Investors must pay attention to the numbers that any company they own reports each quarter. They tell the story of how well the company is doing financially. Unexpected changes can significantly impact the company's value and its ability to return value to investors by distributing cash or repurchasing shares.

While some metrics are important to all companies, specific numbers matter more for certain companies. In the case of Energy Transfer (NYSE: ET), investors should keep an eye on its capital spending. Here's why that number matters most for the high-yielding master limited partnership (MLP).

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Energy Transfer is well-known for its lucrative cash distribution. At more than 7%, it's several times higher than the S&P 500's (SNPINDEX: ^GSPC) dividend yield (less than 1.5%). That makes it very appealing to income-seeking investors.

The MLP generated nearly $8.4 billion of distributable cash flow last year. It paid almost $4.4 billion in distributions to investors. The MLP used its remaining excess cash to fund capital expenditures to grow its business ($3 billion) and strengthen its balance sheet.

In recent years, Energy Transfer has targeted to keep its growth capital spending within its excess free cash flow. That's partly due to prior issues with outspending its excess free cash flow to fund organic expansion projects. This necessitated the company taking on a lot of debt, which increased its leverage ratio. Everything came to a head in 2020 when the MLP had to slash its distribution to retain additional cash to repay debt.

Given the company's past problems with an elevated capital spending profile, it's a number that investors should watch. The MLP plans to spend $5 billion this year on growth capital projects. It has approved several large expansions in recent months. Energy Transfer has more projects in development, including its Lake Charles LNG project. Approving these projects would add to its capital spending outlay.

Energy Transfer must thread the needle and balance growth spending with its investment capacity. If its annual capital spending gets too high, it could start putting pressure on the company's finances.

Should you invest $1,000 in Energy Transfer right now?

Before you buy stock in Energy Transfer, consider this:

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Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $655,255!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $888,780!*

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Matt DiLallo has positions in Energy Transfer. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Realty Income (NYSE: O) is known as The Monthly Dividend Stock. The real estate investment trust's (REIT) stated mission is "to invest in people and places to deliver dependable monthly dividends that increase over time." It has certainly done that throughout its history. It has declared 660 consecutive monthly dividends since its formation and raised its payment 131 times since its public market listing in 1994.

The REIT currently offers a 5.6%-yielding dividend, which is very attractive considering that the S&P 500's dividend yield is below 1.5%. However, it's not the only REIT paying an attractive monthly dividend. EPR Properties (NYSE: EPR) currently pays a monthly dividend yielding 6.2%. Here's why those who like Realty Income should check out this even higher-yielding monthly dividend stock.

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An entertaining portfolio

EPR Properties is a REIT focused on experiential real estate. It owns movie theaters, accounting for 38% of its annual earnings; eat-and-play properties, 24%; attractions and cultural properties, 13%; fitness and wellness locations, 8%; ski resorts, 7%; experiential lodging, 2%; and gaming properties, 2%. The REIT also owns a small educational property portfolio, consisting of early childhood education (4%) and private schools (2%), that it's steadily selling off to recycle capital into experimental properties.

Realty Income also invests in experiential real estate as part of its diversified portfolio. The REIT's portfolio currently has properties in gaming, making up 3.2% of its annual rent; health and fitness, 4.3%; theaters, 2.1%; and entertainment 1.8%.

EPR Properties leases these properties back to companies that operate the experiences under long-term, primarily triple net leases (NNN). That's the same lease structure utilized by Realty Income. These leases provide the REITs with relatively stable and steadily rising rental income.

A strong financial profile

EPR Properties expects its portfolio to produce between $5.00 and $5.16 per share of funds from operations (FFO) as adjusted this year. With its current dividend rate at $0.295 per share each quarter, or $3.54 annually, the REIT has a conservative dividend payout ratio of around 70%. That enables it to retain cash to fund new investments. EPR has a lower dividend payout ratio than Realty Income, which was around 75% of its adjusted FFO in the first quarter.

EPR Properties also has an investment grade-rated balance sheet with lots of liquidity. While the company has a good balance sheet, it's not as strong as Realty Income's, which rates as one of the 10 best in the REIT sector. Higher interest rates in recent years have therefore made it more challenging for EPR to obtain outside capital to fund new investments. That has led it to sell off educational and theater properties to recycle that capital into new experiential property investments.

Solid growth prospects

EPR Properties estimates that the total addressable market opportunity for experiential real estate is well over $100 billion. Given the current size of its portfolio, with $6.4 billion of experiential properties, it has a massive growth runway.

The REIT is investing conservatively these days due to higher interest rates by funding new investments internally via post-dividend free cash flow, the proceeds from capital recycling, and new debt within its current leverage level. That works out to $200 million to $300 million of new investments per year. At that rate, the REIT can grow its adjusted FFO per share by around 3% to 4% annually. That should support a similar dividend growth rate; it raised its payout by 3.5% earlier this year. The company invested a total of $33.7 million in the first quarter, including $14.3 million to acquire an attraction property. Meanwhile, it has lined up $148 million of spending on experiential development and redevelopment projects it expects to fund over the next two years.

Realty Income also expects to grow its adjusted FFO per share at a low-to-mid single-digit rate. That should support continued growth in its dividend. However, given its greater diversification, it has a much bigger opportunity set, at $14 trillion.

A great monthly dividend stock

Realty Income is one of the best monthly dividend stocks to buy for passive income. However, it's not the only option out there. EPR Properties currently offers a higher-yielding payout backed by a solid financial profile. It's a good option for those seeking more passive dividend income each month than Realty Income currently provides.

Should you invest $1,000 in EPR Properties right now?

Before you buy stock in EPR Properties, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and EPR Properties wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $657,871!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $875,479!*

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Matt DiLallo has positions in EPR Properties and Realty Income. The Motley Fool has positions in and recommends EPR Properties and Realty Income. The Motley Fool has a disclosure policy.

Shares of Sezzle (NASDAQ: SEZL) were sizzling in May. They skyrocketed an eye-popping 106.7% for the month, according to data provided by S&P Global Market Intelligence. The primary driver was the digital payment platform's strong first-quarter results.

Sizzling growth

Sezzle reported strong financial results across the board in May. The buy now, pay later (BNPL) company's gross merchandise volume (GMV) jumped 64.1% to $808.7 million. That helped fuel a 123.3% increase in revenue, which reached a new quarterly high of $104.9 million. That represented 13% of its GMV, up from 11.5% in the fourth quarter. The company benefited from higher user engagement and its WebBank partnership.

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Meanwhile, the company's transaction costs declined from 4.3% to 3.8% of GMV. Driving the improvement were better-than-expected credit performance, effective payment processing strategies, and reduced interest costs from the improved terms of its new credit facility.

The combination of surging revenue and improving margins enabled the company to more than quadruple its net income to $36.2 million, or 34.5% of its revenue. The continued growth in profitability enabled Sezzle to produce $58.8 million in cash flow from operations, up from $38.6 million in the fourth quarter. That boosted the company's cash position to $120.9 million against $70.8 million of outstanding principal on its $150 million credit facility.

The company's strong showing gave it the confidence to raise its 2025 guidance. It now sees revenue growing 60% to 65% this year, up from its prior view of 25% to 30%. It also raised its net income outlook to $120 million for the year.

Sezzle also continues to launch innovative products to enhance its ability to serve consumers and merchants. It's beta testing its Pay-in-5 offering to provide borrowers greater flexibility at checkout. It also launched several enhanced shopping tools and expanded its merchant network.

Does Sezzle still have room to run after May's epic rally?

Shares of Sezzle have been scorching hot over the past year, rocketing over 800%. That has driven up its valuation. The fintech stock now trades at nearly 15 times sales and over 40 times its forward P/E ratio. That's definitely a premium valuation. The S&P 500 currently trades at 22.5 times forward earnings, while the tech-heavy Nasdaq-100 index fetches more than 28 times its forward earnings.

