Key Points

• Enterprise Products Partners is boosting its distribution by another 1.9%, compared to last quarter.

• The MLP can easily afford to continue giving its investors raises.

• The midstream giant has lots of fuel to continue growing its payout in the coming years.

• 10 stocks we like better than Enterprise Products Partners ›

Enterprise Products Partners (NYSE: EPD) continues to be an income-generating machine for its investors. The master limited partnership (MLP) recently declared its latest distribution payment. It's paying $0.545 per unit ($2.18 annualized), up from $0.535 last quarter ($2.14 annualized).

This hike continues the steady upward trend in the distribution, which has increased for 26 consecutive years. At its recent unit price, the midstream giant's distribution yield is approaching 7%.

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The MLP should have plenty of fuel to continue increasing its payout in the coming years. That makes it an excellent option for those seeking to generate passive income, as long as they're comfortable receiving the Schedule K-1 Federal Tax Form that the MLP sends to investors each year.

Image source: Getty Images.

The raises keep coming

Enterprise Products Partners is hiking its distribution payment by 1.9%, compared to the first quarter, putting it 3.8% above the year-ago payment level. That continues its long history of distribution increases, which is now well into its 26th straight year.

The MLP can easily afford this higher distribution level. The pipeline company generated $2 billion in distributable cash flow during the first quarter, representing a 5% increase from the year-ago level. That was enough cash to cover its quarterly payment by a super comfy 1.7 times.

As a result, Enterprise Products Partners retained $842 million in excess free cash flow in the period. It returned an additional $60 million of that money to shareholders via unit repurchases and reinvested the rest into growing its operations.

Enterprise Products Partners' conservative payout ratio has enabled it to maintain a strong balance sheet. The MLP ended the first quarter with a low 3.1 times leverage ratio. This level supports the strongest balance sheet in the midstream industry, as Enterprise has A-rated credit (A-/A3).

Ample fuel to continue growing its payout

Enterprise Products Partners has grown its payout by expanding its integrated midstream network. It still has a lot of growth ahead.

The midstream company had $7.6 billion of major growth projects in its backlog at the end of the first quarter. The bulk of those projects ($6 billion) are on track to come online by the end of this year, including two more gas processing plants and some additional export capacity. The remaining projects (another gas processing plant and additional export capacity additions) should enter commercial service by the end of 2026.

As a result, the company's free cash flow is on track to surge. In addition to the increased cash flow from its new projects, the company's capital spending is on track to decline from a range of $4 billion-$4.5 billion this year to $2 billion-$2.5 billion in 2026.

The incremental free cash flow will provide Enterprise Products Partners with the flexibility to return more money to investors through distribution increases and unit repurchases. The MLP can also make additional growth investments (organic expansions and acquisitions).

The company has several more expansion projects under development, including additional gas processing capacity. Enterprise also has a long history of making accretive deals that enhance its growth and profitability.

For example, last year, it bought Pinon Midstream for $950 million. The company expected the deal to add $0.03 per unit to its distributable cash flow this year. Additionally, it came with built-in opportunities to expand Pinon's treating capacity, which would also enable Enterprise to expand its gas processing capacity.

A top choice for a steadily rising passive-income stream

Enterprise Products Partners pays a high-yielding distribution backed by a rock-solid financial profile. It has an exceptional record of increasing its payout, which should continue in the coming years. These factors make the MLP a compelling investment option for those seeking to generate stable and growing passive income.

Should you invest $1,000 in Enterprise Products Partners right now?

Before you buy stock in Enterprise Products Partners, consider this:

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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.

Key Points

• Federal Realty Investment Trust has increased its dividend for 57 straight years.

• EPR Properties expects to grow its monthly dividend at a 3% to 4% annual rate.

• Sun Communities recently hiked its payout by more than 10%.

• These 10 stocks could mint the next wave of millionaires ›

Investing money in high-yielding dividend stocks is a super-easy way to generate passive income. You just buy the stocks and watch the dividend income flow into your account.

For example, investing $22,000 across the following three dividend stocks could net you over $1,000 of dividend income each year:

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Data sources: Google Finance and author's calculations.

These real estate investment trusts (REITs) all generate stable and growing rental income to support their high-yielding dividends. Here's a closer look at these high-quality, high-yielding dividend stocks.

Image source: Getty Images.

