Dividend yields have been on the rise over the past year because of falling share prices and growing payouts. That has created a lot more attractive opportunities to generate passive income these days.
Four dividend stocks that stand out this month for their high-yielding and steadily growing payouts are Clearway Energy (CWEN 0.04%) (CWEN.A), Realty Income (O 0.44%), Kinder Morgan (KMI 0.67%), and Walgreen Boots Alliance (WBA -2.51%).
All the power needed to grow the payout
Clearway Energy's shares have fallen 25% from their peak in the past year. That has helped drive its dividend yield up to 4.8%. The clean-electricity producer expects to grow its payout toward the upper end of its 5% to 8% annual target range through at least 2026.
The company has already locked up all the growth it needs to support that plan. Last year, Clearway sold its thermal assets for $1.35 billion in net proceeds. It has reinvested that money into higher-returning renewable energy deals. The company has already funded and closed over $700 million of investments. Meanwhile, it has transactions lined up for the remaining proceeds that should close through next year. Those investments will grow its cash flow, enabling Clearway to increase its payout.
Expanding its opportunity set to keep growing the dividend
Realty Income's dividend currently clocks in at a 4.9% yield, partly because of a 15% slide in the stock price from the peak. The REIT has increased its monthly payout 120 times since its public market listing in 1994, including twice already this year.
A big driver of its dividend growth has been acquiring additional income-producing properties. Realty Income has enhanced its growth prospects by expanding into several new areas over the past year. It purchased its first gaming property and invested in the consumer-centric medical industry, vertical farming, and Italy. These new growth areas complement its ability to continue making accretive acquisitions in core areas.
A cash flow machine
Kinder Morgan's dividend yields 6.4%, partially because of a 13% slump in the share price. The natural gas pipeline giant has increased its payout for five straight years. It already stated its plan to increase the payout by another 2% this year.
The company generates significant cash flows to support its dividend and growth. It has several growth projects underway that should help drive cash flow higher in the future. Meanwhile, it has a strong balance sheet, giving it the additional financial flexibility to make acquisitions or sanction new expansion projects as opportunities arise.
A healthy payout
Walgreen's dividend currently yields 5.6%, largely because of a 27% tumble in the stock price over the past year. The company has paid a dividend for more than 90 years and increased its payout for the last 47 consecutive years. That puts it only a few years away from joining the elite group of Dividend Kings.
The integrated healthcare, pharmacy, and retail company is investing in building its next growth engine in consumer-centric healthcare solutions. It has grown into one of the largest players in primary care through its investment in VillageMD, which recently bought Summit Health. It also acquired Sheids and CareCentrix to drive its consumer-centric healthcare growth strategy. These investments should also help grow the company's earnings and cash flows, enabling it to maintain its dividend growth streak.
Nice passive-income booster
Clearway Energy, Realty Income, Kinder Morgan, and Walgreens all pay dividends yielding more than 4%, much higher than the 1.7% dividend yield on the S&P 500. On top of that, they all should be able to continue increasing their payouts in the future. That combo makes them great stocks to buy this month for those seeking to pad their passive income.
