Key Points

• ConocoPhillips produced lots of cash in the second quarter despite lower commodity prices.

• The oil giant is returning a large percentage of its excess cash to shareholders.

• It now expects to produce $7 billion of additional annual surplus cash by 2029, giving it even more money to send to shareholders.

• 10 stocks we like better than ConocoPhillips ›

ConocoPhillips (NYSE: COP) is already a cash-gushing machine. The oil and gas giant's low-cost operations enable it to produce significant free cash flow. This allows it to invest in growing its operations, return cash to investors through dividends and buybacks, and maintain its fortress-like financial profile.

The company's already robust cash flow will become even larger in the coming years. A combination of growth initiatives and cost savings is now on track to add $7 billion to its annual free cash flow total by 2029. That will give the oil stock even more money to return to shareholders.

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 »

Drilling down into ConocoPhillips' second-quarter results

ConocoPhillips' ability to print cash was on full display during the second quarter. The company generated $4.7 billion in cash from operations, despite a 19% decline in the average price it realized per barrel of oil equivalent (BOE) sold during the period compared to the second quarter of last year. It was able to partially mute the impact of lower commodity prices by significantly increasing its production. Its output averaged nearly 2.4 million BOE per day in the quarter, 446,000 BOE per day higher than the year-ago period. ConocoPhillips benefited from its acquisition of Marathon Oil, as well as a 3% increase in output from its legacy operations.

The oil giant used that cash to fund $3.3 billion of capital expenditures and investments to maintain and grow its output. It also paid $1 billion in dividends, repurchased $1.2 billion of shares, and retired $200 million of debt at maturity. That brought its year-to-date total to $2.7 billion in share repurchases, $2 billion in dividend payments, and $700 million in debt reduction.

The company ended the quarter with $5.7 billion in cash and short-term investments, and $1.1 billion in long-term investments, backing its fortress A-rated balance sheet. It padded its cash position by closing the sale of $700 million of non-core assets during the quarter and $1.3 billion through the first half of this year. ConocoPhillips has recently agreed to sell an additional $1.3 billion of non-core assets, which should close early in the fourth quarter. As a result, it has exceeded its target of selling $2 billion of assets following its acquisition of Marathon.

The upcoming free-cash-flow growth wave

ConocoPhillips expects to generate significantly more free cash flow in the future. In the near term, the company expects higher cash distributions from its APLNG investment, tax benefits from the "one big, beautiful bill," and lower capital spending to boost its free cash flow in the second half of the year. That assumes oil prices remain near their current level in the $60 to $70 a barrel range.

The company also continues to expect to get a boost from its acquisition of Marathon Oil. It's on track to achieve its target of hitting $1 billion in cost savings from synergies by the end of this year, double its initial target of $500 million. Additionally, the company now expects to deliver another $1 billion in cost and margin enhancements by the end of next year.

Meanwhile, ConocoPhillips continues to anticipate its long-cycle investments in liquified natural gas (LNG) and Alaska will fuel a $6 billion uplift in its free cash flow through 2029. The company has investments in three LNG projects (Port Arthur LNG in the U.S. and Qatar's North Field East and North Field South) that should come online over the next few years. The energy company continues to secure customers for this gas. It recently signed a regasification agreement for the Dunkerque terminal in France and a sales agreement in Asia, both of which will begin in 2028. Additionally, its major Willow project in Alaska should start producing by 2029.

On top of all this, ConocoPhillips now plans to sell another $2.5 billion of non-core assets by the end of next year. These sales will give it additional cash to strengthen its fortress balance sheet or recycle into higher-quality assets.

The company's growing free cash flow and cash balance will enable it to continue returning more money to investors. ConocoPhillips aims to deliver dividend growth within the top 25% of companies in the S&P 500 in the coming years. It also aims to repurchase over $20 billion of its stock in the first three years of closing the Marathon deal.

A cash-producing juggernaut

ConocoPhillips now expects to capture another $1 billion in cost savings from its Marathon deal. It's also on track to produce $6 billion in incremental free cash flow from its investments in LNG and Alaska. That will give the oil company a lot of money to return to shareholders in the future. Its combination of growing cash flows and rising cash returns could provide the fuel to produce strong total returns in the coming years, making it an attractive oil stock to consider for the long term.

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

Before you buy stock in ConocoPhillips, 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 ConocoPhillips 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 $636,563!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,108,033!*

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*Stock Advisor returns as of August 4, 2025

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

Key Points

• Energy Transfer set several volume records in the second quarter.