Federal Realty Investment Trust

Federal Realty Investment Trust is a REIT focused on owning high-quality retail properties. The company has always prioritized quality over quantity when investing in retail properties. It currently owns 103 properties across nine strategically selected metro markets, primarily major gateway cities. The REIT invests in the first-ring suburbs of these markets because those areas benefit from the best demographics, given their highly dense populations of high-income earners. Space in those properties tends to remain in high demand by retailers, keeping occupancy high and driving steady rent growth.

It routinely upgrades its portfolio by selling lower-quality properties and recycling that capital to acquire higher-quality locations. Federal Realty will also invest money to improve its existing locations, including adding residential and other properties to its retail centers to draw more traffic to its retail tenants.

The REIT's focused and high-quality real estate portfolio has produced durable and growing income. That has enabled Federal Realty Investment Trust to raise its payment for 57 straight years, the longest record in the REIT industry.

EPR Properties

EPR Properties is a REIT focused on owning experiential real estate, including movie theaters, eat-and-play venues, and attractions. It leases these properties to operating tenants, primarily under triple net (NNN) terms. NNN leases generate stable rental income because tenants cover all property operating costs, including routine maintenance, real estate taxes, and building insurance. That stable income enables EPR Properties to pay a monthly dividend.

The REIT generates meaningful excess free cash flow after paying its high-yielding dividend. It reinvests those funds to grow its portfolio. EPR Properties buys experiential real estate in sale-leaseback transactions and invests in build-to-suit development and redevelopment projects. At its current annual investment rate of $200 million to $300 million, EPR can grow its cash flow per share and dividend at a 3% to 4% annual rate.

Sun Communities

Sun Communities is a REIT that invests in manufactured home communities and RV resorts. Those properties produce pretty durable income. It's expensive to move a manufactured home, which keeps occupancy high. Lot tenants typically sell their home to a new tenant rather than moving the house. Meanwhile, demand for space in RV parks is strong and growing, with limited new supply.

The company's properties are so durable that Sun Communities has delivered more than 20 years of positive annual net operating income (NOI) growth. For comparison, multifamily REITs have experienced three periods of declining NOI during that timeframe, because of recessions. Sun has also grown its NOI faster than other REITs, with 5.3% compound annual growth since 2000, compared with 3.2% for the industry as a whole. In addition to steady income growth at its existing locations, the REIT routinely acquires new properties and invests in expanding and redeveloping its existing ones.

Sun Communities' stable and steadily rising income enables it to pay a resilient and growing dividend. It recently raised its dividend payment by 10.6%.

Great ways to generate passive income

Federal Realty Investment Trust, ERP Properties, and Sun Communities pay attractive and growing dividends. That makes them great options for investors seeking to generate passive income. They should provide investors with durable and growing dividend income for years to come.

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

Key Points

• Chevron currently has a dividend yield above 4.5%.

• The oil giant has the lowest breakeven level in the industry and a fortress financial profile.

• It has plenty of fuel to continue increasing its dividend.

The Dow Jones Industrial Average tracks 30 of the most prominent companies in the country. These mature companies are very profitable, which allows many of them to pay generous dividends. The index currently has a 1.8% dividend yield, which is higher than the S&P 500's 1.3% and the Nasdaq-100's 0.8%.

The Dow is fertile ground for those seeking dividend income. It holds several higher-yielding dividend stocks with an excellent track record of increasing their payouts. One that stands out for income seekers this July is Chevron (NYSE: CVX). Here's why it's a great Dow stock to buy this month for passive income.

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Image source: Getty Images.

A bankable, high-octane income stream

Chevron's dividend yield is currently over 4.5%. A high dividend yield can sometimes be a warning sign that the payout isn't sustainable. However, that's not the case with Chevron.

The oil giant has built a highly resilient portfolio. The company's business currently has a breakeven level of around $30 per barrel, the lowest in the industry. With crude oil prices in the mid-$60s, Chevron is generating a substantial amount of free cash flow. It produced $15 billion in free cash flow last year after funding capital expenditures of $16.4 billion and another $3.7 billion in the first quarter of 2025. With its dividend costing $3 billion a quarter, Chevron has an ample cushion.

Chevron also has an elite balance sheet. Its leverage ratio was a low 14% at the end of the first quarter. That's well below its 20%-25% target range and toward the low end of its peer group's range.

