Investing in dividend stocks can be a great way to generate cash flow for your portfolio without having to sell your shares. You can continue to benefit from rising stock prices while padding those returns with some recurring revenue along the way. But investors need to be careful when choosing which income stocks to invest in these days. The COVID-19 pandemic has rocked many businesses, forcing them to cut or suspend their payouts.

However, the list of stocks that are safe, cash-generating investments  includes Innovative Industrial Properties (IIPR 0.23%)Public Storage (PSA -0.22%), and Clorox (CLX -0.80%). They all sport higher dividend yields than the average stock on the S&P 500, which yields about 1.6%, and are great buys that could perform well this year.

Stack of cash secured with a padlock.

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1. Innovative Industrial Properties

Real estate investment trust (REIT) Innovative Industrial Properties is a stable investment that generates strong profit margins -- normally above 50%. But what makes this stock not just a safe buy and a great growth investment is that Innovative Industrial owns properties in the cannabis industry. The fast-growing sector is going to experience even more growth in the year ahead after this past November, when voters in five states (Arizona, Montana, Mississippi, New Jersey, South Dakota) chose to move ahead with marijuana reform. That will create many more opportunities for Innovative Industrial to grow and acquire more properties this year.

In the past year, the stock has soared 126%, outpacing the S&P 500 and its 17% returns during that time. A big reason for that is the company's impressive numbers. In the nine-month period ending Sept. 30, 2020, sales of $79.8 million were triple what Innovative Industrial generated a year earlier. Its earnings per share also doubled to $2.35. Income investors should pay special attention to the company's funds from operations (FFO), which for REITs is a better measure of profitability as it excludes gains or losses and adds back depreciation and amortization, which might otherwise distort the bottom line. On Nov. 4, 2020, when Innovative Industrial reported its most recent results (for the same period noted above), it reported FFO per diluted share of $1.22. That's slightly below the $1.24 quarterly dividend that the company is paying today, and that it increased last month. It's the ninth time it has hiked its payouts since going public in December 2016.

REITs have to pay out at least 90% of their earnings back out to shareholders. While Innovative Industrial is paying out slightly more than its FFO, with the growth the company is experiencing, investors shouldn't be too worried about the dividend, as its earnings will likely continue climbing. Today, Innovative Industrial stock yields 2.8%, and it can be an excellent investment whether you're after growth or dividend income.

2. Public Storage

Another REIT to make this list is Public Storage. The stock isn't doing nearly as well as Innovative Industrial is, but for income investors, it makes up for that with a higher yield of 3.6%, although it hasn't raised its payouts since 2016. The good news is that the business is proving to be fairly stable amid the pandemic and may even have an opportunity to grow this year.

On Nov. 4, 2020, the company released its third-quarter results up until Sept. 30, 2020, and its total revenue of $730.7 million was right around where it was a year ago when Public Storage posted $729.3 million in sales. It's a similar story when you look at the year-to-date numbers, as sales of $2.2 billion over the trailing nine months are only up a modest 1.3% from the prior-year period. And although its FFO per share fell from 2.76 to 2.28 in Q3, that's still enough to cover the company's quarterly dividend of $2.

The reason this stock stands out for 2021 is that it could be a challenging year for many out-of-work Americans. Even if the economy recovers, some jobs won't come back, and once stimulus payments come to an end, it may force people to make some hard decisions. Self-storage facilities can help provide some much-needed flexibility for people looking to downsize their homes and bring down their expenses. That can help drive up demand and help boost the company's rental income. 

Public Storage isn't going to double its sales the way Innovative Industrial might, but its business could benefit from heightened demand this year, and if nothing else, it could be a safe way to earn a great yield.

3. Clorox

If you're looking for an extremely safe investment, the best option on this list may be Clorox. The company's brand has become synonymous with cleaning, and its products have been in high demand amid the pandemic. Sales in fiscal 2020 (period ending June 30, 2020) of $6.7 billion were up 8.2% year over year. That may seem minor, but in the previous year, Clorox generated sales growth of just 1.4%. And the year before that, its top line grew at a rate of 2.5%. Its most recent FY earnings totaled $939 million, and rose by 14.5% from the year prior.

It was an all-around great year for the company, but the growth isn't ending anytime soon. On Nov. 2, 2020, it reported its first-quarter results for fiscal 2021, and it was a terrific start to the new fiscal year, as net sales of $1.9 billion for the period ending Sept. 30, 2020 were up 27.2% from the same quarter in 2019. Its sales numbers were strong across all its segments, with household leading the way at 39% sales growth, followed by health and wellness at 28%, international at 18%, and lifestyle at 17%.

One of the positive consequences of the COVID-19 pandemic has been that people and businesses are focusing more on cleanliness, and that's where Clorox could become a great buy even if COVID-19 disappears. Although it may not continue growing in double digits over the long term, it could still achieve better growth numbers than it did prior to the pandemic.

And if dividend investors needed any more of a reason to buy the stock, don't forget this is also a Dividend Aristocrat. Clorox has increased its dividend payments for 20 years in a row, with the most recent hike coming in May of last year when Clorox raised its payouts by 5%, to $1.11 every quarter. Today, the stock yields 2.3% and looks very safe with a payout ratio less than 50%.