The S&P 500 index is offering a tiny 1.1% dividend yield. That's unlikely to be substantial enough for most dividend investors, who are likely seeking a larger income stream to support their living expenses. However, don't fret; you can find attractive dividend stocks with significantly higher yields, such as NextEra Energy (NEE 0.06%), TotalEnergies (TTE +0.14%), and Enterprise Products Partners (EPD 1.64%). Here's a quick look at each one of these potentially brilliant dividend stocks.
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1. NextEra Energy: Dividend growth
NextEra Energy owns one of the largest regulated utilities in the United States. Florida Power & Light has long benefited from the influx of people to the Sunshine State. It is a reliable business, but regulated utilities are generally just slow-and-steady growers. And yet, NextEra Energy has managed to grow its dividend at a roughly 10% compound annual rate over the last 20 years.
NYSE: NEE
Key Data Points
The company has achieved this by layering a fast-growing renewable power business on top of its slow-and-steady utility core. NextEra Energy is now one of the world's largest solar and wind power companies. It has material plans to keep expanding this operation, too, as cleaner energy options become increasingly more important to the electric grid.
Although NextEra Energy has the lowest yield here, at 2.8%, dividend growth investors will likely find it the most appealing choice.
2. TotalEnergies: Dirty and clean
TotalEnergies is a European integrated energy giant. That means its business spans across the energy industry, from the upstream (oil and gas production) through the midstream (pipelines) and into the downstream (chemicals and refining). With a 5.6% yield, it is one of the highest-yielding options in the integrated energy space for those seeking direct energy exposure.
NYSE: TTE
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However, the really interesting thing about TotalEnergies is that, like NextEra Energy, it is building out a clean energy business. Management's aggressive push into electricity is unique among its peers and provides investors with a bit of a clean energy hedge. The dividend has been heading higher in recent years, following a shift from a variable semiannual payment approach common in Europe to the quarterly system typically used by U.S. companies.
If you are looking for exposure to oil and natural gas, TotalEnergies, with its increasing exposure to electricity, could be the perfect hybrid option for those concerned about the energy transition.
3. Enterprise Products Partners: High yield
Enterprise Products Partners has the highest yield on this list, at 6.8%. That said, it is also the most boring business on the list. Enterprise owns the energy infrastructure that helps move oil and natural gas around the world, including things like pipelines, storage facilities, and transportation assets. It charges fees for the use of its assets based on the volume passing through its system, not the price of the commodities being moved.
NYSE: EPD
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That's how, despite the volatile nature of oil prices, Enterprise has managed to increase its distribution annually for 27 consecutive years. That yield is also supported by an investment-grade-rated balance sheet and a distribution that is backed 1.7 times by distributable cash flow. There is a lot of room for adversity before a distribution cut would be in order here.
Even the most conservative dividend investors should find Enterprise Products Partners attractive. There's just one big caveat: It is a slow-growth business, so the yield will make up the lion's share of returns over time. However, if you are looking to maximize the income your portfolio generates, that probably won't bother you.
Unique dividend options for your portfolio
What makes a dividend stock brilliant for you might make it a dud for another investor, so you need to do your homework before buying NextEra, TotalEnergies, or Enterprise Products Partners. However, if you do, it is highly likely that one of these dividend stocks, from dividend-growth-focused NextEra to high-yield Enterprise, will find its way into your portfolio before 2025 comes to a close.