The company's combination of a low breakeven level and fortress balance sheet puts Chevron's high-yielding dividend on a firm foundation.

The fuel to grow

Chevron has been investing heavily in high-return capital projects, which are driving growth in its production and free cash flow. The company and its partners recently completed the Future Growth Project in Kazakhstan and the Ballymore project in the Gulf of Mexico, also known as the Gulf of America in the United States. It has more projects in the Gulf and the Eastern Mediterranean that should come online soon. In addition, the company is developing its assets in the Permian and DJ basins in the U.S. Chevron estimates that its current slate of growth projects puts it on track to add an incremental $9 billion in annual free cash flow by next year, assuming a $60 oil price.

On top of that, the company is waiting to close its mega deal for Hess. It agreed to buy the fellow oil and gas producer in late 2023 for $60 billion. A dispute with ExxonMobil over Hess' stake in their lucrative development offshore Guyana is currently holding up the transaction.

The case has gone to arbitration, with a ruling expected soon. Chevron is so confident it will win that it spent $2.2 billion to buy nearly 5% of Hess' outstanding shares on the open market earlier this year. Winning the case will allow it to close the needle-moving deal, which will extend its production and free cash flow growth outlook into the 2030s.

Even if it loses its case and can't close that deal, Chevron has plenty of growth ahead. As a result, the company's dividend growth engine won't run out of gas. The oil giant has increased its payout for 38 consecutive years, a period spanning multiple commodity price cycles. The company has delivered peer-leading dividend growth over the past decade.

A well-oiled, dividend-paying machine

Chevron currently offers investors an attractive dividend yield due to the uncertainty over the fate of its Hess acquisition and the volatility of commodity prices. However, the company has a highly resilient portfolio and a fortress financial profile, which puts its high-yielding dividend on rock-solid ground. Meanwhile, it has lots of fuel to grow, even if it can't close its deal for Hess. Those features make it a great Dow stock to buy this July for a lucrative and growing stream of passive dividend income.

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Before you buy stock in Chevron, 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 $699,558!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $976,677!*

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*Stock Advisor returns as of June 30, 2025

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

Key Points

• SCHD and GCOW focus on higher-yielding dividend stocks.

• The ETFs have different strategies for selecting those stocks.

• They also have different fees and return profiles.

Many exchange-traded funds (ETFs) focus on holding dividend-paying stocks. While that gives income-seeking investors lots of options, it can make it difficult to know which is the best one to buy.

The Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD) and Pacer Global Cash Cows Dividend ETF (NYSEMKT: GCOW) are two notable dividend ETFs. Here's a look at which is the better one to buy for those seeking to generate passive income.

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Image source: Getty Images.

Different strategies for selecting high-yielding dividend stocks

The Schwab U.S. Dividend Equity ETF and the Pacer Global Cash Cows Dividend ETF aim to provide their investors with above-average dividend income by holding higher-yielding dividend stocks. The ETFs each hold roughly 100 dividend stocks. However, they use different strategies to select their holdings.

The Schwab U.S. Dividend Equity ETF aims to track the returns of the Dow Jones U.S. Dividend 100 Index. That index screens U.S. dividend stocks based on four quality characteristics:

• Cash flow to debt.
• Return on equity (ROE).
• Indicated dividend yield.
• Five-year dividend growth rate.

The index selects companies that have stronger financial profiles than their peers. That should enable them to deliver sustainable and growing dividends, and the Schwab U.S. Dividend ETF accordingly provides investors with a higher-yielding current dividend that should grow at an above-average rate. At its annual reconstitution, its 100 holdings had an average dividend yield of 3.8% and a five-year dividend growth rate of 8.4%.

The Pacer Global Cash Cows Dividend ETF uses a different strategy for selecting its 100 high-yielding dividend stocks. It starts by screening the 1,000 stocks in the FTSE Developed Large-Cap Index for the 300 companies with the highest free cash flow yield over the past 12 months. It screens those stocks for the 100 highest dividend yields. It then weights those 100 companies in the fund from highest yield to lowest, capping its top holding at 2%. At its last rebalance, which it does twice a year, its 100 holdings had an average free cash flow yield of 6.3% and a dividend yield of 5%.

Here's a look at how the top holdings of these ETFs currently compare:

Data sources: Schwab and Pacer.

