The best dividend stocks can provide you with bountiful streams of passive income. With their lower risk and volatility profiles, these stalwart stocks should also help you protect your wealth while adding ballast to your diversified investment portfolio.
To aid your search for these wealth builders, here are two top dividend stocks set to deliver strong returns to their investors in the year ahead.
AT&T (NYSE: T) wants to provide its customers with a simpler solution for their connectivity services. By delivering both wireless and broadband offerings, the telecom titan seeks to become the go-to company for reliable, high-speed internet access — at a time when being online has never been more important.
AT&T is working to expand its fiber internet network to more than 50 million locations by 2029, up from roughly 28 million today. During an interview with CNBC, CEO John Stankey said customers who subscribe to both its fiber and wireless services tend to have higher satisfaction and lower cancellation rates. These positive results, in turn, boost the lifetime value of those customers to AT&T.
Together with its steadily expanding 5G wireless subscriber base, AT&T’s fast-growing fiber network has it on track to generate over $18 billion in annual free cash flow by 2027. Management is committed to passing much of this cash on to investors. Over the next three years, AT&T expects to reward its shareowners with more than $40 billion of dividends and stock buybacks.
Better still, the dividend stalwart has used some of its ample cash generation to pay down debt, which helps to further reduce the risks for shareholders.
Best of all, AT&T’s shares can be had for only about 10 times its forecasted free cash flow for 2025 (and 9 times its projections for 2027). Additionally, its stock currently yields a hefty 4.9%.
While AT&T’s high-speed connectivity services deliver artificial intelligence (AI)-powered applications to its customers’ phones and computers, Kinder Morgan (NYSE: KMI) wants to help power them.
The energy infrastructure giant owns and operates nearly 80,000 miles of pipelines that ship crude oil and other fuels across the U.S. Kinder Morgan has a particularly strong presence in the natural gas market, where its pipelines transport roughly 40% of the gas produced in the country.
Powerful trends are boosting demand for natural gas. U.S. liquefied natural gas (LNG) exports tripled over the past half-decade and are projected to double again by 2030, fueled by booming international demand for reliable and cost-effective energy. At the same time, the reshoring trend is expected to increase gas usage at U.S.-based manufacturing sites.
The AI revolution is another powerful growth driver. AI data centers devour electricity. Gas-fired power plants are expected to supply much of this energy. In turn, analysts at Goldman Sachs see a need for an additional 3.3 billion cubic feet of natural gas per day in the U.S. alone by the end of the decade.
With multiple trends set to fuel its growth, Kinder Morgan should have little difficulty increasing its dividend in the coming years. CEO Kim Dang expects the energy leader to raise its cash payout for the eighth consecutive year in 2025 to $1.17 per share. That would amount to a greater than 4% dividend yield for investors who buy shares today.
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*Stock Advisor returns as of December 30, 2024
Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Goldman Sachs Group and Kinder Morgan. The Motley Fool has a disclosure policy.
The Best Dividend Stocks to Buy in 2025 was originally published by The Motley Fool
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