Investing in high-quality dividend stocks is a great way to generate passive income. The best ones can turn idle cash into an attractive and steadily rising income stream.
Brookfield Renewable (BEPC +0.00%)(BEP +0.35%), Realty Income (O 0.17%), and Verizon (VZ 0.03%) have been magnificent dividend stocks over the years by steadily increasing their high-yielding payouts. That should continue in 2024 (and beyond), making them ideal income stocks to buy right now.
Lots of power to continue growing its payout
NYSE: BEPC
Key Data Points
Brookfield Renewable currently offers a 4.7% dividend yield. That's several times above the S&P 500's 1.5% dividend yield. It could turn $1,000 into $47 of annual dividend income at that rate compared to $15 from an S&P 500 index fund.
The renewable energy giant has done an excellent job growing its high-yielding dividend over the years. For the past dozen years, it has increased its payout by at least 5% annually. That upward trend should continue. Brookfield aims to increase its payout by 5% to 9% per year over the long term.
It has plenty of power to achieve that plan. Brookfield's funds from operations (FFO) are on track to rise by more than 10% per share this year. The company is benefiting from strong organic growth drivers (inflation-linked power rate increases and development projects) and needle-moving acquisitions. It has closed three deals over the past few months, which gives it lots of momentum heading into 2024.
The company believes its growth drivers position it to deliver double-digit FFO per share growth through at least 2028. That puts it in a strong position to continue increasing its high-yielding payout in the coming years.
Built-in growth for 2024
NYSE: O
Key Data Points
Realty Income has been a magnificent dividend stock. The real estate investment trust (REIT) has increased its payment 123 times since its public market listing in 1994, including five times this year. The company's payout currently yields 5.4%, which could turn a $1,000 investment into $54 of annual dividend income.
The REIT is in an excellent position to continue growing its payout in 2024. It got a head start on next year's growth by recently agreeing to acquire fellow REIT Spirit Realty in a $9.3 billion deal that should close in early 2024. The company expects the acquisition to increase its adjusted FFO by more than 2.5% per share next year. That's more than half its targeted annual growth rate of 4% to 5% per share.
Realty Income anticipates that the combined company will generate over $800 million in post-dividend free cash flow. That will give it the funds to acquire even more income-producing real estate. The combination of those reinvested cash flows, its elite balance sheet, and the Spirit Realty deal should be enough to enable the REIT to deliver 4% to 5% adjusted FFO per share growth next year without raising any additional equity.
The REIT should have no shortage of growth opportunities. It has steadily expanded into new areas, enhancing its ability to grow. It has added data centers, consumer-centric medical, gaming, vertical farming, credit investment, Italy, and Ireland to its investment verticals over the past year. That has extended its already long growth runway.
Collecting more cash in 2024
NYSE: VZ
Key Data Points
Verizon currently yields 7.1%, which is one of the highest levels among S&P 500 members. The telecom giant recently increased its already sizable payout by another 1.9%, marking its 17th straight year of dividend growth.
The company is in an excellent position to continue growing its dividend. It has invested heavily in building out its faster 5G network, which is helping to accelerate wireless service revenue growth. Meanwhile, it passed the peak for capital spending earlier this year, which will free up $5 billion of annual cash flow. On top of that, the company is working to trim a couple more billion dollars from its cost structure.
These drivers will increase its already massive free cash flow, giving it more money to pay dividends and strengthen its balance sheet. Verizon's falling debt levels will help cut interest expenses, freeing up even more cash to enhance shareholder value.
Start 2024 off right with these income-producing machines
Brookfield Infrastructure, Realty Income, and Verizon offer investors high-yielding payouts that they've steadily increased. They're in excellent positions to continue growing their payouts in 2024 and beyond, and that makes them great dividend stocks to buy to boost your income in the coming year.