Given their different strategies for selecting dividend stocks, the funds have very different holdings. SCHD holds only companies with headquarters in the U.S., while GCOW takes a global approach. U.S. stocks make up less than 25% of its holdings. Meanwhile, SCHD weights its holdings based on their dividend quality, while GCOW weights them based on dividend yield. Given its focus on yield, GCOW offers investors a higher current income yield at 4.2%, compared with 3.9% for SCHD.

Costs and returns

While SCHD and GCOW focus on higher-yielding dividend stocks, their strategies in selecting holdings have a major impact beyond the current dividend income. Because SCHD is a passively managed ETF while GCOW is an actively managed fund, SCHD has a much lower ETF expense ratio than GCOW. SCHD's is just 0.06%, compared with GCOW's 0.6%. Put another way, every $10,000 invested would incur $60 in management fees each year if invested in GCOW, compared with only $6 in SCHD.

GCOW's higher fee really eats into the income the fund generates, which affects its returns over the long term. The fund's current holdings actually have a 4.7% dividend yield, whereas the fund's latest payout had only a 4.2% implied yield.

Data sources: Pacer and Schwab. Note: GCOW's inception date is 2/22/16, while SCHD's is 10/20/11.

GCOW has outperformed SCHD over the past five years. However, SCHD has delivered better performance over the longer term. That's due to its lower costs and focus on companies that grow their dividends, which tend to produce the highest total returns over the long term.

SCHD is a better ETF for passive income

SCHD and GCOW hold higher-yielding dividend stocks, making either ETF ideal for those seeking passive income. However, SCHD stands out as the better one to buy because of its focus on dividend sustainability and growth. It also has a much lower ETF expense ratio. So it should provide investors with an attractive and growing stream of passive dividend income.

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 $692,914!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $963,866!*

Now, it’s worth noting Stock Advisor’s total average return is 1,050% — a market-crushing outperformance compared to 179% 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 June 30, 2025

Matt DiLallo has positions in Chevron, Coca-Cola, ConocoPhillips, Gilead Sciences, Schwab U.S. Dividend Equity ETF, and Verizon Communications. The Motley Fool has positions in and recommends Amgen, Chevron, Cisco Systems, Gilead Sciences, and Texas Instruments. The Motley Fool recommends BP, British American Tobacco, Equinor Asa, Lockheed Martin, Nestlé, Philip Morris International, and Verizon Communications and recommends the following options: long January 2026 $40 calls on British American Tobacco and short January 2026 $40 puts on British American Tobacco. The Motley Fool has a disclosure policy.

Key Points

• Plains All American Pipeline agreed to sell its Canadian NGL business last month.

• The sale will have several benefits.

• The deal puts the company in an even better position to grow its high-yielding distribution.

Shares of Plains All American Pipeline (NASDAQ: PAA) surged 10.8% in June, according to data provided by S&P Global Market Intelligence. Fueling the oil pipeline company's rally was an agreement to sell its Canadian natural gas liquids (NGL) business to Keyera.

A transformative transaction

Plains All American Pipeline agreed to sell its Canadian NGL business to Keyera for $3.75 billion in cash last month. The master limited partnership (MLP) will retain most of its NGL assets in the U.S. and its Canadian crude oil operations. The company expects the sale to close in the first quarter of 2026.

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Image source: Getty Images.

The transaction will transform Plains All American Pipeline into a premier midstream pure-play company specializing in crude oil. The pipeline company will produce more durable cash flows following the sale because it will reduce its direct exposure to commodity price volatility. The company also expects to generate more free cash flow following the deal and have greater financial flexibility.

Plains All American Pipeline expects to receive approximately $3 billion in net proceeds from the sale after taxes, transaction costs, and a potential one-time special dividend to investors, which will help offset their potential tax liabilities. The company plans to utilize its enhanced financial flexibility to make bolt-on acquisitions that bolster its crude oil portfolio, optimize its capital structure by potentially repurchasing some of its preferred units, and execute opportunistic common unit repurchases.

The transaction will put Plains All American in an even stronger position to continue growing its high-yielding distribution (more than 8% yield). The company expects its leverage ratio to be at or below the low end of its target range (3.25-3.75 times); it was 3.3x at the end of the first quarter. That will give it the flexibility to allocate capital toward initiatives that grow shareholder value.