• The MLP's earnings growth slowed due to fewer growth catalysts and commodity price headwinds.

• It has several growth catalysts ahead in 2026 and beyond.

• 10 stocks we like better than Energy Transfer ›

Energy Transfer (NYSE: ET) recently reported its second-quarter financial and operational results. The company's energy midstream operations were firing on all cylinders during the period, as evidenced by the numerous volume records it set. While its earnings growth rate slowed in the quarter, a re-acceleration awaits.

Here's a closer look at the master limited partnership's (MLP) second-quarter results and outlook for what's ahead.

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Drilling down into Energy Transfer's second-quarter results

Energy Transfer generated nearly $3.9 billion of adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) during the second quarter. That was about 3% higher than the year-ago period. Meanwhile, its distributable cash flow (DCF) dipped 4% to nearly $2 billion. While the company's growth rates have slowed from last year, when its adjusted EBITDA rose 13% and its DCF increased by 10% to new partnership records (fueled by several acquisitions), a re-acceleration is right around the corner.

Here's a snapshot of its earnings by segment:

As the chart shows, Energy Transfer got boosts from its interstate transportation and storage and midstream segments. It also benefited from its investment in Sunoco LP, which contributed substantial additional income in the period following its acquisition of NuStar. This helped offset lower earnings in its crude oil, NGL (natural gas liquids), and intrastate segments due to the impact of lower commodity prices and higher expenses.

While those headwinds caused the MLP's earnings growth rates to slow in the second quarter, its volumes continued to rise. It set new partnership records in the following categories during the period:

• Midstream gathered volumes (up 10%)
• Crude oil transportation volumes (up 9%)
• NGL transportation volumes (up 4%)
• NGL and refined products terminal volumes (up 3%)
• NGL exports (up 5%)

The midstream company benefited from healthy market conditions and the residual impact of recent expansion initiatives, including last year's acquisition of WTG Midstream.

Lots of growth is coming down the pipeline

Continued commodity price headwinds will likely mute Energy Transfer's earnings growth rate through the second half of the year. The MLP currently expects its adjusted EBITDA to be at or slightly below the lower end of its 2025 guidance range of $16.1 billion-$16.5 billion. That implies about 4% growth from last year's level.

However, it has a lot of momentum heading into 2026 and beyond. Energy Transfer recently placed its Lenorah II and Badger processing plants into service. It has also placed its Nederland Flexport NGL Export Expansion project into ethane and propane services, with ethylene service expected in the fourth quarter. These projects will supply it with incremental earnings in the coming quarters. The company should also get a boost from Sunoco's pending acquisition of Parkland, which should close later this year.

Meanwhile, there are more expansion projects on the way next year. The company expects to put its Mustang Draw gas processing plant into service in the second quarter and finish Phase I of its major Hugh Brinson gas pipeline and Frac IX by the end of the year. These projects will give it a lot of earnings growth momentum throughout 2026 and into 2027.

Additionally, Energy Transfer has secured several new expansion projects that enhance and extend its growth outlook through the end of the decade. It recently approved Hugh Brinson Phase II (constructed concurrently with Phase I), the Delaware Basin NGL Pipe Looping project (first half of 2027), the Bethel Storage Expansion (late 2028), and the $5.3 billion Transwestern Pipeline (fourth quarter 2029). These projects will provide it with incremental sources of growing cash flow into the next decade.

The midstream giant has several more proposed expansion projects under development, including the long-delayed Lake Charles LNG export terminal and the CloudBurst AI data center gas supply project. Securing these and other expansions would further enhance and extend the company's long-term growth outlook.

In addition to its organic growth, Energy Transfer has ample financial flexibility to continue making strategic acquisitions as opportunities arise. Future deals would help further bolster its already strong growth profile.

A solid quarter with a growth acceleration ahead

Energy Transfer delivered solid second-quarter results as growing volumes helped mute the impact of lower commodity prices. While that headwind will likely slow its growth this year, a major wave of expansion projects should reinvigorate the company in 2026 and beyond. That growth should give it plenty of fuel to continue increasing its 7.5%-yielding distribution. It makes the MLP an enticing investment opportunity for those seeking income and growth, and who are comfortable receiving the Schedule K-1 Federal Tax Form it sends each year and doing what's needed with that.

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 $636,563!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,108,033!*

Now, it’s worth noting Stock Advisor’s total average return is 1,047% — a market-crushing outperformance compared to 181% 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 August 4, 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.