However, Sezzle is growing much faster than the average company. That could continue for quite a while, given the company's massive total addressable market opportunity. Sezzle currently controls less than 1% of North America's total BNPL market ($257 billion), which is only 2% of North America's total commerce transaction value. Because of that, it's a compelling BNPL stock if you want to capitalize on this massive growth opportunity. While the stock might cool down after its scorching rally, it could have a lot more room to run in the long term as Sezzle continues expanding.

Should you invest $1,000 in Sezzle right now?

Before you buy stock in Sezzle, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Sezzle wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $868,615!*

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Matt DiLallo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Sezzle. The Motley Fool has a disclosure policy.

The Dow Jones Industrial Average tracks 30 large, publicly traded blue chip stocks. These companies are some of the strongest and most well-known in the country. They tend to be lower-risk companies, most of which pay dividends. Because of that, Dow stocks can be a great choice for those seeking reliable dividend income.

Of the 30 Dow stocks, Verizon (NYSE: VZ) stands out for its high dividend yield. At over 6%, it's more than triple the average dividend yield of Dow stocks (less than 2%). That makes the telecom giant an ideal dividend stock to buy for passive income this month.

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A lower-risk, high-yielding dividend stock

A high dividend yield can sometimes suggest that a company has a higher risk profile. However, that's not the case with Verizon. The telecom giant produces prodigious cash flows and boasts a rock-solid financial profile.

Last year, Verizon generated $36.9 billion in cash flow from operations. It invested $17.1 billion into capital projects to maintain and expand its 5G and fiber networks. That left Verizon with $19.8 billion in free cash flow, which easily covered the company's $11.2 billion in dividend payments to shareholders.

The remaining excess free cash flow enabled the telecom giant to strengthen its already solid balance sheet. Its leverage ratio fell from 2.6 times at the end of 2023 to 2.3 times at the end of last year. That's a solid leverage ratio for a company that generates stable cash flow. It backs the company's strong A-/BBB+/Baa1 bond ratings. Verizon's long-term goal is to have an even lower leverage ratio in the range of 1.75x to 2.0x, putting it on an even stronger financial foundation.

More dividend growth ahead

Verizon's robust cash flows and strong financial profile have enabled the company to steadily increase its dividend. Last September, the company delivered its 18th consecutive annual dividend increase, raising its payment by around 2%. That's the longest current streak in the U.S. telecom sector.

The company should be able to continue increasing its dividend in the future. It's investing heavily in 5G and fiber to provide faster wireless and broadband services to customers. That strategy is driving the company's financial growth this year. Its wireless services revenue rose 2.7% in the first quarter to an industry-leading $20.8 billion.

Meanwhile, its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) increased by 4% to $12.6 billion, the highest in the company's history. Verizon also produced $3.6 billion in free cash flow after capital expenses in the first quarter, a 34% jump compared to the year-ago period.

Verizon has budgeted between $17.5 billion and $18.5 billion for capital expenditures this year to maintain and expand its network. That will leave it with $17.5 billion to $18.5 billion in free cash flow, more than enough to cover its dividend and continue strengthening its balance sheet.

The company is using some of its financial flexibility to acquire Frontier Communications in a $20 billion all-cash deal that it hopes to close early next year. The acquisition will significantly expand its fiber network while generating at least $500 million in annual cost savings. Verizon will use its growing excess free cash flow to repay the debt it will take on to close that deal. It should return to its current level within two years of closing the acquisition. That would free up additional cash that Verizon could use to repurchase stock.

The growing free cash flow from its capital investments and the Frontier deal should enable Verizon to continue to steadily increase its high-yielding dividend.

A bankable passive income stream

Verizon is a rare high-yielding blue chip dividend stock. It provides investors with a bond-like income stream with some upside potential from a rising dividend and the possibility of an increasing stock price. These features make it an ideal option for those seeking a bankable income stream backed by a top Dow stock.

Should you invest $1,000 in Verizon Communications right now?

Before you buy stock in Verizon Communications, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Verizon Communications wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $868,615!*

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Matt DiLallo has positions in Verizon Communications. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy.

Investing in high-yielding dividend stocks has benefits and drawbacks. On the plus side, they pay lucrative dividends, making them an excellent way to generate passive income. However, a negative is that many companies have high-yielding dividends because they have nothing better to do with their free cash flow than funnel it back to shareholders.

That's not true with ExxonMobil (NYSE: XOM) or Kinder Morgan (NYSE: KMI). They're also investing heavily in growth projects over the next five years. Because of that, you can confidently buy and hold these energy stocks to collect their high-yielding dividends that should steadily rise through at least 2030.

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A bold plan to 2030

ExxonMobil is a preeminent dividend stock. The oil giant has increased its dividend payment for 42 straight years. That leads the oil industry and is a record that only 4% of companies in the S&P 500 have achieved.

"And we plan for that track record to continue for decades to come," stated CFO Kathy Mikells on Exxon's fourth-quarter earnings conference call. She noted that continuing to deliver dividend growth is "only possible by investing in the high-quality growth opportunities that drive leading returns and higher cash flows."

The oil giant plans to invest $140 billion into major projects and its Permian Basin development program through 2030. It expects "this capital to generate returns of more than 30% over the life of the investments," stated CEO Darren Woods in the press release unveiling its plan to 2030.

That level of investment and returns has the potential to deliver incremental growth of $20 billion in earnings and $30 billion in cash flow by 2030, assuming oil prices average around $60 a barrel (below the current price point). That's a 10% compound annual growth rate for its earnings and an 8% growth rate for cash flow from last year's baseline.

Exxon estimates that this plan could produce a staggering $165 billion in surplus cash through 2030. The company can use the money to increase shareholder distributions by growing the dividend and continuing to buy back boatloads of its stock. It's aiming to repurchase $20 billion of its shares this year and another $20 billion in 2026, assuming reasonable market conditions.

Given Exxon's track record and visible earnings growth through 2030, it seems safe to assume it can continue growing its dividend, which yields nearly 4%, throughout this period.

A growing growth pipeline

Kinder Morgan extended its dividend growth streak to eight straight years in 2025. The pipeline company's payout, which yields over 4%, should continue growing for at least the next five years.

Several factors drive that view. For starters, the company has highly contracted and predictable cash flows. Only 5% of its cash flow is exposed to commodity prices, and another 26% is subject to volume risk. Take-or-pay agreements or hedging contracts that guarantee payment lock in 69% of its cash flow.

Kinder Morgan pays out less than half of its stable cash flow in dividends. It retains the rest to invest in expansion projects and maintain its financial flexibility.

The company currently has $8.8 billion of commercially secured expansion projects underway. That's a $5.8 billion increase from where its backlog was at the end of 2023. Its current slate of projects includes $8 billion of natural gas-related expansions. Those projects have in-service dates through the second quarter of 2030. Because of that, they'll supply the company with steadily growing cash flow through at least the end of that year.

Kinder Morgan plans to continue adding fuel to its growth engine. It recently closed the $640 million acquisition of a natural gas gathering and processing system in the Williston Basin area of North Dakota, which will immediately boost its cash flow. The company has ample financial flexibility to complete additional accretive deals as opportunities arise in the future.

Kinder Morgan is also pursuing a slew of additional growth projects. It's currently working on a substantial number of opportunities to supply additional gas to liquefied natural gas (LNG) export terminals that are under development. The company is also pursuing opportunities to supply a lot more gas to the power sector, which is expected to require substantial additional fuel in the future to support the anticipated surge in electricity demand from catalysts such as AI data centers.

With visible growth coming down the pipeline and more opportunities on the horizon, Kinder Morgan should have ample fuel to continue increasing its high-yielding dividend through at least 2030.

Growth visibility for the next five years

Most companies don't have a lot of growth visibility. That's what makes ExxonMobil and Kinder Morgan stand out. They currently have visibility into their ability to grow their earnings and cash flow through 2030. Because of that, it looks highly likely that they will be able to increase their high-yielding dividends throughout that time frame. That's why you can confidently buy and hold these dividend stocks for the next five years, if not much longer.

Should you invest $1,000 in ExxonMobil right now?