The company has demonstrated that it can use its financial flexibility to enhance value for investors. For example, in January, Plains made three bolt-on acquisitions for $670 million and repurchased 18% of its Series A Preferred Units for $330 million. Those transactions enabled the company to increase its dividend by 20%.

Is Plains All American a buy after last month's jump?

Plains All American still trades at an attractive value after last month's surge. The MLP's yield is toward the high end of its peer group despite having very strong financial metrics. Because of that, it's a great option for those seeking sustainable and growing passive income.

The company offers two investment options. Those seeking the tax benefits of an MLP can buy units of Plains All American Pipeline and receive a Schedule K-1 federal tax form. Meanwhile, investors who don't want the potential tax complications can buy shares of Plains GP Holdings (NASDAQ: PAGP) and receive a 1099-DIV form.

Should you invest $1,000 in Plains All American Pipeline right now?

Before you buy stock in Plains All American Pipeline, 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 Plains All American Pipeline 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 $692,914!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $963,866!*

Now, it’s worth noting Stock Advisor’s total average return is 1,050% — a market-crushing outperformance compared to 179% 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 June 30, 2025

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

My main financial goal is to grow my passive income to the point where it can fully fund my basic living expenses. Reaching that target will provide me with a high level of financial freedom. It will also give me more peace of mind knowing I won't have to worry if my income from working ever takes a big hit.

I work toward my goal by steadily investing more money in income-generating assets, like high-yielding dividend stocks. I'm always on the lookout for new passive income sources. One that I finally added to my portfolio is Main Street Capital (NYSE: MAIN). After overlooking the company for years, I've come to realize it's a magnificent passive income producer.

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Image source: Getty Images.

Providing capital to help Main Street grow

Main Street Capital is a business development company (BDC). It provides debt and equity capital to lower-middle-market companies (those with revenues between $10 million and $150 million). It also provides loans to larger companies.

The BDC provides smaller companies with the capital they need to fund their operations and grow their businesses. It structures its investments to deliver three objectives: protecting its invested capital, delivering high recurring income, and providing opportunities for meaningful capital gains.

The company's secured debt investments generate a high yield. Its current portfolio has a 12.4% weighted average cash coupon. That supplies the company with recurring interest income to fund dividend payments. Meanwhile, its equity investments provide dividend income (63% of its holdings pay dividends) and additional upside potential as the value of its equity investments increases.

A very dependable dividend (and more)

As a BDC, Main Street Capital must distribute 90% of its income to investors via dividends to comply with IRS regulations (like a real estate investment trust, or REIT). It does that in two ways.

Main Street Capital pays regular monthly dividends. It sets the base dividend at a level that can be conservatively covered with its earnings. That enables the company to provide investors with significant comfort knowing they'll receive this recurring income stream. It has never suspended or reduced its dividend level since its initial public offering (IPO). It has paid a dividend either at or above the prior month's rate every month since its IPO.

While it hasn't increased its dividend level every year, it has steadily hiked the payout, growing it by 132% since late 2007. Main Street recently raised its monthly dividend by 2% and has increased it by 4.2% over the past year.

The company's dividend track record stands in stark contrast to that of other BDCs, with 78% of them having reduced their dividend rate at least once during that period or since their subsequent IPOs and 50% having cut their dividends multiple times. The sector's lackluster dividend track record is why I never looked into Main Street Capital until recently.

Main Street Capital also pays supplemental dividends to reach its target payout level, typically once per quarter. It has been paying $0.30 per share in supplemental dividends each quarter over the past year and a half in addition to its $0.255 monthly dividend. That puts its total dividend outlay at $1.065 per share over the past quarter, giving it an annualized yield of 8%.

These additional payments can vary depending on earnings and market conditions. For example, it paid less in supplemental dividends during the pandemic. Nevertheless, it's a nice additional income stream.

A magnificent passive income investment

I like to invest in companies that pay a high-yielding, steadily rising dividend because they should help me reach my passive income target sooner. Main Street Capital does that and more, thanks to the addition of its supplemental dividends. That's why I'm excited to have finally added this magnificent dividend stock to my portfolio. I plan to continue building my position as I have the cash to invest, because I believe Main Street can provide me with a lot of dividend income in the future.

Should you invest $1,000 in Main Street Capital right now?

