Dividend-paying stocks tend to be lower-risk investments compared to non-payers. They typically produce more than enough cash to fund their growth, leaving them with excess to return to shareholders via dividends.

However, some dividend stocks are less risky than others. Black Hills (NYSE: BKH), Kinder Morgan (NYSE: KMI), and American States Water (NYSE: AWR) stand out to three Fool.com contributing analysts for their lower risk profiles. As a result, they can turn $1,000 into durable streams of dividend income.

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

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Black Hills is a boring, high-yield regulated utility

Reuben Gregg Brewer (Black Hills): From a business perspective, the ultimate achievement is a monopoly. This is such a powerful industry position that the government attempts to prevent monopolies from existing...with a few exceptions.

One exception is the utility sector, as building two electric grids in one region would be prohibitively difficult. That's why the government regulates utilities like Black Hills, which has a monopoly on natural gas distribution and electricity in the areas it serves in Arkansas, Colorado, Iowa, Kansas, Montana, Nebraska, South Dakota, and Wyoming.

There are both positive and negative aspects to being a regulated utility. One negative is that the government dictates Black Hill's rates and capital investment plans. Regulators try to strike a balance between reward, reliability, and customer costs, leading to slow and steady growth for utilities like Black Hills. That's a positive, as regulator-approved spending generally occurs regardless of what's going on in the economy or on Wall Street. Investors buying Black Hills are, effectively, buying into a fairly reliable business through the economic cycle.

In the case of Black Hills, its customer base is growing around twice as quickly as the broader U.S. population. There's a good reason to believe that more regulator-approved growth lies ahead. Looking backward, meanwhile, investors have benefited from a regularly increasing dividend payment. At this point, Black Hills is one of the few utilities to have achieved Dividend King status, with over five decades of annual hikes.

Given the company's expectation of 4% to 6% earnings growth for the foreseeable future, meanwhile, it seems like the dividend streak will continue. Add in an above industry-average yield of 4.8% and you can see why this low-risk dividend stock might be a great buy today. A $1,000 investment will net you around 17 shares.

A very bankable income stream

Matt DiLallo (Kinder Morgan): Kinder Morgan operates one of the country's largest energy infrastructure platforms. Its pipelines, processing plants, terminals, and other midstream energy assets generate lots of very stable cash flow. Take-or-pay contracts, which entitle the company to payment regardless of volume, back 64% of the company's annual cash flows.

On top of that, Kinder Morgan has hedging contracts that lock in an additional 5% of its cash flows. Meanwhile, another 26% of its cash flows are fee-based, which provides it with a fixed fee based on volumes (most of which tend to be very stable). That leaves only about 5% of its annual earnings exposed to the ups and downs of commodity prices.

The company's highly contracted and predictable cash flows provide a rock-solid foundation for its more than 4% yielding dividend. The company has high visibility in its cash flow, which it expects will grow by 5% to $5.9 billion this year. That's more than enough to cover its expected $2.6 billion dividend outlay.

It's also plenty to fund its entire capital spending level for this year, with room to spare ($150 million in excess free cash flow). That surplus cash will enhance the company's already strong financial flexibility. Kinder Morgan has an investment-grade balance sheet backed by a conservative leverage ratio.

The midstream giant currently has $8.8 billion of growth capital projects underway. Those projects, predominantly natural gas pipelines ($8 billion), will enter commercial service through 2030. As they do, they'll add to the company's stable sources of cash flow. That should give Kinder Morgan more fuel to increase its dividend. The pipeline giant has raised its payout for eight straight years. With a 4% dividend yield, a $1,000 investment would generate about $40 (and growing) of dividend income each year.

70 years of dividend increases

Neha Chamaria (American States Water): Given the uncertain times we are in right now, adding stocks that can earn you some reliable extra income is a smart move. Even better, a defensive, low-risk dividend stock like American States Water should send bigger dividend checks your way every year.

American States Water is one of the largest water utilities in the U.S., serving 1 million consumers across nine states. The company also owns an electric utility and provides water and wastewater services to 12 military bases under 50-year contracts. As a regulated utility, American States Water generates stable cash flows, which is why it has been able to pay a dividend every year since 1931 and has raised it for 70 consecutive years. That incredible dividend streak makes American States Water the top Dividend King, with the longest streak of dividend increases.

After growing its dividend by a compound annual growth rate (CAGR) of 8.8% over the past five years, American States expects the trend to continue and is aiming to increase its dividend by a CAGR of over 7% in the long term. Management believes there's ample room for dividends to grow, given the company's earnings growth prospects backed by planned capital expenditures.

All that makes American States Water one of the safest and most reliable dividend stocks out there. The dividend growth potential is the cherry on top, making this 2.4%-yielding stock an incredible buy now.

Should you invest $1,000 in Kinder Morgan right now?

Before you buy stock in Kinder Morgan, 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 Kinder Morgan 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 Kinder Morgan. Neha Chamaria has no position in any of the stocks mentioned. Reuben Gregg Brewer has positions in Black Hills. The Motley Fool has positions in and recommends Kinder Morgan. The Motley Fool has a disclosure policy.