Before you buy stock in ExxonMobil, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and ExxonMobil wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $868,615!*

Now, it’s worth noting Stock Advisor’s total average return is 792% — a market-crushing outperformance compared to 173% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

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Matt DiLallo has positions in Kinder Morgan. The Motley Fool has positions in and recommends Kinder Morgan. The Motley Fool has a disclosure policy.

Investing in real estate can be a terrific way to make passive income. Tenants pay rent, which should cover all property expenses with room to spare, providing the landlord with income.

One of the easiest ways to make passive income from real estate is to invest in a real estate investment trust (REIT). These companies own portfolios of income-generating real estate. They distribute a portion of that income to shareholders via dividend payments.

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VICI Properties (NYSE: VICI) is a top REIT to buy for passive income this June. It currently pays a 5.5%-yielding dividend -- more than four times the S&P 500's (SNPINDEX: ^GSPC) sub-1.5% yield -- that it has been growing at an above-average rate. That combination of yield and growth enables investors to collect lots of income now and even more in the future.

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A rock-solid income stock

VICI Properties is one of the largest REITs focused on experiential real estate. It owns market-leading gaming, hospitality, wellness, entertainment, and leisure destinations, like the Venetian Resort Las Vegas and the Chelsea Piers sports and entertainment complex in New York City.

The REIT leases these properties to operating companies under very long-term triple net (NNN) leases (40-year average remaining lease term) that increasingly escalate rents at rates tied to inflation (42% this year, rising to 90% by 2035). Those leases, which require that tenants cover all property operating costs (including routine maintenance, real estate taxes, and building insurance), provide it with stable, steadily rising rental income.

The REIT pays out about 75% of its adjusted funds from operations (FFO) in dividends each year. That gives it a big cushion while enabling it to retain a meaningful amount of its cash flow to fund new investments. VICI Properties also has a solid investment-grade-rated balance sheet, providing it with additional financial flexibility.

Its net leverage ratio was 5.3 times at the end of the first quarter, right in the middle of its 5.0x-5.5x target range. The company's stable cash flow and solid financial profile put its high-yielding dividend on a very stable foundation.

VICI Properties' rising rental income and growing real estate portfolio have supported its ability to increase its dividend. The REIT has raised its payment in all seven years since its formation. It has grown its dividend at a 7.4% compound annual rate, which is much faster than the 2.3% average pace of other REITs focused on investing in NNN real estate.

Plenty of room to continue growing

VICI Properties already has a leading experiential real estate portfolio. The REIT owns 54 gaming properties, including 10 trophy assets on the Las Vegas Strip. The company also owns Chelsea Piers and 38 bowling entertainment centers leased to Lucky Strike.

Despite its already extensive portfolio, VICI Properties has plenty of room to continue growing. There is an estimated $400 billion in U.S. gaming properties not currently owned by REITs or operated by tribal gaming companies. These properties alone represent a massive growth opportunity for the roughly $50 billion REIT (by enterprise value).

Meanwhile, tribal casinos represent an additional investment opportunity. VICI Properties owns several casinos leased to tribal operators. It has also made two loan investments related to properties on tribal land, including its recent partnership with Red Rock Resorts to fund the development of the North Fork Mono Casino and Resort in California.

On top of that, there's a large and growing opportunity to invest in nongaming experiential properties. VICI Properties has been getting in on the ground floor of this opportunity by forming financial partnerships with experiential property operators. It has made loans to Great Wolf Lodge (indoor water parks), Canyon Ranch (wellness retreats), Cabot (destination golf), and others. Many of these loans give the REIT the option to acquire properties from the developer in sale-leaseback transactions.

VICI Properties is always on the lookout for new partners and experiential real estate investment opportunities. It formed a strategic relationship with Cain International and Eldridge Industries earlier this year to identify and pursue unique experiential real estate. The first investment is a $300 million mezzanine loan to support the development of One Beverly Hills, a landmark luxury mixed-use development featuring an all-suite Aman Hotel, high-end boutiques, world-class culinary destinations, and a botanical garden.

The REIT's ability to continue expanding its portfolio supports its capacity to grow its dividend.

A high-quality, high-yield income stock

VICI Properties pays an attractive, steadily rising dividend backed by a world-class experiential real estate portfolio. The REIT also has a rock-solid financial profile, enabling it to continue growing its portfolio and dividend. Its combination of a high-yield dividend and above-average growth profile makes it a top REIT to buy for income this June.

Should you invest $1,000 in Vici Properties right now?

Before you buy stock in Vici Properties, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Vici Properties wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $668,538!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $869,841!*

Now, it’s worth noting Stock Advisor’s total average return is 789% — a market-crushing outperformance compared to 172% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

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Matt DiLallo has positions in Vici Properties. The Motley Fool recommends Red Rock Resorts and Vici Properties. The Motley Fool has a disclosure policy.

Shares of Constellation Energy (NASDAQ: CEG) rocketed 37% in May, according to data provided by S&P Global Market Intelligence. Powering the energy producer's stock price was its strong first-quarter results and recently signed executive orders by President Donald Trump aimed at ushering in a nuclear energy renaissance in the country.

Dual catalysts powered the energy stock's surge last month

Constellation Energy reported strong first-quarter results in early May. The power producer generated $2.14 per share of adjusted operating earnings, up from $1.82 per share in the year-ago period, a nearly 18% increase. The company benefited from the strong performance of its business. That strong showing gave the company the confidence to reaffirm its full-year outlook that it will generate between $8.90 and $9.60 per share of adjusted earnings.

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The company also noted that it remains on track to close its acquisition of Calpine by the end of this year. That deal will significantly expand its leading clean energy fleet, enhancing its earnings growth rate.

In addition, grid operator PJM selected the company's Crane Clean Energy Center to be fast-tracked for interconnection to the grid. Constellation Energy is restarting the dormant nuclear power plant to help support the cloud and artificial intelligence (AI) power needs of tech giant Microsoft. The company is working to restart the 845-megawatt nuclear power generating unit by 2028. It previously shut down the plant for economic reasons.

Constellation Energy is bringing that plant back online to help support an expected surge in power demand in the coming years from AI data centers and other catalysts. The country's growing need for power led Trump to sign executive orders last month aimed at ushering in a nuclear renaissance in the country. The president wants to build more nuclear reactors in the country to help supply more power to the grid.

Constellation Energy applauded the move.

In a statement on the nuclear executive orders, the company commented, "We applaud the Trump administration for its strong support for preserving and expanding America's nuclear fleet to power our economy, win the AI race against China, and reassert America's leadership in nuclear energy."

The energy company also highlighted that it's "walking the walk with plans to invest billions of dollars into its fleet on projects like increasing the generation capacity of our plants by up to 1,000 additional megawatts and relicensing the entire fleet into the 2070s."

Does Constellation Energy have the power to continue surging?

Shares of Constellation Energy have rallied sharply over the past year, powered by the anticipated surge in demand for nuclear energy. The resurgence continued in early June when the company signed a 20-year power purchase agreement with Meta Platforms for power produced at its Clinton Clean Energy Center (1.1 gigawatts).

Growing demand for nuclear energy plus the company's pending Calpine deal position Constellation Energy to grow its earnings briskly in the coming years (more than 13% annually through 2030 without the boost from Calpine). That's a robust rate and could continue powering a surge in Constellation's stock in the coming years.

Should you invest $1,000 in Constellation Energy right now?

Before you buy stock in Constellation Energy, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Constellation Energy wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $657,385!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $842,015!*

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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Matt DiLallo has positions in Meta Platforms. The Motley Fool has positions in and recommends Constellation Energy, Meta Platforms, and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Enterprise Products Partners (NYSE: EPD) has been an elite income-producing investment over the years. The master limited partnership (MLP) has raised its cash distribution to investors for 26 straight years (every year since its initial public offering). The energy midstream giant currently offers a yield of around 7%, which is several times higher than the S&P 500 (less than 1.5%).

One factor fueling the MLP's lucrative and steadily growing payout is its leading energy export business. It operates several marine terminals along the U.S. Gulf Coast that export natural gas liquids, crude oil, petrochemicals, and refined products to global markets.

