Good dividend stocks are getting harder to find. With stock prices soaring, dividend yields have gone in the opposite direction. Meanwhile, companies are choosing to do other things with their cash, including hoarding it in the bank, rather than paying it out to investors.

That said, one sector that continues putting a priority on paying cash out to investors is the pipeline industry. Three of the top options to consider buying are ONEOK (NYSE:OKE), TransCanada (NYSE:TRP), and Kinder Morgan (NYSE:KMI). Here's a closer look at these dividend dynamos.

A stack of cash.

Image source: Getty Images.

A hefty payout with more on the way

Natural gas pipeline and processing company ONEOK currently offers an attractive 5.9% yield. It backs that payout with three essential things. First, roughly 90% of its cash flow comes from fee-based assets, which provides it with a predictable income stream. Second, it comfortably covered its payout with cash flow by 1.29 times last quarter. Finally, it has an investment-grade credit rating, with an improving leverage ratio.

But ONEOK's dividend stability is only part of what makes it such a compelling income stock. The other is the company's growth prospects, with it expecting to increase its payout at a 9% to 11% annual rate through 2021 while maintaining a conservative 1.2 coverage ratio and reducing its leverage ratio from 4.7 down to 4.0. Fueling that forecast is the expectation that the company will invest between $2.5 billion to $3.5 billion on high-return expansion projects through 2020. It already has nearly $500 million of growth projects underway, which gives it a good head start on its plan to provide investors a growing income stream.

Similar prospects, but on a stronger foundation

Canadian energy infrastructure giant TransCanada also offers investors a high growth high yield. At the moment, it pays a nearly 4% dividend. While that's less than ONEOK, it's worth pointing out that TransCanada pays out a smaller portion of its cash flow in supporting that payout, with its coverage ratio averaging 1.6 times this year. Meanwhile, it gets more than 95% of its earnings from stable sources and boasts an even stronger credit rating. These factors put its dividend on an even firmer footing than ONEOK's, which is the trade-off for the difference in yields.

In addition to its ultra-conservative financial profile, TransCanada currently expects to grow its payout by 8% to 10% per year through 2020, though it's increasingly confident that it can boost the dividend at the upper end of that range. Driving that view are the roughly 24 billion Canadian dollars ($18.9 billion) in expansion projects it has under way, which should fuel significant cash flow growth in the coming years. That highly visible backlog, when combined with its stronger financial footing, makes TransCanada a top choice for conservative income investors.

A close-up of a gas pipeline under construction.

Image source: Getty Images.

Getting ready to give a big raise

Kinder Morgan currently offers the lowest yield of this trio at 2.9%. However, that's a bit deceiving, since the company expects to increase its dividend 60% next year and by 25% in both 2019 and 2020. The upcoming increase implies that investors who buy today can lock in a nearly 4.7% yield for 2018. Furthermore, the payout is on solid ground, since the company can cover it with cash flow by 2.5 times next year, and by more than 2.0 times in 2019 and 2020.

Supporting that forecast is that Kinder Morgan generates steady cash flow, since 91% comes from predictable fee-based sources. It also has an investment-grade credit rating with an improving leverage ratio. And it has $12 billion in expansion projects either under construction or in late-stage development, with more growth on the way. These projects, when combined with its conservative coverage ratio and increasing financial flexibility, position Kinder Morgan for rapid dividend growth in the coming years.

An option for any investor

All three of these pipeline stocks offer investors a compelling current income stream and visible growth prospects. However, each has a slightly different twist, so dividend-lovers can buy the pipeline stock that best fits their situation.

 

Matthew DiLallo owns shares of Kinder Morgan and has the following options: short January 2018 $30 puts on Kinder Morgan, long January 2018 $30 calls on Kinder Morgan, and short December 2017 $19 puts on Kinder Morgan. The Motley Fool owns shares of and recommends Kinder Morgan and ONEOK. The Motley Fool has a disclosure policy.