My top financial goal is to eventually generate enough passive income to cover my basic living expenses. I march toward that objective each month by investing more money into income-generating investments, like dividend-paying stocks. I focus on buying stocks that pay high-yielding dividends that steadily increase.
Vici Properties (VICI 1.21%), PepsiCo (PEP +1.65%), and Genuine Parts (GPC 0.67%) all fit those criteria. That's why I can't wait to buy more shares of each one this April to boost my passive income.
A low-risk bet on a growing income stream
NYSE: VICI
Key Data Points
Vici Properties currently pays a 5.4%-yielding dividend. At that rate, every $100 I invest into the real estate investment trust (REIT) can generate $5.40 of annual dividend income. That's a lot higher than the S&P 500's (^GSPC 0.16%) dividend yield (currently around 1.3%).
The REIT has done a solid job growing its dividend over the years. It has increased its payment every single year since its formation (last year was the seventh in a row). Meanwhile, it has grown its dividend much faster than other REITs focused on investing in triple net lease real estate (7% compound annual growth rate, compared to the 2.2% peer average).
Vici Properties has grown by expanding its portfolio of experiential real estate. It buys experiential properties like casinos and bowling entertainment centers in sale-leaseback transactions with the operators. It also originates loans to developers of experiential real estate backed by those properties. The REIT has a conservative financial profile, which should enable it to continue expanding its portfolio and dividend payment.
A satisfying income stream
NASDAQ: PEP
Key Data Points
PepsiCo currently yields 3.6%. The beverage and snacking giant has already announced plans to increase its dividend by another 5% starting in June. That will extend the company's growth streak to 53 straight years, keeping it in the elite group of Dividend Kings: companies with 50 or more years of annual dividend increases.
The company is in an excellent position to continue increasing its payout. PepsiCo generates plenty of cash flow, giving it the money to pay dividends and reinvest in the business. The company's capital spending has been about $5 billion annually over the past few years on projects to increase its productivity and drive organic growth through product innovation and additional manufacturing capacity. Its long-term target is to organically grow its revenue by 4% to 6% per year while expanding its margins to support high-single-digit earnings per share growth.
Meanwhile, PepsiCo uses its strong balance sheet to make acquisitions that enhance its ability to grow. The company recently agreed to buy the fast-growing lower-calorie soda maker Poppi for $1.7 billion. It also bought Siete Foods for $1.2 billion and the remaining 50% interest in Sabra and Obela it didn't already own to bolster its food portfolio. These and future acquisitions should further enhance its ability to grow its earnings and dividend.
The growth streak continues
NYSE: GPC
Key Data Points
Genuine Parts currently has a 3.5% dividend yield. The leading auto parts supplier recently hiked its payment by another 3%. That extended its dividend growth streak to an impressive 69 years in a row.
The company's business generates lots of cash. Genuine Parts expects to produce $1.2 billion-$1.4 billion in net cash from operating activities this year and $800 million to $1 billion of free cash flow after capital expenditures. That's more than enough cash to cover its dividend, which cost $555 million last year.
Genuine Parts also invests heavily in expanding its business. Last year, it invested $1.5 billion, including $567 million in capital expenses and $1.1 billion in acquisitions. The company has been buying up independent owners of its NAPA Auto Parts stores in key markets. These investments position the company to grow its earnings to support continued dividend increases.
Great passive income producers
Vici Properties, PepsiCo, and Genuine Parts are all great dividend stocks. They offer high-yielding payouts that they've steadily increased over the years. With more growth likely, I can't wait to buy more shares of this trio in April as I continue marching toward my goal of growing my passive income.