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China is a major destination for its ethane and butane exports. That's a potential problem now that the U.S. Department of Commerce is requiring companies to apply for a license to export to China. Here's a look at whether this policy shift could affect the company's ability to continue growing its high-yielding payout.

Image source: Getty Images.

Stopping the flow of ethane to China

The Commerce Department recently ordered companies to stop shipping goods, including ethane and butane, to China without a license. That will have a direct effect on Enterprise Products Partners.

The company's marine terminal on the Houston ship channel loaded about 85,000 barrels of ethane per day last year for export to Chinese markets. That represented about 40% of the volumes from that facility, a big chunk of this country's ethane exports to China, which hit a record 227,000 barrels per day last year. The U.S. also exported a record 26,000 barrels of butane per day in 2024.

The company is currently evaluating its procedures and internal controls. It said in a regulatory filing that it's not yet sure if it will be able to obtain a license to resume exports to China.

One potential roadblock to a license is that an agency of the Commerce Department told the company that ethane and butane exports to China pose an unacceptable risk of military end-use by the country.

However, that's not the typical use of ethane. Chinese petrochemical companies use the cheaper natural-gas-based product in place of oil-based naphtha as a feedstock to produce plastics and chemicals. It also has heating and cooking uses.

An uncertain near-term impact

Enterprise isn't sure how much this policy change will affect its operations and cash flow. A big unknown is whether the industry will be able to quickly find alternative markets and uses for the U.S. ethane and butane that were flowing to China. It's also not clear how much effect this will have on prices.

China is a major energy consumer, making it a prime destination for U.S. hydrocarbons. U.S. exports satisfy 27% of the country's demand. While the Trump administration is currently curtailing exports to China, increasing U.S. energy export volumes to the country could help reduce the current trade imbalance.

Enterprise's co-CEO Jim Teague said on the company's first-quarter conference call last month that the new administration's tariff plan "is causing nothing short of chaos around the world. Energy is not excluded." However, his company believes that the administration's policies have an end goal, which is "intended to promote U.S. energy, not just for the next four years, but for decades," Teague added. That's because U.S. energy is important to our economy, global markets, and our balance of trade.

Built to withstand the uncertainty

The new license requirements to export ethane to China could have some effect on Enterprise Products Partners' export business. However, the company has one of the most diversified midstream operations in the industry, which should help mute the impact.

On top of that, it has one of the strongest financial profiles in the energy midstream sector. Because of that, the headwind shouldn't significantly affect the MLP's ability to continue paying a growing distribution in the near term.

Meanwhile, the administration's policies should be net positives for the U.S. energy sector over the long term, especially for exports, since they're crucial to helping balance trade. Given all the positives, the company remains a rock-solid option for income-seeking investors to buy and hold for the long haul.

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Matt DiLallo has positions in Enterprise Products Partners. The Motley Fool recommends Enterprise Products Partners. The Motley Fool has a disclosure policy.

There are many ways to make some passive income. Investing in real estate and high-yielding dividend stocks are two tried-and-true methods. You can combine those options to collect some lucrative dividend income by investing in real estate investment trusts (REITs) with high dividend yields.

For example, investing $11,250 across the following four high-yielding REITs can generate over $1,000 of dividend income each year:

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Data source: Google Finance and the author's calculations.

These REITs also pay their dividends monthly, making them ideal for those seeking to collect regular passive income to help cover their recurring expenses.

AGNC Investment

AGNC Investment is a mortgage REIT focused on investing in residential mortgage-backed securities (MBS) guaranteed against credit losses by government agencies like Fannie Mae. That makes these mortgage pools very low-risk investments. They're also relatively low-returning investments (low-to-mid single-digit yields).

Image source: Getty Images.

AGNC uses leverage to earn higher returns. This investment strategy can be very lucrative. CEO Peter Federico commented on the REIT's first-quarter conference call, "A portfolio of swaps levered the way we lever them would generate a return in the low 20%." That's a high-enough return to cover the REIT's current dividend and operating expenses, which is why it remains comfortable with its high yield.

AGNC has a higher risk profile than other REITs because a sudden shift in market conditions could impact its returns and ability to maintain its dividend, which investors need to monitor.

Realty Income

Realty Income has been one of the most reliable dividend stocks over the years. It recently declared its 659th consecutive monthly dividend. The REIT has increased its payment for 110 straight quarters and all 30 years that it has been a public company, growing it at a 4.3% compound annual rate. It has also delivered positive earnings growth in 29 of those 30 years.

A big factor driving its consistency is its portfolio. Realty Income owns a diversified portfolio of net lease properties (retail, industrial, gaming, and others). Net leases provide it with very stable rental income because they require tenants to cover all property operating expenses, including routine maintenance, real estate taxes, and building insurance.

Realty Income also has a top-tier financial profile, which enables it to steadily invest in additional income-generating properties. That steady stream of new properties empowers the REIT to routinely increase its high-yielding monthly dividend.

Healthpeak Properties

Healthpeak Properties is a healthcare REIT. It owns outpatient medical, lab, and senior housing properties. The company's diversified portfolio works together as a cohesive unit focused on healthcare discovery and delivery. Its properties will benefit from the aging of the U.S. population and the desire for better health.

Those catalysts drive stable and growing demand for space in its portfolio of high-quality healthcare properties, supporting rising rental income for the REIT. Healthpeak also has a healthy financial profile, which allows it to invest in new properties to expand its portfolio (it currently has $500 million to $1 billion of dry powder to make new investments). These drivers should enable Healthpeak to increase its high-yielding payout in the future (it recently started growing its dividend, providing investors with a 2% raise).

EPR Properties

EPR Properties specializes in investing in experiential real estate. It owns movie theaters, eat-and-play venues, fitness and wellness properties, and other attractions. The company also has a small educational property portfolio. These properties provide it with steady rental income, backed primarily by net leases.

The REIT currently has the financial capacity to invest $200 million to $300 million into new properties each year. EPR Properties has already lined up $148 million of experiential development and redevelopment projects it expects to fund over the next two years, including financing the construction of a private golf club in Georgia, its first traditional golf investment. That investment rate should drive 3% to 4% annual growth in its cash flow per share, which should support a similar dividend growth rate (it raised its payout by 3.5% earlier this year).

Big-time passive income stocks

REITs are often great investments for those seeking to generate passive income. Many have high dividend yields, which enable you to produce more income from every dollar you invest. Meanwhile, AGNC Investment, Realty Income, EPR Properties, and Healthpeak Properties all pay monthly dividends, which is ideal since they better align your income with your expenses. Most of those REITs should also steadily increase their payouts, which should enable you to collect even more passive income in the future.

Should you invest $1,000 in AGNC Investment Corp. right now?

Before you buy stock in AGNC Investment Corp., consider this:

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Matt DiLallo has positions in EPR Properties and Realty Income. The Motley Fool has positions in and recommends Realty Income. The Motley Fool recommends EPR Properties and Healthpeak Properties. The Motley Fool has a disclosure policy.

Investing money in high-yielding dividend stocks can be a great way to generate passive income. Their higher yields enable investors to earn more money from every dollar they invest.

EPR Properties (NYSE: EPR) is a great option for those seeking a lucrative passive income stream. The real estate investment trust (REIT) currently has a dividend yield approaching 7%. It could turn a $5,000 investment into nearly $350 of annual passive income at that rate. Even better, the REIT pays a monthly dividend, making it appealing for those seeking regular passive income to help cover their recurring expenses. Here's a closer look at this high-yielding REIT.

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Image source: Getty Images.

Cashing in on a niche

EPR Properties specializes in investing in experiential real estate. It owns movie theaters, eat-and-play venues, fitness and wellness properties, attractions, and other similar properties. It leases these properties to tenants that will operate the experiences. It also has a small portfolio of educational properties (early education centers and private schools). Most of its leases are triple net (NNN), which provides very stable rental income because the tenant covers all operating costs, including routine maintenance, real estate taxes, and building insurance.

