Bonds are great for those seeking to generate investment income. They typically make fixed-income payments, providing their investors with predictable cash flow.

However, a drawback of fixed income is that inflation erodes its buying power over time. A potentially better alternative is to invest in high-yielding dividend stocks that can steadily increase their payments. Kinder Morgan (KMI -0.64%), Verizon (VZ 1.17%), and W.P. Carey (WPC -1.70%) stand out for their bond-like income streams that should continue rising in the future.

Ample fuel to keep growing its sizable payout

Kinder Morgan currently offers a 6.6% dividend yield. That's a higher income yield than most high-quality bonds. For example, the 10-year U.S. Treasury bond currently yields about 4.3%, while the average investment-grade corporate bond has a yield to maturity of less than 6%. That means investors can generate more income per dollar invested in Kinder Morgan's stock. 

What sets Kinder Morgan's dividend income even further apart from bonds is that it should continue growing. The pipeline giant has increased its dividend in each of the last six years, including by 2% for 2023. 

Kinder Morgan retains about half of its stable cash flow after paying dividends. The company reinvests most of that money to expand its energy infrastructure operations. It currently expects to invest about $2.1 billion this year across a variety of capital projects, including natural gas pipeline expansions, renewable natural gas production facilities, and carbon capture and storage. Those projects should grow its cash flow, giving it more fuel to pay dividends. Meanwhile, the company uses any remaining cash flow to enhance its already strong investment balance sheet and opportunistically repurchase shares. These factors put its high-yielding payout on a very sustainable foundation.

Hitting a free cash flow infection point

Verizon's dividend currently yields 7.9%. The telecom giant recently increased it by another 1.9%. That marked its 17th straight year of dividend growth. 

The company is in an excellent position to continue growing its dividend. It recently completed a $10 billion spending program to accelerate its 5G network plans. That will free up about $1.8 billion in cash flow each quarter. The company initially plans to use that incremental cash to strengthen its already strong investment-grade balance sheet. 

Verizon's 5G-related investments should grow its revenue. Meanwhile, its deleveraging plan should reduce its interest expense. Add in other cost-saving initiatives, and Verizon's free cash flow should continue rising in the future. That will give the telecom giant even more money to pay dividends.

Built to pay a growing dividend

W.P. Carey's dividend yields 6.7%. The diversified REIT has increased its dividend payment each year since its public market listing in 1998, including every single quarter for more than 20 straight years. The company typically provides modest raises -- about 0.2% every quarter. 

The REIT's large-scale real estate portfolio generates steadily rising rental income. It signs long-term net leases with tenants that typically feature an annual rental rate escalation clause. The majority of W.P. Carey's leases tie rent growth with the inflation rate, while the bulk of its remaining leases escalate rent at a fixed rate.

W.P. Carey's other growth driver is acquisitions. The company acquires income-producing real estate in sale-leaseback transactions with the operator. It will also invest in build-to-suit development projects and acquire single-tenant net lease properties from third-party sellers. The REIT has lots of financial flexibility to acquire additional income-generating real estate thanks to its post-dividend free cash flow and strong investment-grade balance sheet.

Better than bond-like income

Kinder Morgan, Verizon, and W.P. Carey offer higher income yields than many high-quality fixed-income investments. On top of that, those payouts should continue rising in the future. That will help mute some of the impact of inflation on an investor's purchasing power. Any way you look at it, these dividend stocks are better options for income-seeking investors than bonds.