I'm a goal-oriented investor. One of my targets for the coming year is to increase my annualized dividend income by more than 15% by the end of 2024.
I aim to achieve that goal by investing more money into higher-yielding stocks that consistently increase their dividend payments. Growing my passive income is part of my strategy to eventually become financially independent.
I can't wait to get started on that goal. I have a list of dividend stocks I plan to buy in 2024 to help me reach my income target. Three of the top ones are Clearway Energy (CWEN 0.26%) (CWEN.A 0.28%), Kenvue (KVUE -0.84%), and VICI Properties (VICI -0.28%). Here's why I can't wait to buy some more shares in the coming year.
Powerful dividend growth ahead
Clearway Energy pays a high-yielding dividend that it expects to grow at a high rate over the next few years. The clean-energy producer's payout currently clocks in at 5.7%, well above the S&P 500's 1.5% dividend yield. It backs that payout with very stable cash flow by selling the electricity it produces to utilities and corporate buyers under long-term, fixed-rate power purchase agreements.
The company expects to grow its payout at or near the high end of its 5% to 8% annual target range through at least 2026 (it increased its payout by 8% in 2023). Clearway already has all that growth lined up and funded.
Last year, it sold its thermal business for nearly $1.4 billion in net proceeds. It's recycling that capital into higher-returning renewable energy investments. It has already allocated all that money into new investments that should close over the next couple of years as the underlying renewable energy projects enter service and start generating cash.
Clearway's recent investments have it on track to grow its cash available for distribution by about 15% in 2024. That easily supports the company's plan to deliver high-end dividend growth.
Likely the first of many increases in 2024
Kenvue just started paying dividends earlier this year. The consumer healthcare products company offers a generous payout yielding 3.7%.
While Kenvue is new to paying dividends, it comes from a company with a rich dividend heritage. Its former parent, Johnson & Johnson, has increased its dividend for 61 straight years.
Kenvue is in an excellent position to grow its payout in the future as demand for its products is durable and growing. The company expects to deliver low- to mid-single-digit organic sales growth in the future. It can complement its organic growth with acquisitions, funded with excess cash and its strong balance sheet. That growing cash flow should enable Kenvue to steadily increase its dividend.
Lots more growth ahead
VICI Properties currently pays a 5.2%-yielding dividend. The real estate investment trust (REIT), which is focused on entertainment properties, has increased its payout every year since it went public. It delivered its sixth straight increase in late 2023, raising its payout by 6.4%.
That upward trend should continue. The REIT generates very steady cash flow backed by long-term net leases. It has built-in escalation clauses that increase rates each year (with 50% tied to inflation).
Meanwhile, the REIT has a reasonable dividend payout ratio (75%) and a strong investment-grade balance sheet. That gives it the financial flexibility to make additional income-producing investments.
It recently agreed to acquire 38 bowling entertainment centers, provide construction financing for an indoor waterpark resort development, purchase the leasehold interest of the iconic Chelsea Piers sports and entertainment complex, and fund two luxury golf resort developments. These and future investments will grow its cash flow, giving VICI Properties the funds to continue increasing its dividend.
Buying growing income streams
I'm steadily growing my dividend income to achieve financial independence. While I have a long way to go, I'm making progress on my goal each year by investing in stocks that pay higher-yielding dividends that should continue rising in the years ahead.
Clearway Energy, Kenvue, and VICI Properties certainly meet those criteria. That's why I'm excited to buy even more shares of those top-notch dividend stocks in 2024.