The REIT pays out a conservative percentage of its predictable rental income in dividends. In 2025, the company expects to generate between $5 and $5.16 per share of funds from operations (FFO) as adjusted, a 4.3% increase from last year at the midpoint. EPR Properties currently pays a monthly dividend of $0.295 per share ($3.54 annually). That gives it a dividend payout ratio of around 70%.

That conservative payout ratio gives the REIT a nice cushion while enabling it to retain meaningful excess free cash flow to fund new experiential property investments. EPR Properties also has a solid investment-grade balance sheet with lots of liquidity. It ended the first quarter with $20.6 million in cash and only $105 million outstanding on its $1 billion credit facility.

EPR Properties' combination of stable cash flow, conservative payout ratio, and rock-solid balance sheet puts its high-yielding dividend on a very firm foundation.

Slow and steady growth

The REIT steadily invests money to enhance and expand its portfolio. It aims to spend between $200 million and $300 million this year. The company invested $37.7 million during the first quarter, including buying an attraction property in New Jersey for $14.3 million (Diggerland USA, the only construction-themed attraction and water park in the country). The rest of its investments were on build-to-suit development and redevelopment projects, including some Andretti Indoor Karting eat-and-play venues that will open over the next year.

EPR Properties also continued to secure new build-to-suit projects. It bought land for $1.2 million and provided $5.9 million of mortgage financing for a private club in Georgia, its first traditional golf investment. It also closed on the land for a new Pinstack Eat & Play property in Virginia (paying $1.6 million) and expects to spend $19 million on construction. EPR has now secured $148 million of experiential development and redevelopment projects it intends to fund over the next two years.

The company is funding these investments with post-dividend free cash flow, available liquidity, and capital recycling. The REIT has been strategically reducing its exposure to the theater and educational sectors by selling properties. It sold three theaters and 11 early childhood properties in the first quarter for $70.8 million ($9.4 million gain). It also received $8.1 million to fully repay two mortgages secured by early childhood properties. The company anticipates selling $80 million to $120 million of properties this year, giving it cash to recycle into its targeted experiential sectors.

The company's current investment rate has it on track to grow its FFO per share at around a 3% to 4% annual rate. That should support a similar dividend growth rate (it raised its payment by 3.5% earlier this year). If interest rates fall, the company could ramp up its investment rate and grow even faster in the future.

A high-quality passive income stock

EPR Properties' portfolio of experiential properties produces very stable rental income. That provides the REIT with cash to pay its lucrative monthly dividend and invest in expanding its portfolio. Those growth investments should enable the company to steadily increase its payout. That stable and growing dividend makes EPR Properties a great option for those seeking a recurring passive income stream.

Should you invest $1,000 in EPR Properties right now?

Before you buy stock in EPR Properties, consider this:

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Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $614,911!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $714,958!*

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Matt DiLallo has positions in EPR Properties. The Motley Fool recommends EPR Properties. The Motley Fool has a disclosure policy.

Shares of Rexford Industrial Realty (NYSE: REXR) tumbled 12.4% in April, according to data from S&P Global Market Intelligence. Weighing on the real estate investment trust (REIT) was tariff-driven volatility in the market and its first-quarter financial results.

Tariffs drive uncertainty

Last month, the Trump administration surprised the market by launching unexpectedly high reciprocal tariffs on global trading partners to help rebalance trade. They caused significant market volatility as stock prices tumbled and Treasury bond yields soared, the latter of which can have a significant impact on the value of commercial real estate.

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Image source: Getty Images.

Tariffs could also affect demand for industrial real estate, especially in Southern California, where Rexford focuses. It could cause imports to decline, which could reduce demand for warehouse space. Tariffs could also cause a recession, which could also affect demand.

Those headwinds could further affect what has already been a soft market. Rents for warehouse space in Southern California declined by 2.8% in the first quarter and have fallen 9.4% over the past year. However, that was mainly due to an excess supply of large properties -- that is, those exceeing 100,000 square feet. Rexford focuses on owning smaller properties of less than 50,000 square feet, which have seen more resilient demand. As a result, the spread it captured between rents on expiring leases and new ones signed during the quarter was up 14.7% on a cash basis. That's a 20.2% increase for renewal leases against a 5.4% decline for leases with new tenants.

Tariffs have caused some additional slowdown in leasing activity during the early part of the second quarter as tenants defer making leasing decisions because of increased economic uncertainty. The company's vacancy rate could tick up in the near term, and rents might not rise as much as anticipated.

Time to buy or say goodbye?

Although there's a lot of uncertainty in the near term, Rexford Industrial believes it's in a strong position for the medium and long term. The company owns a high-quality portfolio in Southern California, where there's a long-term imbalance between demand for space and supply, which should make its portfolio even more valuable in the future. Furthermore, its properties primarily serve regional consumption, not global trade. That drives its view that rents should rise in the coming years.

Rexford currently expects that embedded annual rent escalations, securing higher market rents as legacy leases expire, and its current slate of repositioning and redevelopment projects will grow its net operating income by 40% over the next few years. Meanwhile, there's additional upside potential from acquisitions, improving market conditions, and new redevelopment/repositioning projects. That should enable the REIT to continue increasing its high-yielding dividend, which got up to 5% after last month's slump. That combination of income and growth could help the REIT to produce strong total returns over the coming years, making it look like a compelling buy following last month's performance.

Should you invest $1,000 in Rexford Industrial Realty right now?

Before you buy stock in Rexford Industrial Realty, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Rexford Industrial Realty wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $623,685!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $701,781!*

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Matt DiLallo has positions in Rexford Industrial Realty. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Market volatility has increased significantly this year. The Trump administration's introduction of reciprocal tariffs spooked the market, causing concerns that we could be heading toward a recession. That drove investors to sell off stocks and bonds as they repositioned their portfolios to better navigate the current period of uncertainty.

These market changes have already had some impact on AGNC Investment (NASDAQ: AGNC). Despite that, the mortgage REIT remains comfortable with its current monthly dividend level, which gives it an eye-popping yield of more than 16%.

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Turbulent times

The CEO of AGNC Investment, Peter Federico, discussed the recent market shift on the company's first-quarter earnings conference call. He commented that the tariff policy announcement earlier this month "caused volatility to increase significantly across all financial markets." The issue is that "with the breadth and magnitude of the tariffs being greater than anticipated, recession fears increased materially."

As a result, stock prices tumbled, and "interest rate volatility also increased substantially. Federico noted that "This interest rate volatility and broad macroeconomic uncertainty caused normal financial market correlations to break down, liquidity to become constrained, and investor sentiment to turn negative." He also stated that the agency MBS market, which is AGNC's investment focus, "was not immune to these adverse conditions and also came under significant pressure in early April."

On a positive note, "AGNC was well prepared for the recent market volatility and navigated it without issue," stated the CEO. However, he commented, "AGNC's net asset value was negatively impacted by the mortgage spread widening."

Still at a comfortable level

Given the recent market volatility and the decline in the book value of the company's assets, an analyst on the call asked about the management's comfort level with the dividend.

Federico responded by reminding investors that AGNC's benchmark for dividend stability is its total cost of capital. He went through the math on the call:

At the end of the first quarter, our total cost of capital and the way we're calculating our total cost of capital is the dividends that we pay both on our common and preferred stock, plus all of our operating expenses divided by our total tangible capital which at the end of the first quarter was about $9.5 billion. And by that measure, it would say that the breakeven return on our portfolio to sustain all of those costs was 16.7%.

That's the return hurdle the company needed to exceed on MBS investments to maintain its dividend.

However, that was the benchmark at the end of the first quarter. The numbers have shifted since volatility increased in the early part of the second quarter. Federico stated that if you calculate it based on more recent numbers, it's "probably closer to 18%."

The good news is that the returns it can earn on MBS investments have also increased amid the market's volatility. The CEO stated that "a portfolio of swaps levered the way we lever them would generate a return in the low 20%." Federico noted that "those are historically high levels." That drives his belief that "at current valuation levels, we believe Agency MBS provide investors with a compelling return opportunity."

