Higher interest rates are bad news for borrowers because they're paying more money to borrow money. However, higher rates benefit savers and investors because they can earn more investment income. Many bank CDs and bonds currently yield more than 5%, while several top dividend stocks pay even more.

Energy Transfer (ET 0.12%), EPR Properties (EPR -0.32%), and Verizon (VZ 1.17%) offer payouts yielding over 7.5% these days. That could turn a $1,000 investment into more than $75 of annual income. Meanwhile, unlike fixed-income investments like CDs and bonds, this income should grow in the future.

Lots of fuel to grow its payout

Energy Transfer's distribution currently yields 8.8%. The master limited partnership (MLP) backs its payout with rock-solid financials. It generates significant recurring cash flows supported by long-term contracts and government-regulated rate structures. That allows it to produce very predictable and stable cash flow no matter the market environment.

The MLP currently distributes a little more than half its steady cash flow to investors. It retains the rest to fund expansion projects, strengthen its balance sheet, and repurchase units. The company's expansion projects help grow its stable cash flow. Meanwhile, its strong balance sheet gives it the flexibility to capitalize on acquisition opportunities. The company acquired Lotus Midstream in a $1.5 billion deal earlier this year and is working to close a $7.1 billion merger with fellow MLP Crestwood Equity Partners. These deals give it more fuel to grow its cash flow.

Energy Transfer's growth drivers position it to continue increasing its already high-yielding distribution. The company aims to raise its payout by 3% to 5% annually. That will enable investors to earn more income from Energy Transfer in the future. 

A growing portfolio

EPR Properties currently pays a 7.7%-yielding dividend. The real estate investment trust (REIT) supports that payout by generating relatively stable rental income. It owns a growing experiential real estate portfolio featuring theaters, attractions, and eat-and-play venues. EPR Properties leases these facilities back to the operators under long-term net leases. That structure requires tenants to cover insurance, maintenance, and real estate taxes.

The REIT expects its dividend payout ratio will be around 65% of its funds from operations (FFO) this year. That gives it a nice cushion while allowing it to retain cash to fund new investments. EPR also has a strong investment-grade balance sheet, with $99.7 million in cash and no borrowings under its $1 billion credit facility at the end of last quarter. That gives it even more financial flexibility to fund new investments. 

EPR has used its financial flexibility to make nearly $100 million of investments during the first half of this year, including acquisitions and development projects. It has lined up almost $225 million of future development-related investments it expects to fund over the next two years. It has ample internal liquidity to finance these investments thanks to its post-dividend free cash flow and balance sheet capacity. These investments should grow its FFO, which should allow the REIT to increase its dividend in the future. 

Generating even more free cash to support its payout

Verizon's dividend currently clocks in at 8.6%. The telecom giant generates plenty of cash to cover that monster payout.

The company hauled in $18 billion in operating cash flow during the first half of this year. That covered its capital spending ($10.1 billion) and dividend outlay ($5.5 billion) with room to spare. The company used that excess free cash to strengthen its already solid balance sheet. 

Verizon recently finished funding a major capital outlay to support its 5G network expansion. That will free up nearly $1.8 billion per quarter. That's giving the company more cash to strengthen its balance sheet and pay dividends. Verizon recently increased its dividend by another 2%, pushing its streak to 17 straight years of dividend growth, the longest current one in the U.S. telecom sector. 

High-yielding payouts that should continue rising

Energy Transfer, EPR Properties, and Verizon all currently yield more than 7.5%, meaning they can turn $1,000 into meaningful annual investment income. Meanwhile, unlike fixed-income alternatives, their dividends should grow in the future. That ability to earn a higher yielding and rising payout makes them appealing options for those seeking to generate investment income these days.