These companies are likely to keep boosting their high-yield dividends in the years ahead.
My goal is to attain financial independence through passive income. To achieve this, I plan to diversify my income streams until they sufficiently cover my essential living costs. A key aspect of my strategy involves depositing $250 into my brokerage account monthly to invest in high-yield dividend stocks.
With my next deposit coming up later this week, I intend to invest in additional shares of Coca-Cola KO -0.52%, Brookfield Renewable BEP 1.53% BEPC 1.56%, and W.P. Carey WPC 1.56%. Here’s why I consider them great options for passive income.
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Reliable Income for Over Six Decades
Coca-Cola has proven to be a highly dependable dividend stock. With 63 consecutive years of dividend increases, it stands among the prestigious Dividend Kings. Currently, it offers a yield of over 3%, significantly higher than the S&P 500, which is below 1.2%.
This renowned beverage company supports its dividend with consistent and increasing cash flow. Approximately 73% of its adjusted free cash flow after capital expenditures is distributed as dividends. The remaining funds help to maintain a strong balance sheet, allowing for share repurchases and acquisitions.
An Excellent Dividend Stock
Brookfield Renewable has showcased remarkable income growth over the years. This global renewable energy producer has achieved a 6% compound annual growth rate in dividends since 2001, with current payouts yielding over 4%.
The clean energy producer enjoys stable and increasing cash flows, selling over 90% of its generated electricity to utilities and large corporations under long-term agreements that extend for 14 years on average, with 70% of revenue linked to inflation. These contracts are projected to increase Brookfield’s funds from operations (FFO) by 2% to 3% per year.
Gradual Recovery and Expansion
W.P. Carey has a history of increasing its dividend annually for 25 years, though that streak paused in late 2023. The diversified real estate investment trust (REIT) adjusted its dividend to better match its cash flows following a strategic shift away from the office sector.
Over the past few years, the REIT has been focused on rebuilding its portfolio and dividends. It has reinvested the capital gained from selling non-core properties into more promising investments, such as industrial real estate, planning to spend between $1.4 billion and $1.8 billion this year.
Ideal Passive Income Investments
Coca-Cola, Brookfield Renewable, and W.P. Carey represent excellent choices for dividend stocks aimed at generating passive income. They provide high and steadily increasing dividends supported by sustainable and growing cash flows. Therefore, I plan to invest another $250 in these three stocks this week to enhance my passive income streams.
Matt DiLallo holds positions in Brookfield Renewable, Brookfield Renewable Partners, Coca-Cola, and W.P. Carey. The Motley Fool recommends Brookfield Renewable and Brookfield Renewable Partners. The Motley Fool has a disclosure policy.