Given all this, and to answer the question, Federico believes that even with the recent decline in its book value, the increase in returns puts them at a level that still aligns well with its total cost of capital. The REIT remains comfortable with the current dividend level.

Still safe for now

AGNC Investment believes it can continue paying its current dividend level, even with all the recent changes in the market. It looks like an enticing option for those seeking a monster monthly income stream.

However, it is very much a high-risk, high-reward income stock. If market conditions shift again, and its investment returns no longer align with its cost of capital, AGNC might need to reduce its dividend, which it has done several times over the years. It's not the best dividend stock to buy if you're seeking a reliable income stream that can withstand future market turbulence.

Should you invest $1,000 in AGNC Investment Corp. right now?

Before you buy stock in AGNC Investment Corp., consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and AGNC Investment Corp. wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $594,046!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $680,390!*

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*Stock Advisor returns as of April 21, 2025

Matt DiLallo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Investing in the stock market can seem like a daunting task. There are so many options available. Making matters worse, there's so much uncertainty in the air these days with tariffs and their potential impact on the economy and stock market.

If you're feeling nervous about stocks and picking individual ones, one solution is to invest in a top exchange-traded fund (ETF). These investment vehicles can provide broad exposure to the market's long-term upside with less risk. A simple one to start with is the Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD). It holds a portfolio of high-quality dividend stocks that can provide investors with a tangible return during uncertain times in the form of dividend income. For example, investing $1,000 into this fund would at its current payout produce about $40 of dividend income each year. That's only part of the draw, which is why it's such a great fund to buy right now.

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Turning cash into cash flow

The Schwab U.S. Dividend Equity ETF has a very simple strategy. It tracks an index (Dow Jones U.S. Dividend 100 Index) that screens companies based on the quality of their dividends and financial profiles. The result is a list of 100 companies with higher dividend yields, strong dividend growth rates, and healthy financial profiles.

For example, the fund's top holding is Coca-Cola (NYSE: KO). The beverage giant currently has a dividend yield of nearly 3%, which is about double the yield of the broader market (the S&P 500's dividend yield is less than 1.5%). Coca-Cola increased its dividend payment by 5.2% earlier this year. That marked the 63rd consecutive year it increased its dividend. It's part of the elite group of Dividend Kings, companies with 50 or more years of annual dividend growth. The company backs its dividend with strong free cash flow and a top-notch balance sheet.

At the fund's annual rebalancing last month, its holdings had an average dividend yield of 3.8%. That yield has crept up as the stock market (and the ETF's value) has declined in recent weeks and is now up over 4%. At that rate, a $1,000 investment in the fund would produce more than $40 of annual passive income.

Meanwhile, the current group of holdings has delivered an average dividend growth rate of 8.4% over the past five years. Because of that, the ETF should steadily pay out more cash as its holdings continue increasing their payouts:

SCHD Dividend data by YCharts

Dividend income is only part of the draw

The likely growing stream of dividend income supplied by the Schwab U.S. Dividend Equity ETF provides investors with a solid base cash return. While the payment will ebb and flow each quarter based on when the underlying companies make their dividend payments, it should continue to steadily head higher as they grow their dividends. Given the strength of their financial profiles, these companies should continue increasing their payouts even if there's a recession.

That rising income stream is only part of the return. The share prices of the companies held by the fund should increase in the future as they grow their earnings in support of their rising dividends.

Over the long term, dividend growth stocks have historically produced excellent total returns. According to data from Hartford Funds and Ned Davis Research, dividend growers and initiators have delivered an average annual return of 10.2% over the past 50 years. That has outperformed companies with no change in their dividend policy (6.8%), non-dividend payers (4.3%), and dividend cutters and eliminators (-0.9%).

The Schwab U.S. Dividend Equity ETF has delivered similarly strong returns throughout its history. It has produced an 11.4% annualized return over the past decade and 12.9% since its inception in 2011. While there's no guarantee it will earn returns at those levels in the future, its focus on the top dividend growth stocks puts it in an excellent position to continue delivering strong returns for investors.

A great fund to buy right now

With the stock market slumping this year, shares of the Schwab U.S. Dividend Equity ETF are down about 15% from the high point earlier in the year. That's a great entry point for this high-quality fund. It positions investors to generate lots of dividend income while potentially capturing strong total returns over the long term.

Should you invest $1,000 in Schwab U.S. Dividend Equity ETF right now?

Before you buy stock in Schwab U.S. Dividend Equity ETF, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Schwab U.S. Dividend Equity ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $591,533!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $652,319!*

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Matt DiLallo has positions in Coca-Cola and Schwab U.S. Dividend Equity ETF. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

There have been a lot of questions surrounding AT&T's (NYSE: T) dividend in recent years. The telecom giant already cut its payout by nearly 50% in 2022 to retain additional cash for debt reduction and to reinvest in expanding its fiber and 5G networks. Despite that cut, its leverage ratio remained elevated, causing concerns that another cut could be forthcoming.

Those worries should disappear now that AT&T has finally reached its target leverage ratio. It has the flexibility to start returning more cash to investors, which it initially plans to do by repurchasing shares. That also means the company's more than 4%-yielding dividend is on rock-solid ground.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Reaching the target range

AT&T has been following a well-defined capital allocation strategy. The telecom company has been using its strong cash flow to invest heavily in growing its 5G and fiber networks while also maintaining its attractive dividend. It has been using any remaining excess free cash flow to repay debt, aiming to get its leverage ratio down to the 2.5 range.

While it took a few years, AT&T has finally reached its leverage target. The company produced $3.1 billion in free cash flow during the first quarter, more than covering its $2.1 billion dividend outlay. That provided it with excess free cash flow to continue whittling down its debt. As a result, its leverage ratio was a little more than 2.6 at the end of the first quarter, down from more than 2.9 in the year-ago period, as it has delivered a $9.6 billion reduction in its net debt over the past year.

The company noted that leverage has continued to fall in the early part of the second quarter and is now at its target. AT&T now expects to begin returning more cash to shareholders by starting to repurchase shares. The company plans to buy back as much as $20 billion of its stock over the next several years.

The dividend will only grow safer

AT&T expects to generate at least $16 billion in free cash flow this year. That will easily cover its dividend outlay, which is currently over $8 billion per year. Meanwhile, the company expects its free cash flow to grow by about $1 billion per year in 2026 and 2027, putting it on track to generate over $18 billion in annual free cash flow by 2027.

That growing free cash flow will steadily reduce the company's dividend payout ratio. Meanwhile, unless it starts increasing the dividend, which isn't currently in the plans, its actual cash payments will fall as the company starts repurchasing shares. That's because its outstanding shares will decline, meaning it will need less cash to fund its current per-share payment. As a result, the company anticipates its dividend outlay will be around $20 billion over the next three years.

Finally, with its leverage target achieved, AT&T will have additional borrowing capacity over the next few years while maintaining its current leverage ratio. When added to its free cash flow, the company estimates it will have over $50 billion of financial capacity it can deploy over the next three years. With $20 billion of anticipated dividend payments and another $20 billion of share repurchases expected, it will have about $10 billion of additional financial flexibility. The company could hold on to that flexibility by allowing its leverage ratio to fall below its target. It could also use it to opportunistically buy back more stock or to make an accretive acquisition that grows its cash flow. Any of those options would further enhance the sustainability of its dividend in the coming years.

A very bankable dividend

AT&T's capital allocation strategy has worked as expected. The telecom giant has now reached its leverage target, which positions it to start returning more cash to investors by repurchasing shares, putting the company's 4%-yielding dividend on an extremely safe foundation. That makes it a rock-solid option for those seeking a bond-like income stream from a high-quality company.

Should you invest $1,000 in AT&T right now?

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Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $566,035!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $629,519!*

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Matt DiLallo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Shares of Medical Properties Trust (NYSE: MPW) have defied the market downdraft this year. The real estate investment trust (REIT) has rallied about 35%, significantly outperforming the roughly 10% decline in the S&P 500. That's a welcome turn for investors, given the stock's struggles in recent years.