The energy midstream sector has been a great spot for investors to go if they want to make some passive income. Many companies in this sector produce very stable cash flow as oil and gas flow through their pipelines and related midstream assets. That gives them money to pay lucrative dividends and invest in growing their businesses.

Enbridge (NYSE: ENB), Enterprise Products Partners (NYSE: EPD), and Kinder Morgan (NYSE: KMI) are among the top options, according to a few Fool.com contributors, for those seeking passive income in the sector. Here's why this trio of midstream companies could help you create years of passive income.

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

Enbridge: A high yielder that's built to last

Reuben Gregg Brewer (Enbridge): The midstream sector is tied at the hip to oil and natural gas producers. But not every pipeline company is the same, and one notable standout is Enbridge. A key corporate goal is to provide the world with the energy it needs. Today, only around 75% of Enbridge's earnings before interest, taxes, depreciation, and amortization (EBITDA) are linked to oil and natural gas pipelines.

That 75% is a solid core, to be sure, given that Enbridge is one of the largest midstream players in North America. And this foundation has handily supported regular dividend increases, with the annual streak now up to three decades. But long-term dividend investors need to pay particular attention to the other 25% of EBITDA.

The rest of the portfolio is split between regulated natural gas utilities and renewable power investments. Both of these businesses provide reliable cash flows, just like pipelines. However, the utility business tends to provide more consistent opportunities for capital investments, while clean energy investment is expected to grow materially in the years ahead. And both natural gas utilities and renewable power are moving Enbridge in the same "cleaner power" direction as the rest of the world. In other words, Enbridge is preparing today for the energy market of tomorrow.

With a huge 5.8% yield, 30 annual dividend increases, and a business that is changing with the energy needs of the world, Enbridge is the kind of dividend stock you buy and hold for the long term.

These dividends should keep growing

Neha Chamaria (Enterprise Products Partners): Enterprise Products Partners is one of the largest midstream energy companies in the U.S., with a massive pipeline network spanning over 50,000 miles. While its large footprint provides critical energy transportation services to the economy, Enterprise Products has judiciously used capital over the decades to grow its business and reward shareholders while maintaining a strong balance sheet.

Enterprise Products has increased its dividend for 26 consecutive years, and its distributable cash flows (DCF) have covered its dividend payout by at least 1.5 times since 2018. Similar to cash flows from operations, DCF is an important metric for master limited partnerships like Enterprise Products, as they are required to distribute a major portion of their income to shareholders in the form of dividends.

This is a great time to invest in Enterprise Products stock. The midstream giant expects major projects worth $6 billion to come online this year. That's nearly 80% of all major projects under construction. As these projects start contributing to the company's earnings and cash flows, Enterprise Products should be in an even stronger position to not only pay regular dividends but also increase them year after year. With the stock also yielding a hefty 6.8%, Enterprise Products is one of the best midstream stocks to buy to earn years of passive income.

A growing pipeline of projects

Matt DiLallo (Kinder Morgan): Kinder Morgan currently clocks in with a dividend yield approaching 4.5%. That high-yielding payout is on a very sustainable foundation. The natural gas pipeline giant generates very stable cash flow, as 95% comes from highly contracted and predictable sources, like long-term fee-based contracts. Meanwhile, the company pays out less than 45% of its stable cash flows in dividends. That enables it to retain significant excess free cash flow to invest in expanding its operations.

The company has $8.8 billion of growth capital projects in its backlog, primarily natural gas pipeline expansions ($8 billion). It currently has projects underway that it expects will enter commercial service by the end of the decade. That gives it a lot of visibility into its ability to grow its cash flow in the coming years.

Kinder Morgan's backlog has ballooned by more than $5 billion over the past year as it has secured several large-scale natural gas expansion projects. Demand for gas is surging these days, fueled by catalysts like AI data centers, the onshoring of manufacturing, and the electrification of transportation. These drivers should enable Kinder Morgan to continue securing additional expansion projects in the coming years.

The pipeline giant's cash flow should grow briskly over the next several years as its growing backlog of expansion projects enters commercial service. That should enable Kinder Morgan to continue increasing its dividend. The company recently raised its payment for the eighth straight year. Given its high yield and growth visibility, Kinder Morgan can certainly create years of passive income for investors.

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

Before you buy stock in Enbridge, 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 Enbridge 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!*

Now, it’s worth noting Stock Advisor’s total average return is 906% — a market-crushing outperformance compared to 164% 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 May 5, 2025

Matt DiLallo has positions in Enbridge, Enterprise Products Partners, and Kinder Morgan. The Motley Fool has positions in and recommends Enbridge and Kinder Morgan. The Motley Fool recommends Enterprise Products Partners. The Motley Fool has a disclosure policy.

The energy sector can be a great place for investors to collect a lucrative passive income stream. Many energy companies generate lots of excess cash flow, giving them the money to pay hefty dividends. Several companies in the sector also have long dividend growth streaks.