Key Points

• EPR Properties pays a monthly dividend yielding over 6%.

• Vici Properties' payout yields more than 5%.

• The REITs expect to continue increasing their dividend payments.

• 10 stocks we like better than EPR Properties ›

Investing in high-yield dividend stocks is a great way to generate passive income. For example, investing $1,000 in the following companies could yield nearly $60 of annual dividend income:

Dividend Stock 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 »	Amount Invested	Recent Yield	Annual Dividend Income
EPR Properties (NYSE: EPR)	$500	6.42%	$32.10
Vici Properties (NYSE: VICI)	$500	5.29%	$26.45
Total	$1,000	5.85%	$58.55

Data sources: Google Finance and author's calculations. Dividend yields are as of July 31.

Here's a closer look at these high-quality, high-yielding dividend stocks.

EPR Properties

EPR Properties is a real estate investment trust (REIT) focused on experiential real estate. The company owns a diversified portfolio of movie theaters, eat-and-play venues, health and fitness properties, attractions, and other entertainment spaces.

It leases these properties back to operating tenants, primarily under long-term, triple net leases (NNNs). Those leases provide it with very stable cash flow because tenants cover all property operating costs (including routine maintenance, real estate taxes, and building insurance).

The REIT expects its stable portfolio to generate $5 to $5.16 per share of funds from operations (FFO) as adjusted this year. That easily covers its monthly dividend payment of $0.295 per share, or $3.54 annually. It also provides a cushion and surplus cash to invest in more experiential properties.

EPR Properties invested $86.3 million into new properties in the first half of this year. Recent investments included acquiring land for $1.2 million and providing $5.9 million in mortgage financing secured by improvements at a health and wellness property in Georgia. It also acquired land for a new eat-and-play property development in Virginia for $1.6 million, which has an expected total cost of $19 million and an anticipated completion in 2026.

The company plans to invest $200 million to $300 million in new properties this year. This includes $106 million for experiential development and redevelopment projects it plans to fund over the next 18 months.

These investments should grow EPR's FFO and dividend. The REIT raised its payout by 3.5% earlier this year.

Vici Properties

Fellow REIT Vici Properties also invests in experiential real estate. However, its primary focus is on market-leading gaming, hospitality, wellness, entertainment, and leisure destinations. For example, it owns several iconic casinos along the Las Vegas Strip, including Caesars Palace Las Vegas, MGM Grand, and the Venetian Resort Las Vegas.

The REIT also leases its properties under long-term NNN contracts with operating tenants. These leases currently have a weighted average remaining term of over 40 years. A growing subset of its leases -- 42% this year, rising to 90% by 2035 -- link rents to inflation. Its strategy of investing in large properties with long-term, inflation-linked leases provides it with stable and rising rental income.

Vici Properties currently pays out $0.4325 per share each quarter in dividends, for a total of $1.73 annually. It produces plenty of cash to cover that payment level -- $2.35 to $2.37 per share of adjusted FFO is expected this year. The REIT uses the cash it retains to invest in additional experiential properties.

The company has secured two notable new investments this year. It has agreed to provide a loan of up to $510 million to fund the development of the North Fork Mono Casino & Resort in California. Additionally, Vici has committed to investing $450 million into a mezzanine loan related to the development of One Beverly Hills, a landmark luxury mixed-use development in California.

Vici's new investments help drive growth in both its FFO per share and its dividend. The REIT has raised its payment for seven straight years (each year since its formation). It has grown the payout at a 7.4% compound annual rate during that period, outpacing the 2.3% average of other REITs focused on properties secured by NNNs.

Excellent ways to generate passive dividend income

EPR Properties and Vici Properties own diversified and growing portfolios of experiential real estate. Those properties provide them with rising streams of rental income to pay dividends and invest in additional properties. That makes them great ways to turn $1,000 into a growing stream of passive dividend income this August.

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 $624,823!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,064,820!*

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*Stock Advisor returns as of July 29, 2025

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

Key Points

• Energy Transfer pays a lucrative distribution supported by stable cash flow and a strong financial profile.

• The MLP has lots of growth coming down the pipeline.

• It currently trades at one of the lowest valuations in its peer group.

• 10 stocks we like better than Energy Transfer ›

Energy Transfer (NYSE: ET) offers investors a high-yielding distribution (currently around 7.5%) backed by a rock-solid financial profile. The master limited partnership (MLP) is also growing at a healthy rate, which should continue. To top it off, the company trades at a very attractive valuation.

