Owning high-yielding dividend stocks can be a great way to generate passive income. However, there's one big caveat. The big-time payout needs to be sustainable over the long term. Major factors driving dividend sustainability are companies with a strong financial profile and visible growth prospects.
Brookfield Renewable (BEPC -0.74%) (BEP 0.50%), ConocoPhillips (COP 0.26%), and Enbridge (ENB 0.31%) back their high-yielding payouts with strong financial profiles. On top of that, they have highly visible growth ahead through 2029. Because of that, you can confidently buy and hold these high-yield dividend stocks through at least the end of the decade.
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Highly visible growth through the end of the decade and beyond
Brookfield Renewable owns and operates a globally diversified portfolio of renewable energy assets and sustainable solutions. The company sells about 90% of its capacity under long-term, fixed-rate contracts, the bulk of which link rates to inflation. Many of the company's legacy contracts have below-market rates. They will expire over the next few years, which should enable Brookfield to sign new contracts for this capacity at higher market rates. These catalysts power the company's view that it can grow the funds from operations (FFO) of its existing assets by 4% to 7% per share over the next several years.
On top of that, Brookfield has a vast pipeline of development projects under construction or in advanced stages. This drives the company's belief that it can commission an average of 10 gigawatts of new renewable energy capacity annually by 2027 through at least 2030, which would support 5% annual FFO per share growth. The company also expects to complete additional accretive acquisitions to further boost its FFO growth rate. Overall, it expects to deliver 10%+ annual FFO per-share growth.
Brookfield's growth is highly visible and secured through 2029 and increasingly visible and secured through 2034. That powers its view it can grow its more than 5%-yielding dividend by 5%-9% per year over the long term. Brookfield has grown its payout at a 6% compound annual rate since 2001.
Sector-leading growth through 2029
ConocoPhillips believes "we are on the cusp of a compelling multiyear free-cash-flow growth trajectory, led by our high-quality longer-cycle investments in Alaska and LNG," stated CEO Ryan Lance on the first-quarter earnings conference call on May 8. He continued, "This underlying improvement in our free cash flow will structurally lower our breakeven and increase our capacity to return capital to shareholders." Those long-cycle investments will drive an incremental $6 billion in annual free cash flow for the company, fueling sector-leading growth through 2029.
The oil company's LNG investments in Qatar and Port Arthur LNG in Texas will fuel growth over the next few years. Meanwhile, it expects to deliver the first oil from its $8 billion Willow project in Alaska in 2029.
The company's growing free cash flow will support its plan to deliver dividend growth within the top 25% of companies in the S&P 500. It has been growing its payout (which currently yields nearly 4%) at a more than 10% annual rate in recent years, including by 34% last year.
Visible growth coming down the pipeline through 2029
Enbridge is already one of the largest energy infrastructure operators in North America. However, it's about to get a lot bigger. The Canadian pipeline and utility company currently has a staggering 28 billion Canadian dollars ($20.4 billion) of commercially secured expansion projects in its backlog. These projects include oil pipeline expansions, new natural gas pipelines, gas utility growth projects, and renewable energy developments. Enbridge currently has projects scheduled to come online through 2029.
The company can easily fund that massive project backlog. Enbridge estimates it has CA$9 billion-CA$10 billion ($6.6 billion-$7.3 billion) of annual investment capacity between its post-dividend free cash flow and balance sheet flexibility within its targeted leverage range. Its current backlog would require about CA$8 billion-CA$9 billion ($5.8 billion-$6.6 billion), leaving it with CA$1 billion-CA$2 billion ($730 million-$1.5 billion) of excess investment capacity each year. It can use that flexibility to make bolt-on acquisitions and approve additional expansion projects. The company currently has an eye-popping CA$50 billion ($36.4 billion) of additional capital projects under development that it could approve through 2030.
Enbridge's drivers give it a lot of visibility into its future growth potential. It expects to grow its earnings by around a 5% annual rate through the end of the decade. That could support a similar growth rate for its nearly 6%-yielding dividend. Enbridge has raised its payout for 30 straight years.
Top-notch income stocks
Brookfield Renewable, ConocoPhillips, and Enbridge have visible cash-flow growth lined up through at least the end of the decade. Because of that, they should have plenty of fuel to continue increasing their high-yielding dividends. That makes them great stocks to buy and hold for a growing stream of passive dividend income through 2029, if not much longer.
