3 Top Dividend Stocks I Can't Wait to Buy In July

I'm on a mission to reach financial freedom. I aim to achieve that goal by growing my passive investment income to the point where it exceeds my expenses. While I have a long way to go, I'm getting closer each month as I make new income-generating investments.

Enbridge (ENB -1.21%), Energy Transfer (ET 0.12%), and Kinder Morgan (KMI -0.64%) top my list of dividend stocks I plan to buy in July. Here's why I can't wait to add to my positions in these pipeline stocks this month.

The streak will continue

Enbridge offers the two things I love to see in a dividend stock. It has an attractive yield and visible growth on the horizon. The Canadian energy infrastructure giant currently yields 7.1%. Meanwhile, it has grown that payout for 28 straight years. 

That upward trend isn't going to end anytime soon. Enbridge has a massive and growing expansion project backlog that should fuel dividend growth for the next several years. It currently has 17 billion Canadian dollars ($12.9 billion) of commercially secured capital projects under construction, with more in the pipeline. Meanwhile, it has billions of dollars in annual financial flexibility to fund these investments from its post-dividend free cash flow and balance sheet strength.

These projects should come online through 2028, with the bulk starting up in the 2025-2028 timeframe. They run the gamut from natural gas pipeline expansions in North America to offshore wind farms in Europe. Enbridge's expansion projects should grow its cash flow per share by around a 3% compound annual rate through 2025 and at a roughly 5% annual rate after that. That should support a similar dividend growth rate. Add in its already attractive yield, and Enbridge should have the fuel to produce double-digit total annual returns in the coming years.

The big-time payout is heading higher

Energy Transfer offers an even more generous yield of 9.6%. The master limited partnership (MLP) backs that payout with a very strong financial profile.

The company generates the cash flow to cover its payout and expansion program with room to spare. During the first quarter, Energy Transfer produced $2 billion in cash, which covered its distribution with $965 million left over. As a result, it had more than enough money to fund its $407 million of growth capital projects, enabling it to generate excess free cash to strengthen its already solid balance sheet. That's allowing Energy Transfer to drive its leverage ratio toward the lower end of its 4.0-4.5 target range.

That gives it the financial flexibility to continue investing in new expansion projects and make accretive acquisitions. Energy Transfer recently used its financial strength to acquire Lotus Midstream for $1.45 billion. That deal will increase its free cash flow without impacting leverage. The MLP's growth-focused investments and strong financial profile drive its view that it can grow its already high-yielding payout by 3% to 5% per year. 

The fuel to continue growing

Kinder Morgan also offers an attractive payout. The natural gas pipeline giant currently yields 6.6%.

That already high-yielding dividend should continue growing in the future. Kinder Morgan gave its investors a 2% raise earlier this year, notching its sixth straight year of dividend increases. It currently has $3.7 billion of growth capital projects under construction that should come online over the next several years. Most of those investments are in lower carbon projects like natural gas pipeline expansions, renewable natural gas production facilities, renewable fuel hubs, and carbon capture and sequestration projects. These investments will help grow its cash flow while making it more sustainable, which should give it more fuel to increase the dividend. 

Kinder Morgan has ample financial flexibility to continue growing. It generates excess free cash flow after covering its dividend and expansion projects. Its leverage ratio is on track to end the year at 4.0, well below its 4.5 target. That gives it an incremental $3 billion of opportunistic investment capacity. It could use the money to approve new expansion projects or make accretive acquisitions, potentially giving it more fuel to grow the dividend.

More passive income now and in the future

Enbridge, Energy Transfer, and Kinder Morgan pay high-yielding dividends. Meanwhile, they should all be able to continue growing their high-yielding payout as they use their strong financial profiles to invest in expanding their energy infrastructure operations. I want more of their attractive and growing passive income streams in my portfolio. That's why I can't wait to add to my existing positions this July.