TotalEnergies (NYSE: TTE), Chevron (NYSE: CVX), and Brookfield Renewable (NYSE: BEPC)(NYSE: BEP) stand out to a few Fool.com contributors as excellent energy stocks to buy for passive income. They pay high-yielding and steadily rising dividends. Here's a look at why they could deliver years of passive income.

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 »

TotalEnergies is acting now so it can thrive through the transition

Reuben Gregg Brewer (TotalEnergies): For most investors, the best way to invest in the energy sector will be to buy an integrated energy company. That's because these businesses have exposure to the entire industry, from the upstream (drilling) through the midstream (pipelines) and into the downstream (chemical and refining). This diversification helps to soften the peaks and valleys of an industry that is known for being volatile. But all of the major integrated energy companies are a little different, with TotalEnergies standing out in a very important way.

In 2020, European peers BP and Shell cut their dividends as they announced plans to increase investment in clean energy assets. TotalEnergies made the same commitment but maintained its dividend. Since that point, both BP and Shell have walked back their clean energy plans. TotalEnergies has increased the pace of its investment in electricity and even created a new division so investors could more easily monitor its progress. The new integrated power division grew operating income 17% in 2024.

Simply put, TotalEnergies is a well run oil and gas company and, increasingly, a well-run clean energy company, too. If you want years of passive income, the French energy giant is positioning itself to not just weather the clean energy transition but also to thrive as the world increases its use of non-carbon fuels. And you can collect a dividend yield of 6%, higher than all but one of its closest peers, if you buy it today. (Note that U.S. investors have to pay French taxes on the dividends they receive, a portion of which can be claimed back when filing U.S. taxes.)

Stress-tested to thrive on lower oil prices

Matt DiLallo (Chevron): Chevron's dividend yield is approaching 5%. That's due to a nearly 20% decline in the oil company's stock price from its recent peak. Shares of the oil giant have sold off because of lower crude prices this year. The price of Brent crude, the global oil benchmark, has fallen more than 10% to around $65 a barrel because of fears that tariffs could slow economic growth and reduce oil demand.

While lower oil prices will have an impact on Chevron's cash flow, they won't affect its ability to continue increasing its high-yielding dividend. The oil giant has stress-tested its business for a downside scenario where Brent averages just $50 a barrel from 2025 through 2027. Under that scenario, Chevron would produce enough cash to cover its investment program and pay a growing dividend with room to spare. Meanwhile, it would have the capacity to buy back shares at the low end of its $10 billion to $20 billion annual target range thanks to its strong balance sheet.

Chevron is on pace to add $9 billion to $10 billion to its annual free cash flow by 2026 in an environment where Brent is in the $60- to $70-a-barrel range. That would enable the company to buy back shares toward the upper end of its target range at the current price point. On top of that, there's additional upside if the company closes its needle-moving acquisition of Hess, which would more than double its free cash flow by 2027 at $70 oil.

Chevron's low-cost production, visible upside catalysts, and strong balance sheet put it in an excellent position to continue increasing its dividend, which it has done for 38 straight years. The oil company has grown its payout faster than the S&P 500 and its closest peer over the past five years. These factors suggest that an investment in Chevron will create a lot of passive income over the years to come.

Riding the renewable energy boom to reward investors

Neha Chamaria (Brookfield Renewable): Brookfield Renewable is one of the largest publicly traded renewable energy companies in the world with a massive portfolio spanning hydropower, wind, solar, and distributed energy and storage. The company also has a large global footprint and is embarking on a big growth journey that should drive its cash flows and dividends higher in the coming years.

To put some numbers to that, Brookfield Renewable is planning to invest $8 billion to $9 billion over the next five years and expects to grow its funds from operations (FFO) per unit by over 10% annually in the long term. That's not an overly ambitious goal if you think it is, simply because almost 6% growth could already be embedded in the company's development pipeline and inflation escalation clauses in its long-term contracts. For those in the know, Brookfield Renewable sells electricity under long-term contracts, and almost 90% of its cash flows are contracted for an average of 14 years.

That also makes Brookfield Renewable's cash flows highly stable and predictable, which is why management has been able to set a goal of increasing its dividend annually by 5% to 9% in the long term. Even a 5% annual dividend growth could create years of passive income for investors if they reinvest the dividends. Investors who own the corporate shares of Brookfield Renewable also get to enjoy a high 5%-plus dividend yield now.

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

Before you buy stock in Chevron, 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 Chevron 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!*

Now, it’s worth noting Stock Advisor’s total average return is 872% — a market-crushing outperformance compared to 160% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 28, 2025

Matt DiLallo has positions in Brookfield Renewable, Brookfield Renewable Partners, and Chevron. Neha Chamaria has no position in any of the stocks mentioned. Reuben Gregg Brewer has positions in Brookfield Renewable Partners and TotalEnergies. The Motley Fool has positions in and recommends Chevron. The Motley Fool recommends BP, Brookfield Renewable, and Brookfield Renewable Partners. The Motley Fool has a disclosure policy.