Before you buy stock in Main Street Capital, 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 Main Street Capital 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 $713,547!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $966,931!*

Now, it’s worth noting Stock Advisor’s total average return is 1,062% — a market-crushing outperformance compared to 177% 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 June 23, 2025

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

Units of Energy Transfer (NYSE: ET) have cooled off this year. They're down nearly 10% on the year and were recently below $18. That's a big shift from last year, when the master limited partnership (MLP) gained more than 41% and peaked at $21.45 per unit.

Here's a look at what has weighed on the MLP's unit price and whether its slump below $18 is a buying opportunity or if it could continue falling.

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Image source: Getty Images.

Slowing growth in 2025

Last year was one for the record books for Energy Transfer. The MLP set operational records across several categories, including record crude oil transportation volumes, up 25%; and record fractionation and transportation volumes in natural gas liquids, up 9% and 7%, respectively. Those record volumes enabled the midstream giant to generate a record $15.5 billion of adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) last year, a 13.1% increase from 2023.

Acquisitions were the biggest growth catalyst last year. Energy Transfer benefited from its $7.1 billion purchase of fellow MLP Crestwood Equity Partners, which closed in late 2023. The company also bought WTG Midstream in a $3.3 billion deal in the middle of last year. On top of that, the company secured six major growth projects last year as it began to capitalize on an uptick in demand for natural gas. The biggest project was the $2.7 billion Hugh Brinson natural gas pipeline that should begin to enter service at the end of next year.

However, the company's growth engine has slowed this year. While Energy Transfer expects to grow its adjusted EBITDA to a range of $16.1 billion to $16.5 billion this year, that's only a 5% increase from last year at the midpoint. Meanwhile, the MLP hasn't secured any major new expansion projects or needle-moving acquisitions. That growth slowdown is among the factors weighing on its unit price.

About to rev back up

While Energy Transfer's growth rate has slowed this year, it appears poised to experience a resurgence in 2026 and 2027. The MLP is investing $5 billion into organic expansion projects this year, a $2 billion increase from last year. Those projects should start entering service over the second half of this year through the end of next year. Given the timing of its project completions, including the end of 2026 in-service date for Hugh Brinson, Energy Transfer expects "the majority of the earnings growth from these projects to significantly ramp up in 2026 and 2027," stated co-CEO Tom Long on the first-quarter earnings conference call.

Meanwhile, despite the lack of new project approvals this year, Energy Transfer is making progress in securing new growth opportunities. It has signed several deals supporting its proposed Lake Charles LNG export terminal, including bringing MidOcean Energy aboard as a 30% partner on the project. The company also signed what could be the first of many deals to supply gas to AI data centers. It's working on many expansion opportunities, which it could approve over the coming months.

The MLP also remains on the hunt for its next acquisition. It's in the strongest financial position in its history, putting it in excellent shape to make a deal when the right opportunity presents itself. Meanwhile, even though Energy Transfer hasn't secured an acquisition, its affiliate Sunoco has agreed to buy Parkland for $9.1 billion in a deal it expects to close later this year. Sunoco anticipates the Parkland acquisition will boost its cash flow per unit by more than 10%. With a 21% interest in Sunoco, Energy Transfer will see an earnings boost from this deal.

Even more attractive below $18

With its unit price dipping this year, Energy Transfer currently trades at the second-lowest valuation in its peer group. It also has an even higher distribution yield of 7.3%. Energy Transfer's combination of a lower valuation and a higher yield makes its dip below $18 look like a compelling buying opportunity, especially given the growth resurgence that appears ahead.

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

Before you buy stock in Energy Transfer, 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 Energy Transfer 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 $664,089!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $881,731!*

Now, it’s worth noting Stock Advisor’s total average return is 994% — 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 Energy Transfer. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

I really want to become financially independent. I don't like the stress of worrying about how I'll make a living if AI eventually takes my job. This desire is driving me to grow my sources of passive income. My goal is to eventually generate enough passive income to cover my basic living expenses. That way, I won't have to fret if my income from working were to disappear.

My foundational strategy is investing in high-quality, high-yielding dividend stocks. One of my core holdings is W.P. Carey (NYSE: WPC). I recently bought more shares of the high-yielding real estate investment trust (REIT), which I expect to continue doing in the future. Here's why I believe W.P. Carey can help me reach financial independence through passive income.

