Dividend income is a great way to boost your financial situation in the short and the long term. The extra income can add stability and make it easier for you to work less today and potentially retire early.
There are many great high-yielding stocks to help you generate significant dividend income. By investing $15,000 each into Realty Income (NYSE: O), Verizon Communications (NYSE: VZ), and Enbridge (NYSE: ENB), you can generate $3,000 per year in dividends. And over time, that income could grow even higher. Here’s a look at each stock and it’s recent dividend yield.
Realty Income: 5.9%
Realty Income is a real estate investment trust (REIT) that has a diverse set of properties in its portfolio. For long-term investors, that’s of key importance because not only does that add long-term stability, but it also means there are many opportunities for growth.
The company has 1,326 clients spanning 86 industries. And with its portfolio totaling 272 million square feet, it’s one of the largest REITs in the world.
In 2023, the company wrapped up another strong year with revenue of $4.1 billion, rising by 22%. And funds from operations (FFO) per share of $4.07 were slightly higher than the $4.04 it reported in the previous year.
FFO per share is effectively what REITs use instead of net income to assess the safety of their payouts since it gives a better indication of profitability when excluding noncash items such as depreciation and amortization.
The stock pays a monthly dividend of $0.2570, which totals $3.08 a year, well below its FFO per share, suggesting that the dividend is safe.
Realty Income has increased its dividend annually for 29 straight years, and with its strong numbers, it’s likely that trend will continue for the foreseeable future. Investing $15,000 into the stock would generate approximately $890 in annual dividends for your portfolio.
Verizon Communications: 6.6%
The telecom sector can be a great place for long-term dividend income. But with interest rates on the rise in recent years, investors have pulled out of telecoms and transitioned more into bonds and other assets.
The big drawback for telecoms is that capital spending can be a drain, especially when the cost of borrowing is high. But Verizon is one of the top telecom companies in the country, and its results suggest that the business is still in excellent shape.
It finished 2023 with $134 billion in operating revenue, which was down 2.1% year over year. But with consumers fighting higher costs and looking to cut their bills, a modest decline in revenue might not be a huge surprise.
It’s certainly no reason to be worried about Verizon’s long-term prospects. Last year, its free cash flow totaled $18.7 billion, which was up considerably from the $14.1 billion it brought in a year earlier.
Free cash flow is an important consideration for dividend investors since payments are made in cash. Annually, Verizon pays out approximately $11 billion in cash dividends, and its recent results show that even in a challenging economy, there is plenty of room for the company to continue paying and increasing its dividend.
In 2023, Verizon increased its dividend for a 17th consecutive year, which is the longest streak among U.S. telecom companies. Investing $15,000 into this stock would bring you around $990 in dividends per year.
Enbridge: 7.6%
The highest yield on this list belongs to the pipeline company Enbridge. This has long been one of the safest options for dividend investors in the oil and gas industry.
Since it’s not drilling for oil or gas, Enbridge’s business doesn’t depend on high commodity prices. Its infrastructure, however, is crucial for the industry because it helps transport 30% of the crude oil that’s produced in North America and close to 20% of the natural gas that’s used in the U.S.
The Canadian company had a strong year in 2023 with its adjusted earnings of 5.7 billion Canadian dollars ($4.2 billion) being unchanged from the previous year. Distributable cash flow, which is what dividend investors will want to focus on, grew by CA$300 million to CA$11.3 billion. The company has been a stalwart in the industry, hitting its financial guidance for the 18th straight year.
The business is also known for consistently raising its dividend each year. Its streak currently sits at 29 years, and with lots of predictability in its operations thanks to long-term agreements and continued growth, this can also be an excellent dividend play.
A $15,000 investment in this stock would result in $1,140 in annual dividends. When combined with the other investments on this list, that would put your total investment at $45,000, with expected annual dividend income around $3,020.
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David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Enbridge and Realty Income. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy.
Want $3,000 in Annual Dividends? Invest $15,000 in Each of These 3 High-Yielding Stocks was originally published by The Motley Fool
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