Some companies really stand out for their ability to pay dividends. Their high-yielding payouts supply investors with lucrative and reliable income streams. And some have impressively long track records of regularly increasing their payouts.
Enterprise Products Partners (EPD +0.89%) and NNN REIT (NNN +0.49%) are elite income-generating investments. At their current share prices, each has a yield above 5.5% -- several times higher than the S&P 500's 1.3% average dividend yield. Meanwhile, both have increased their payouts each year for more than a quarter century. With more dividend hikes likely, they're great stocks to buy for the income and never look back.
Enterprise has ample fuel to continue growing
NYSE: EPD
Key Data Points
Enterprise Products Partners' distribution currently yields 6.3%. At that rate, every $100 invested in the company would generate $6.30 of annual passive income, but those payments should grow each year. The master limited partnership (MLP) -- which sends investors a Schedule K-1 Federal Tax Form instead of a 1099-DIV Form each year -- has increased its payouts for 26 straight years. That's one of the longest dividend growth streaks in the energy sector.
While oil and natural gas prices are volatile, Enterprise Products Partners produces stable cash flows. It operates an integrated portfolio of critical energy midstream infrastructure such as pipelines, processing plants, storage terminals, and export facilities that generate steady earnings backed by long-term, fee-based contracts and government-regulated rate structures. The company currently generates enough stable cash flow to cover its distribution by a comfortable 1.7 times.
Enterprise Products Partners uses the cash it retains to help fund its continued expansion. The MLP currently has $7.6 billion of major projects under construction that should come online and contribute to its cash flow over the next few years. Meanwhile, it has more projects under development to fuel longer-term growth. For example, it's working with a subsidiary of oil giant Occidental Petroleum to develop a carbon dioxide transportation network to feed into one of its carbon capture and sequestration hubs. The company has a long history of securing high-return expansion projects to fuel its growth.
The MLP also makes acquisitions when accretive opportunities emerge. For example, it bought Pinon Midstream for $950 million last year. That deal will boost its cash flow per share this year while enhancing its long-term growth prospects. Enterprise Products Partners has an elite balance sheet and the highest credit rating in the midstream sector, which gives it tremendous financial flexibility to continue making acquisitions.
The growing income from organic expansion projects and accretive acquisitions should give Enterprise Products Partners plenty of fuel to continue increasing its lucrative distributions.
This REIT's simple strategy continues to pay off for investors
NYSE: NNN
Key Data Points
NNN REIT's dividend currently yields 5.5%. At that rate, every $100 invested in its stock would produce $5.50 of income for shareholders annually. But the real estate investment trust (REIT) is likely to keep increasing those dividend payments.
Last year, the REIT brought its streak of payout hikes to 35 straight years. Only two other REITs and fewer than 80 publicly traded companies have hit that milestone.
The REIT's portfolio produces stable cash flow. It focuses solely on investing in single-tenant retail properties that it rents under net lease agreements. Net leases provide steady income to the landlord because they make the tenant responsible for nearly all of their property's operating expenses, including routine maintenance, real estate taxes, and building insurance.
NNN REIT pays out a conservative portion of its stable cash flow in dividends -- less than 70% of its core funds from operations (FFO). That enables it to retain a meaningful amount of cash to invest in additional income-generating retail properties. (It expects to book about $200 million in free cash flow in 2025.) The REIT also has a conservative balance sheet, giving it more financial flexibility to fund new investments. Meanwhile, it regularly recycles capital by selling non-core properties to fund new investments with higher expected returns.
The landlord typically partners with retailers to help them expand their footprints. It will steadily buy properties from their existing tenants in sale-leaseback transactions. That gives the chains additional capital to open new stores, which in turn provides the REIT with additional investment opportunities. More than 70% of NNN REIT's investment volume since 2007 has come from companies it already had an established relationship with. The company's growing portfolio should enable it to continue increasing its high-yielding payout.
Great dividend stocks to buy and forget
Enterprise Products Partners and NNN REIT have elite records of growing their big-time dividends. They should be able to keep their streaks going thanks to their stable cash flows, conservative financial profiles, and solid growth prospects. Because of that, they're worry-free stocks to buy for income.