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Built for income

W.P. Carey owns a well-diversified portfolio of high-quality, operationally critical properties across North America and Europe. It primarily invests in single-tenant industrial, warehouse, retail, and other properties secured by long-term net leases with built-in rent escalations. Net leases provide it with stable rental income because tenants pay all property operating costs, including routine maintenance, real estate taxes, and building insurance. Meanwhile, the rental income tends to rise each year as its leases escalate rents. Forty-seven percent of its leases climb at a fixed rate, while 50% are tied to inflation.

The diversified REIT aims to pay out 70% to 75% of its stable cash flow in dividends. That gives it a comfy cushion while allowing it to retain some cash to fund new income-generating real estate investments.

W.P. Carey also has a rock-solid investment-grade balance sheet. It maintains a conservative leverage ratio with a target in the mid-to-high fives range. The ratio came in at 5.8 at the end of the first quarter. Its strong balance sheet gives it the capacity to continue paying dividends and growing its portfolio during more challenging times.

The combination of stable income and financial strength puts W.P. Carey's high-yielding dividend on a sustainable foundation. For context, its 5.8% yield is about four times higher than the S&P 500's sub-1.5% dividend yield.

Dual growth drivers

W.P. Carey has more embedded rent growth than the typical net lease REIT because more of its leases feature escalation clauses that link rates to inflation. That strategy has paid off in more recent years as elevated inflation has driven faster rent growth for W. P. Carey. Its same-store annual base rent rose at a 2.4% annualized pace in the first quarter and has increased by as much as a 4.3% annualized rate in recent years. For perspective, leading net lease REIT Realty Income expects to capture only around 1% annual base rent growth this year because of lower annual fixed rental rate escalations.

New investments are W.P. Carey's other growth driver. It expects to spend between $1 billion and $1.5 billion to add new properties to its portfolio this year. It has already secured nearly $450 million of new investments in the first quarter, including a $136 million, 59-property sale-leaseback transaction with Reddy Ice for industrial and warehouse properties in the United States. It also had about $120 million of development projects scheduled for completion this year and several hundred million dollars of additional deals in advanced stages in the pipeline.

The company plans to internally fund its 2025 investment rate through post-dividend free cash flow, non-core asset sales, and new debt while remaining within its targeted leverage range. W.P. Carey intends to sell between $500 million and $1 billion of properties this year, primarily self-storage properties not currently secured by net leases. It's also selectively selling retail and warehouse properties linked to lower-quality tenants. The REIT can increase its investment rate if market conditions improve by selling stock to fund additional new investments.

Rising rental income and portfolio growth positions W.P. Carey to grow its cash flow per share. That allows the REIT to raise its dividend. It has hiked its payment level every quarter since resetting its dividend following its strategic decision to exit the office sector in late 2023 by selling and spinning off those properties. Before that, W.P. Carey had increased its dividend at least once annually for a quarter century.

An attractive and steadily rising income stream

W.P. Carey has everything I want in a passive income investment. The REIT's portfolio generates very stable cash flow to support its high-yielding dividend. It also has the financial flexibility to grow its portfolio, which allows it to steadily increase its dividend. That attractive and growing income stream will help me reach my passive income target sooner. It's why I keep buying shares of W.P. Carey and expect to continue adding to my position in the future.

Should you invest $1,000 in W.P. Carey right now?

Before you buy stock in W.P. Carey, 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 W.P. Carey 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 $658,297!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $883,386!*

Now, it’s worth noting Stock Advisor’s total average return is 992% — 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.

See the 10 stocks »

*Stock Advisor returns as of June 9, 2025

Matt DiLallo has positions in Realty Income and W.P. Carey. The Motley Fool has positions in and recommends Realty Income. The Motley Fool has a disclosure policy.

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:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Energy Transfer 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 $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!*

Now, it’s worth noting Stock Advisor’s total average return is 999% — a market-crushing outperformance compared to 174% 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 June 9, 2025

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!*

Now, it’s worth noting Stock Advisor’s total average return is 998% — a market-crushing outperformance compared to 174% 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 June 9, 2025

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!*

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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*Stock Advisor returns as of June 9, 2025

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!*

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.

See the 10 stocks »

*Stock Advisor returns as of June 2, 2025

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.

See the 10 stocks »

*Stock Advisor returns as of June 2, 2025

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.

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 »

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.

Image source: Getty Images.

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.

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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?

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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.

Should you invest $1,000 in Enterprise Products Partners right now?

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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:

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 $635,275!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $826,385!*

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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:

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 $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.