Even with that big rally, shares of the healthcare REIT still offer a compelling dividend yield of more than 6%. Here's a look at whether it still has more upside ahead.

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What drove this year's rally?

The past few years have been very challenging for Medical Properties Trust. The REIT has battled tenant issues and higher interest rates. Those headwinds made it difficult for the company to refinance debt as it matured.

Medical Properties Trust has worked hard to address its tenant and balance sheet issues. It has sold several properties, which provided it with cash to repay debt as it matured. Meanwhile, even though two of its top tenants have filed for bankruptcy protection over the past year, the REIT has been working through those events to preserve the value of its real estate. It regained control of most of its real estate from one tenant last year, enabling it to sign leases with five new financially stronger operators.

Those new tenants have started paying rent this year. The rental rate will slowly escalate over the next two years, reaching the fully stabilized rate at the end of 2026 at about 95% of what that former tenant was paying on the properties. Meanwhile, its improving financial situation enabled it to capitalize on lower interest rates earlier this year to refinance about $2.5 billion of debt set to mature over the next two years, giving it more financial breathing room. That has taken some pressure off its balance sheet and stock price.

Is there any more upside potential left?

While shares of the REIT are up more than 30% this year, they're still down almost 80% from their peak a few years ago. That decline in its market value, along with asset sales and debt repayments, have driven down Medical Properties Trust's enterprise value from its peak of more than $24 billion to less than $12 billion.

That market valuation is worth noting because it's much lower than the underlying value of the REIT's real estate portfolio. Medical Properties Trust ended last year with $14.3 billion of total real estate assets. The value of its portfolio has held up relatively well because its facilities are crucial to providing care to their local communities. That has enabled the company to sell properties at strong valuations to repay debt in recent years. This valuation disconnect alone suggests that the stock has additional upside potential.

Meanwhile, its valuation doesn't currently reflect the income-generating capacity of its portfolio. The company reported $0.80 per share of normalized funds from operations (FFO) per share last year. That was down from $1.59 per share in 2023 because of rent collection issues, higher interest rates, and asset sales. Even at that lower rate, Medical Properties Trust only trades at about 6.5 times its FFO, which is a very low level for a REIT. With its FFO expected to rise steadily over the next two years as new tenants pay increasingly higher rents, the REIT's valuation will only get cheaper.

That rising rental income will also make its dividend safer. At its current quarterly rate of $0.08 per share, Medical Properties Trust's dividend payout ratio is 40% based on last year's normalized FFO, which is already a very low level for a REIT. Because of that, and the expected increase in its FFO this year, Medical Properties Trust could start rebuilding its dividend following two deep cuts in recent years. That would provide investors with an even higher base return from dividend income.

Still worth buying for income and upside

Shares of Medical Properties Trust have started to recover from their steep slide over the past few years. They still have a long way to go, given the underlying value of the REIT's real estate and the expected improvement in its income. Add in its high-yielding dividend, which could start growing in the future, and the REIT looks like a compelling buy right now, even after its rally. While it's riskier than other REITs, it also has a much higher total return potential as its recovery continues.

Should you invest $1,000 in Medical Properties Trust right now?

Before you buy stock in Medical Properties Trust, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Medical Properties Trust wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $566,035!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $629,519!*

Now, it’s worth noting Stock Advisor’s total average return is 829% — a market-crushing outperformance compared to 155% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

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*Stock Advisor returns as of April 21, 2025

Matt DiLallo has positions in Medical Properties Trust. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The stock market has been rocked by volatility this year. The S&P 500 was recently down by about 10% since the calendar flipped the page to 2025. That volatility likely has your portfolio down deep in the red.

While you can't eliminate market volatility from your portfolio, you can reduce its sting. One way to do that is by investing in dividend stocks. They provide you with a tangible return in the form of income. On top of that, companies that grow their dividends have historically been less volatile than the S&P 500 as a whole.

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Vanguard makes it easy to add dividend stocks to your portfolio through its many exchange-traded funds (ETFs). Three top Vanguard dividend ETFs to buy to help mute volatility are Vanguard Utilities ETF (NYSEMKT: VPU), Vanguard High Dividend Yield ETF (NYSEMKT: VYM), and Vanguard Real Estate ETF (NYSEMKT: VNQ). As the chart below showcases, they haven't slumped nearly as much as the S&P 500 this year:

^SPX data by YCharts

Real estate helps diversify a portfolio and reduce volatility

The Vanguard Real Estate ETF focuses on owning real estate investment trusts (REITs). These companies own income-generating real estate. They use that rental income to pay dividends and invest in additional income-generating real estate.

Investing in real estate is a great way to diversify your portfolio and insulate it from some of the risks of investing in stocks and bonds. REITs have historically been much less volatile than the broader stock market. For example, of the 16 REITs that have been members of the S&P 500 over the past three decades, all but two have betas less than the S&P 500, meaning they've historically been less volatile than that index.

A big driver of the lower volatility of REITs is their dividends, which tend to grow over the long term. The Vanguard Real Estate ETF currently has a dividend yield of around 3.5%, which is a lot higher than the S&P 500's 1.4% yield. That higher income yield provides investors with a higher base return, which also helps cushion some of the impact of volatility.

High-quality, high-yielding dividend stocks help a port

The Vanguard High Dividend Yield ETF focuses on companies that pay high-yielding dividends. The fund currently has a dividend yield of around 2.7%, nearly double the S&P 500's dividend yield. Because of that, it provides investors with a higher base return.

While the fund focuses broadly on stocks with higher dividend yields, most of its top holdings also have excellent records of growing their dividends, which helps mute volatility. For example, its top holding is semiconductor and software giant Broadcom. The technology company currently offers a dividend yield right around the S&P 500's level. However, Broadcom has a terrific record of delivering above-average dividend growth. Late last year, Broadcom hiked its payment by 11%. That extended its dividend growth streak to 14 straight years. The company has boosted its payout by a jaw-dropping 8,333% during that period.

Another top holding is oil giant ExxonMobil. The big oil company currently offers a much higher dividend yield of around 4%. Exxon has a fantastic record of growing its dividend. The oil giant raised its payment by another 4% earlier this year, its 42nd straight year of increasing its dividend.

Energize your portfolio with these defensive stocks

The Vanguard Utilities ETF owns companies that distribute electricity, water, or gas to customers or produce power that they sell to other utilities and large corporate customers. Most utilities generate very stable cash flow because government regulators set their rates while demand for their services tends to be very steady, even during a recession. In addition, many utilities and utility-like companies produce additional revenue backed by long-term, fixed-rate contracts, providing them with additional sources of stable cash flow.

The low-risk business models of most utilities enable them to generate stable cash flow to pay dividends and invest in expanding their operations. As a result, utilities tend to have a higher yielding dividend (The Vanguard Utilities ETF yields 2.9%) that slowly rises.

For example, Duke Energy, one of its top holdings, has paid dividends for 99 straight years. While Duke Energy hasn't increased its payment every single year, it has raised its payment for the past 18 years in a row. That growth should continue as Duke invests heavily in supporting the growing demand for electricity in the regions it serves.

Dividend stocks can help lessen the impact of stock market volatility

Adding one or more Vanguard ETFs focusing on dividend stocks to your portfolio is a great way to reduce volatility. Dividend stocks have tended to be less volatile because their growing income payments help cushion the blow. That can help you sleep a little better at night knowing your portfolio has some added downside protection.

Should you invest $1,000 in Vanguard World Fund - Vanguard Utilities ETF right now?

Before you buy stock in Vanguard World Fund - Vanguard Utilities ETF, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Vanguard World Fund - Vanguard Utilities ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $495,226!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $679,900!*

Now, it’s worth noting Stock Advisor’s total average return is 796% — a market-crushing outperformance compared to 155% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

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Matt DiLallo has positions in Broadcom. The Motley Fool has positions in and recommends Vanguard Real Estate ETF and Vanguard Whitehall Funds-Vanguard High Dividend Yield ETF. The Motley Fool recommends Broadcom and Duke Energy. The Motley Fool has a disclosure policy.

