7 billion in capital investments planned through 2024.
The company invests a significant portion of this capital on green energy projects to support its long-term goal of achieving net-zero emissions by 2050, with the potential to invest $68 billion over the next decade. Given its strong balance sheet and its dividend distribution rate for a utility, Consolidated Edison should be able to make these investments while continuing to grow its attractive dividend.
The fuel to keep generating passive income
Enbridge has one of the longest track records of dividend growth in the energy industry. The Canadian energy infrastructure giant has increased its payments for 27 consecutive years. This is impressive considering the volatility of the sector over the years. Enbridge has mitigated this impact by owning stable infrastructure assets such as pipelines, natural gas utilities and renewable power generation facilities.
The company should have plenty of fuel to grow its attractive 6.1% dividend going forward. It has a solid balance sheet, a reasonable dividend payout ratio for an intermediate energy company and a large backlog of expansion projects. Enbridge believes it has the financial capacity and visible investment opportunities to sustain annual cash flow per share growth of 5% to 7% through at least 2024.
Meanwhile, he sees plenty of opportunities for expansion beyond this period, especially in low-carbon energy like renewables, natural gas infrastructure, carbon capture and storage, and hydrogen. This should give him the power to continue to increase his payments in the years to come.
True to its name
Realty Income has been one of the real estate investment trust’s most trusted passive income holdings (REITs) sector. The company, which pays a monthly dividend, recently announced its 115th raise since its IPO in 1994. The REIT has granted investors a raise for the past 98 consecutive quarters while increasing its payout at an annual rate of 4.4%. That’s over 25 consecutive years of dividend increases, calling it a Dividend Aristocrat. Realty Income is one of the few REITs in this elite group.
The company should be able to continue to grow its dividend by 4.5% going forward. He is coming off a monster year where he acquired fellow countryman REIT VEREIT in an $11 billion deal while buying a record $6.4 billion in additional properties. The company has also de-risked its portfolio by splitting its combined office assets to create Orion Office REIT.
Realty Income expects to buy at least $5 billion worth of properties this year. It’s already a good start, agreeing to acquire the Encore Boston Harbor Resort and Casino for $1.7 billion. This is the company’s first acquisition in the gaming industry, which will help diversify its retail-focused portfolio. Realty Income has significant financial flexibility to continue to grow its portfolio to support steady dividend increases.
Sit back and collect passive income with these actions
Enbridge, Consolidated Edison and Realty Income are excellent passive income producers. They allow their investors to collect ever-increasing streams of income. With attractive current yields and visible growth prospects, they continue to look like great ways to generate stable passive income in the future.
10 stocks we like better than Consolidated Edison
When our award-winning team of analysts have stock advice, it can pay to listen. After all, the newsletter they’ve been putting out for over a decade, Motley Fool Equity Advisortripled the market.*
They just revealed what they think are the ten best stocks investors can buy right now…and Consolidated Edison wasn’t one of them! That’s right – they think these 10 stocks are even better buys.
View all 10 stocks
* Equity Advisor Returns as of March 3, 2022
Matthew DiLallo owns Enbridge and Realty Income. The Motley Fool owns and recommends Enbridge. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.