These 3 Dividend Stocks Are Your Answer to the Banking Industry's Financial Woes

Big blowups have besieged the banking sector over the past few months. Several banks have gone under, while many remain at risk for failure. Because of that, some banks have already cut their dividends, while many others seem to be on shaky ground. 

That instability likely has many income-seeking investors looking elsewhere for dividends these days. Enterprise Products Partners (EPD 0.45%), Brookfield Infrastructure (BIPC -1.04%) (BIP -0.80%), and NextEra Energy Partners (NEP -0.89%) are three rock-solid dividend stocks that investors concerned about the banking sector should consider. Here's why they stand out to a few Fool.com contributors as income shelters during the banking sector's storm.  

Fee for all

Reuben Gregg Brewer (Enterprise Products Partners): Demand is king in the midstream sector, where Enterprise Products Partners is among the largest players in North America. Even though commodity prices are highly cyclical, demand tends to remain fairly robust throughout the energy cycle.

That's good news for businesses that own energy infrastructure because fees for the use of their assets drive the lion's share of the top and bottom lines, not commodity prices. Fees account for roughly 75% of Enterprise's gross margin. That helps explain how, despite volatile energy markets, the master limited partnership has managed to increase its distribution annually for 24 consecutive years.

The yield today is around 7.2%, which is well above the 1.6% you'd get from an S&P 500 index ETF, or the 3.4% yield from the average bank, using the SPDR S&P Bank Index ETF as a proxy. Adding to the allure, Enterprise's distributable cash flow covered its distribution by 1.9 times in the fourth quarter of 2022. And the MLP has an investment-grade rated balance sheet. Basically, the distribution not only looks very safe, but it also appears to have room to keep growing. And Enterprise's customers can't easily change to another service provider.

If the uncertainty in the banking sector has you worried about the investment income you generate, noting that withdrawals have forced First Republic to eliminate both its dividend and its preferred dividends, you should take a closer look at reliable, fee-based Enterprise.

An incredibly stable payout

Matt DiLallo (Brookfield Infrastructure): Brookfield Infrastructure offers investors a secure dividend. The global infrastructure giant generates very stable cash flows. It gets 90% of its funds from operations (FFO) from long-term, fixed-rate contracts or government-regulated rate structures. Meanwhile, 70% of its FFO has no volume or price exposure. That provides it with an extremely stable base of cash flow to pay dividends.

The company pays 60% to 70% of its stable cash flow via dividends. That aligns the dividend payment with its most stable cash flows and gives it a nice cushion. This reasonable payout ratio also enables Brookfield Infrastructure to retain cash to help fund expansion projects.

Brookfield Infrastructure provides even more firm support for the payout with a rock-solid balance sheet. The company has a strong investment-grade credit rating and lots of liquidity. That gives it the additional financial flexibility to fund new investments. Brookfield further enhances its funding flexibility by recycling capital. That strategy sees it sell mature assets to invest in new higher-returning opportunities.

The company recently found its latest deal. Brookfield Infrastructure and its partners are buying Triton International for $13.3 billion. The transaction will supply Brookfield with highly contracted and stable cash flows and an expandable platform in the transportation and logistics sector. 

Deals like that enhance the company's already solid organic growth profile. Brookfield sees inflation-linked contracts, economic growth, and expansion projects increasing its FFO per share by 6% to 9% per year. That embedded internal growth easily supports Brookfield's plan to grow its 3.5%-yielding dividend at a 5% to 9% annual rate. That solid and rising dividend makes Brookfield Infrastructure a secure way to generate passive income.

A reliable dividend stock for uncertain times

Neha Chamaria (NextEra Energy Partners): With banking woes catching some income investors on the wrong foot, now is the time to look for dividend stocks that offer stable and growing dividends for years to come. With its high yield and dividend growth goal underpinned by solid growth catalysts, NextEra Energy Partners is one dividend stock that's unlikely to disappoint.

Earnings and cash flows are prime factors affecting a company's dividend stability, and NextEra Energy Partners offers excellent visibility on that front. With the backing of giant NextEra Energy, NextEra Energy Partners has already built an enviable footprint for itself in the high-potential clean energy industry. The company primarily acquires clean energy assets from its parent and third parties, operates them, and eventually sells energy under long-term, often fixed-price contracts.

It's an enticing business model to generate steady and predictable cash flows, which explains why NextEra Energy Partners is confident of growing its dividend per share annually by 12% to 15% between 2022 and 2026. That's compelling growth, and the stock starts to look even more promising when you factor in its high dividend yield of 5.2%. The most important part is that the stock should be able to support a high yield thanks to its steady dividend growth funded by stable and growing cash flows.

That's the kind of bankable dividend stock you'd want to own, especially during uncertain times when you see stocks from some industries slashing their dividends.