The energy sector can be a great source of durable dividend income. Many companies have long histories of increasing their dividends. Meanwhile, energy demand, especially for clean energy, will continue to grow for decades to come.
Clearway Energy (CWENA +0.64%)(CWEN +0.48%), Chevron (CVX +2.70%), and Kinder Morgan (KMI +0.86%) currently offer attractive dividends that should continue growing in the decades ahead. That makes them great energy stocks to buy now for a potential lifetime of dividend income.
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Growth visibility well into the next decade
Clearway Energy is one of the largest owners of clean power generation assets in the country, with a growing portfolio of wind, solar, energy storage, and natural gas assets. The company sells the electricity it produces under long-term power purchase agreements (PPAs) with utilities and large corporations. Those PPAs supply it with predictable cash flow that supports Clearway's 4.7%-yielding dividend.
The company uses the cash it retains after paying dividends and its strong balance sheet to invest in additional income-generating clean power assets. Clearway currently expects to grow its free cash flow per share at a 7% to 8% compound annual rate through 2030. It has already secured or identified several investments to support this growth plan.
NYSE: CWEN
Key Data Points
Meanwhile, growing power demand, driven by data centers and other catalysts, drives the company's longer-term expectation of delivering 5% to 8%+ annual cash flow per share growth in 2031 and beyond. It has a strong strategic relationship with a leading renewable energy developer that currently has projects under development through 2032 that Clearway can acquire as they enter commercial service. The company's growing cash flows should support continued dividend increases.
High-octane cash flow growth through 2030
Chevron is one of the world's largest oil and gas producers. Its scale and abundance of low-cost resources enable it to make a lot of money even at lower oil prices. Chevron can generate enough cash to cover its capital spending plan and 3.9%-yielding dividend at an oil price below $50 a barrel (it's currently over $70 a barrel).
NYSE: CVX
Key Data Points
The oil giant expects to add $12.5 billion to its annual free cash flow total this year, fueled by its Hess merger, recently completed expansion projects, and cost-savings initiatives. Meanwhile, Chevron can grow its free cash flow at a more than 10% annual rate through 2030 at $70 oil, driven by major growth capital projects. That should support continued dividend growth. Chevron has increased its payout for 39 consecutive years.
Chevron is also investing in the lower-carbon energy that the global economy will require in the future. It sees significant potential to build gas-fired power plants to support AI data centers. Chevron is also investing in renewable fuels, hydrogen, lithium, and carbon capture and storage. These lower-carbon energy investments will help power dividend growth in the coming decades.
Lots of fuel to continue growing
Kinder Morgan is a leading energy infrastructure company. It operates the country's largest gas pipeline transmission network as well as refined products, carbon dioxide, and renewable natural gas infrastructure. Most of its assets generate stable cash flows backed by long-term contracts and government-regulated rate structures. The company's stable cash flows support its 3.6%-yielding dividend.
NYSE: KMI
Key Data Points
The pipeline company currently has $10 billion in growth capital projects in its backlog, which it expects to complete through 2030. Kinder Morgan is pursuing over $10 billion of additional expansion projects to further enhance and extend its growth visibility. The bulk of its projects support increased natural gas demand.
Kinder Morgan's extensive pipeline of growth projects will grow its cash flow in the coming years. That should support continued dividend increases. This year will be the ninth year in a row that Kinder Morgan has raised its dividend.
Lots more dividend growth ahead
Clearway Energy, Chevron, and Kinder Morgan pay high-yielding dividends that should continue growing in the decades ahead. That makes them ideal dividend stocks to buy and hold for a potential lifetime of passive income.
