Investing in dividend stocks can be an excellent way to earn passive income. Many companies have a long history of paying their investors a share of their profits, enabling them to collect a steady income stream.
Three top-tier passive income stocks are Consolidated Edison (ED 0.73%), Enbridge (ENB 1.68%), and Realty Income (O 0.24%). They offer above-average income streams with elite dividend growth track records.
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An elite passive income generator
Consolidated Edison has the best dividend growth track record in the utility sector. The company delivered its 48th straight year of dividend increases earlier this year, the longest period of consecutive yearly dividend growth for a utility in the S&P 500 index. It's now only two years away from 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 increasing its dividend in the coming years. It expects to grow its adjusted earnings per share at a 5% to 7% annual rate over the next five years, fueled by $15.7 billion of planned capital investments through 2024.
The company is investing a significant portion of that 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 solid balance sheet and reasonable dividend payout ratio for a utility, Consolidated Edison should be able to make these investments while continuing to grow its attractive dividend.
The fuel to continue producing passive income
Enbridge has one of the energy sector's longest dividend growth track records. The Canadian energy infrastructure giant has increased its payout for 27 straight years. That's impressive considering the volatility in the sector over the years. Enbridge has muted that impact by owning stable infrastructure assets like pipelines, natural gas utilities, and renewable energy-generating facilities.
The company should have plenty of fuel to grow its attractive 6.1%-yielding dividend in the future. It has a strong balance sheet, a reasonable dividend payout ratio for an energy midstream company, and a large backlog of expansion projects. Enbridge estimates it has the financial capacity and visible investment opportunities to support 5% to 7% annual cash flow per share growth through at least 2024.
Meanwhile, it sees lots of expansion opportunities beyond that timeframe, especially in lower-carbon energy like renewables, natural gas infrastructure, carbon capture and storage, and hydrogen. That should give it the power to keep growing its payout in the years to come.
Living up to its name
Realty Income has been one of the most dependable passive income stocks in the real estate investment trust (REIT) sector. The company, which pays a monthly dividend, recently announced its 115th increase since going public in 1994. The REIT has given investors a raise in the last 98 straight quarters while growing its payout at a 4.4% annual rate. That's more than 25 consecutive years of dividend increases, qualifying it as a Dividend Aristocrat. Realty Income is one of only a handful of REITs in that elite group.
The company should be able to continue growing its 4.5%-yielding dividend in the future. It's coming off a monster year where it acquired fellow REIT VEREIT in an $11 billion deal while also purchasing a record $6.4 billion of additional properties. The company also de-risked its portfolio by spinning off its combined office assets to create Orion Office REIT.
Realty Income expects to purchase at least $5 billion of properties this year. It's already off to a great start, agreeing to acquire the Encore Boston Harbor Resort and Casino for $1.7 billion. That's the company's first acquisition in the gaming industry, which will help diversify its retail-focused portfolio. Realty Income has ample financial flexibility to continue growing its portfolio to support steady dividend increases.
Sit back and collect passive income with these stocks
Enbridge, Consolidated Edison, and Realty Income are excellent passive income producers. They enable their investors to collect steadily rising income streams. With attractive current yields and visible growth prospects, they continue to look like great ways to generate stable passive income in the future.