Recessions can be really challenging periods. A contracting economy causes companies and consumers to pull back on spending. One of the first cuts many economically cyclical companies make is to their dividends.

However, other companies are more recession-resistant. One sector known for its recession resistance is utilities. That's evident by the dividend histories of top utilities like Consolidated Edison (NYSE: ED), NextEra Energy (NYSE: NEE), and Southern Company (NYSE: SO), which have all increased their payouts for more than 20 years in a row, periods which included some severe recessions. Because of that, they're great stocks to buy if you're concerned that a recession is nigh.

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Dividend royalty

Through its various local utilities, Consolidated Edison provides electricity and natural gas services to the New York City region and surrounding areas. The company generates very stable earnings backed by government-regulated rate structures. Meanwhile, the region's electricity and gas demand has grown steadily, even during recessions.

That has enabled Consolidated Edison to increase its dividend very consistently. This year was the 51st consecutive year that it hiked its payout. That kept it in the elite group of Dividend Kings, companies with 50 or more years of annual dividend increases. It also extended its record for the longest consecutive yearly streak of dividend increases of utilities in the S&P 500.

Consolidated Edison is in a strong position to continue growing its dividend. It has a conservative dividend payout ratio for a utility (55% to 65% of its adjusted earnings) and a strong balance sheet. That gives it the financial flexibility to continue investing in expanding its utility infrastructure to support the growing demand for electricity and natural gas in the New York City area.

The powerful dividend growth should continue

NextEra Energy operates the country's largest electric utility (Florida Power & Light), which generates stable rate-regulated earnings. On top of that, the company has a leading competitive energy platform (NextEra Energy Resources), which owns an extensive portfolio of renewable energy assets that generate stable cash flow backed by long-term, fixed-rate contracts. Those stable and growing cash flow sources have enabled NextEra Energy to increase its dividend every year over the past three decades.

The company has grown its payout at a roughly 10% annual pace over the past 20 years, which should continue. NextEra Energy is targeting to deliver around 10% annual dividend growth through at least next year. It can deliver that robust dividend growth rate thanks to its lower dividend payout ratio and the earnings growth it has ahead. The company expects to grow its adjusted earnings per share by 6% to 8% annually through 2027.

Powering that growth is the strong and rising demand for power, especially from cleaner sources. NextEra Energy plans to invest a massive $120 billion into energy infrastructure like new renewable energy capacity over the next four years.

Decades of dividend stability and growth

Southern Company operates several electric and natural gas utilities across the South that generate very stable rate-regulated earnings. The company also has a competitive energy business and provides fiber and connectivity solutions. These businesses produce predictable cash flow from long-term, fixed-rate contracts and supply it with potential opportunities for additional growth.

The utility's stable and growing cash flow profile has been on full display over the decades. Southern Company has paid a dividend equal to or greater than the previous year for 77 years. Meanwhile, it has increased its payment for 23 years in a row.

That growth will likely continue. Southern Company plans to invest $63 billion through 2029 to maintain and expand its utility operations to support growing power demand in the South. These investments should power 5% to 7% annual earnings growth, which should support continued dividend increases.

Portfolio stabilizers

Utilities operate very recession-resilient businesses because demand for electricity and gas tends to rise steadily even in a recession. Meanwhile, governments set the rates they charge, which they increase over time to compensate utilities for their heavy investment in maintaining and expanding their infrastructure. Because of that, they produce stable and growing cash flow to support rising dividend payments. That durability makes utilities a great way to diversify your portfolio to help mute some of the impact of future recessions.

Should you invest $1,000 in NextEra Energy right now?

Before you buy stock in NextEra Energy, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and NextEra Energy wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $495,226!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $679,900!*

Now, it’s worth noting Stock Advisor’s total average return is 796% — a market-crushing outperformance compared to 155% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 10, 2025

Matt DiLallo has positions in NextEra Energy. The Motley Fool has positions in and recommends NextEra Energy. The Motley Fool has a disclosure policy.

The stock market recently took a big dip, driven down by concerns about how much tariffs will affect the economy. One of the benefits of falling stock prices is that dividend yields move in the opposite direction. That allows investors to lock in even higher yields on some high-quality dividend stocks.

I recently capitalized on the dip in the market to deploy some cash in my retirement account to add to my position in several top-notch dividend stocks, including VICI Properties (NYSE: VICI), Verizon (NYSE: VZ), and Genuine Parts Company (NYSE: GPC). Here's why I think they are low-risk stocks to buy amid the current market turmoil.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

A low-risk wager on a steadily growing income stream

Amid the market downturn, VICI Properties' stock has dipped more than 10% from its recent peak. That has driven up the dividend yield of the real estate investment trust (REIT) to 5.7%, well above the S&P 500's 1.5% yield.

The REIT's high-yielding payout is on a very safe footing. It produces very stable cash flow from its portfolio of high-quality experiential real estate, like casinos and sports and entertainment complexes.

It leases these properties to operating tenants under very long-term triple net leases (NNNs), which currently have an average remaining term of 41 years. An increasing percentage of its leases index rents to inflation (42% this year, rising to 90% by 2035). Because of that, it generates very stable and growing rental income.

VICI Properties has a very strong financial profile that gives it the flexibility to continue investing in income-producing experiential real estate. Its growing portfolio enables the REIT to increase its dividend. It has raised it for seven straight years (every year since its formation), at a 7% compound annual rate, well above the 2% average annual rate of its net lease peers.

A cash flow machine

Verizon's shares have slumped more than 7% from their recent peak. That has pushed the telecom giant's dividend yield up to 6.3%. That high-yielding dividend is super safe.

Verizon produces lots of durable cash flow as businesses and consumers pay their wireless and broadband bills. The company earned $36.9 billion in cash flow from operations last year and $19.8 billion in free cash flow (FCF) after funding capital expenditures, which was more than enough to cover its dividend outlay of $11.2 billion. Verizon used the remaining excess FCF to strengthen its already rock-solid balance sheet.

The company is using some of its financial flexibility to acquire Frontier Communications in a $20 billion all-cash deal to bolster its broadband network. That deal and the continued capital investments to organically grow its fiber and 5G networks put Verizon in position to grow its revenue and cash flow in the future.

That should enable the company to continue increasing its dividend, which it has done for a sector-leading 18 years in a row.

Decades of dividend growth prove its resiliency

Genuine Parts Company has sold off sharply during the recent market downdraft, falling over 30%. That slump pushed the automotive and industrial parts distributor's dividend yield up to 3.7%.

There are some concerns that tariffs could have a meaningful impact on the automotive sector, given the volume of parts imported into the country. While this headwind could affect Genuine Parts' business, it has weathered adverse conditions before, demonstrating its resilience by increasing its dividend for 69 years in a row.

The company has a strong financial profile to support its high-yielding dividend amid the current market uncertainty. Last year, Genuine Parts produced $1.3 billion in cash flow from operations and $684 million in FCF. That was more than enough to cover the $555 million it paid in dividends.

It has a strong balance sheet with lots of liquidity ($2 billion, including $480 million of cash and equivalents). That gives it a lot of financial flexibility to continue investing in growing its business and making acquisitions, including buying independent NAPA Auto Parts stores in the top markets.

These investments should help grow its revenue and cash flow over the long term, supporting the continued rise in its dividend.

High-quality, high-yielding dividend stocks

Shares of VICI Properties, Verizon, and Genuine Parts Company have dipped during the recent stock market sell-off, which has pushed their dividend yields even higher. Given the durability of their cash flows and the strength of their financial profiles, those payouts are very safe. That's why I've capitalized on the recent sell-off to buy even more shares for my retirement account to increase the amount of their super-safe income that I will collect in the years to come.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $244,570!*
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Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

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*Stock Advisor returns as of April 5, 2025

Matt DiLallo has positions in Genuine Parts, Verizon Communications, and Vici Properties. The Motley Fool recommends Genuine Parts, Verizon Communications, and Vici Properties. The Motley Fool has a disclosure policy.