Let's examine these features to determine whether they make Energy Transfer the smartest investment you can make today.

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A rock-solid income stream

Energy Transfer's diversified midstream business generates substantial and stable cash flow, with fee-based contracts backing about 90% of the MLP's annual earnings. During the first quarter, the company produced $2.3 billion of distributable cash flow. It distributed a little over $1.1 billion of this money to investors, retaining the rest to invest in expansion projects and maintain its strong financial profile.

This conservative payout ratio allowed the MLP to maintain its leverage ratio in the lower half of its target range of 4 to 4.5 times. That has the company in its strongest financial position in its history.

This strong financial profile makes the MLP's payout highly durable.

A fully fueled growth engine

Energy Transfer also has a healthy growth profile. The MLP is on track to grow its earnings before interest, taxes, depreciation, and amortization (EBITDA) by around 5% this year. Growth drivers include last year's acquisition of WTG Midstream, recently completed organic expansion projects, and healthy market conditions.

The MLP has even more growth ahead. It's investing $5 billion into growth capital projects this year, including several gas processing plants, a major new natural gas pipeline, and some additional export capacity. These growth projects should come online in the second half of 2025 through the end of next year. Given that timeline, Energy Transfer expects these projects will boost its earnings growth rate in the 2026 to 2027 time frame. That provides the MLP with lots of near-term visibility into its earnings growth.

Additionally, Energy Transfer is developing several expansion projects, including its Lake Charles LNG facility and a new gas supply line for an AI data center. The MLP has identified three major catalysts -- rising Permian production, increasing gas demand from emerging sectors such as AI data centers, and growing export demand for natural gas liquids -- that will provide it with numerous opportunities to continue expanding its midstream footprint in the years to come. Its ability to secure more new projects would further enhance and extend its earnings growth outlook.

Energy Transfer's strong financial position also enables it to continue making accretive acquisitions that complement its operations and growth. The MLP has a long history as a consolidator in the midstream sector, often making at least one major deal each year. Visible earnings growth from its upcoming projects and future expansion opportunities supports the company's plan to deliver 3% to 5% annual distribution increases.

All this for an attractive value

Despite its strong growth and financial profiles, the MLP currently trades for an enterprise value (EV)-to-EBITDA ratio of less than 9. That's the second-lowest valuation among energy midstream companies, where the peer group average is around 12.

This low valuation is a key reason for Energy Transfer's high distribution yield, which enhances its appeal compared to peers.

A wise choice

Energy Transfer offers a high-yielding distribution and has a strong growth profile. It's also in the best financial shape of its history and has a valuation near the bottom of its peer group. These features make the MLP look like a very attractive investment these days, as it could deliver strong total returns. It's especially smart for those seeking a lucrative and growing passive income stream with potential tax benefits from the Schedule K-1 Federal Tax Form that the MLP sends investors each year.

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 $636,628!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,063,471!*

Now, it’s worth noting Stock Advisor’s total average return is 1,041% — a market-crushing outperformance compared to 183% 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 July 21, 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.

Key Points

• EPR Properties has a 6% dividend yield.

• Realty Income has increased its monthly dividend 131 times since coming public in 1994.

• Healthpeak Properties pays a very healthy monthly dividend.

• 10 stocks we like better than EPR Properties ›

Investing in real estate investment trusts (REITs) can be a very effective way to generate consistent dividend income. These companies typically produce dependable rental income that supports attractive dividend payments. Most REITs also reinvest capital to expand their portfolios, supporting rental income and dividend growth.

EPR Properties (NYSE: EPR), Realty Income (NYSE: O), and Healthpeak Properties (NYSE: DOC) currently rank among the most compelling REITs to buy for dividend income right now. They offer high-yielding monthly dividends, making them ideal choices for investors seeking reliable 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 »

An attractive income stream

EPR Properties focuses on experiential real estate such as movie theaters, eat-and-play venues, and attractions. It leases these properties to operators under long-term, net leases that require tenants to cover all operating costs, including routine maintenance, real estate taxes, and building insurance. This structure provides EPR with stable rental income.

The REIT expects to generate between $5.00 and $5.16 per share of funds from operations (FFO) as adjusted this year. That's plenty of cash flow to cover its monthly dividend payments ($0.295 per share each month and $3.54 annually). At that payment rate, the landlord has a dividend yield of more than 6%, turning a $2,000 investment into $120 of annual dividend income (or $10 per month).

EPR Properties reinvests its excess cash after paying dividends into additional experiential properties. The REIT spent $37.7 million in the first quarter, including buying an attraction property for $14.3 million. It has lined up another $148 million of experiential development and redevelopment projects it expects to fund over the next two years. These investments should grow the REIT's FFO per share by 3%-4% annually, supporting dividend growth within that range.

An extremely durable dividend stock

Realty Income owns a diversified portfolio (retail, industrial, gaming, and other properties), net leased to many of the world's leading companies. Its high-quality portfolio generates durable rental income to support its monthly dividend. Its portfolio has been so resilient that the REIT has only had one year when it didn't grow its adjusted FFO per share (2009).

The REIT's durable rental income has provided it with a rock-solid foundation to pay dividends. Realty Income has declared 661 consecutive monthly dividends throughout its history. Better yet, it has raised its payment 131 times since its public market listing in 1994, including 111 straight quarters. That payout currently yields more than 5.5%.

Realty Income is in an excellent position to continue increasing its dividend. It generates substantial free cash flow after paying dividends and maintains one of the industry's strongest balance sheets. Meanwhile, it has a massive market opportunity, with over $14 trillion of real estate in its core markets suitable for net leases.

A very healthy income stock

Healthpeak Properties holds a diversified portfolio of healthcare real estate. Its outpatient medical, lab, and senior housing assets benefit from steady and rising demand, producing consistent and growing rental income. This stable income supports the landlord's monthly dividend, which yields nearly 6.5%.

Healthpeak's existing portfolio should grow its rental income by around 3% per year due to contractual rental escalation clauses. Additionally, the company expects to capture bigger rent bumps as existing long-term leases expire and it signs new leases at higher market rents.

Meanwhile, Healthpeak's strong balance sheet and substantial excess cash flow after paying dividends provide ample flexibility to pursue new investments, including acquisitions, development projects, and mortgage loans secured by healthcare real estate. The REIT's growth drivers should increase its income, supporting further dividend growth.

Smart REITs to buy for passive dividend income

EPR Properties, Realty Income, and Healthpeak Properties generate reliable rental income to support their high-yielding monthly dividends. They also have strong financial positions that enable continued investments in new income-generating properties, fueling further income and dividend growth. These qualities make them top REITs to buy for investors seeking to turn $2,000 into dependable passive income.

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 $636,628!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,063,471!*

Now, it’s worth noting Stock Advisor’s total average return is 1,041% — a market-crushing outperformance compared to 183% 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 July 21, 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 recommends Healthpeak Properties. The Motley Fool has a disclosure policy.

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%.

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 »

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.

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:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Enterprise Products Partners 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 $694,758!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $998,376!*

Now, it’s worth noting Stock Advisor’s total average return is 1,058% — a market-crushing outperformance compared to 180% 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 July 7, 2025

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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Dividend Stock	Investment	Current Yield	Annual Dividend Income
Federal Realty Investment Trust (NYSE: FRT)	$7,333.33	4.67%	$342.47
EPR Properties (NYSE: EPR)	$7,333.33	6.05%	$443.67
Sun Communities (NYSE: SUI)	$7,333.33	3.26%	$239.07
Total	$22,000.00	4.66%	$1,025.20

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.

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.

Where to invest $1,000 right now

When our analyst team has a stock tip, it can pay to listen. After all, Stock Advisor’s total average return is 1,048%* — a market-crushing outperformance compared to 179% for the S&P 500.

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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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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.

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 $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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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:

SCHD	GCOW
ConocoPhillips, 4.4%	Phillip Morris, 2.6%
Cisco Systems, 4.3%	Engie, 2.6%
Texas Instruments, 4.2%	British American Tobacco, 2.4%
Altria Group, 4.2%	Equinor, 2.2%
Coca-Cola, 4.1%	Gilead Sciences, 2.2%
Chevron, 4.1%	Nestle, 2.2%
Lockheed Martin, 4.1%	AT&T, 2.2%
Verizon, 4.1%	Novartis, 2.1%
Amgen, 3.8%	Shell, 2.1%
Home Depot, 3.8%	BP, 2%

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.

ETF	1-Year	3-Year	5-Year	10-Year	Since Inception
GCOW	11.2%	8.4%	15.5%	N/A	8.8%
SCHD	3.8%	3.7%	12.2%	10.6%	12.2%

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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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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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.

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.

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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.

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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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!*

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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!*

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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.

See the 10 stocks »

*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.

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

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.