2024-08-24 14:15:00 +0300

3 Dividend Stocks to Supercharge Your Passive-Income Pursuits

Making passive income is one of the keys to becoming financially independent. Once your income from passive pursuits exceeds your expenses, you no longer have to actively work to make money.

One way to accelerate your financial independence is to invest in dividend stocks with an above-average yielding dividend that can steadily grow in the coming years. Three high-quality dividend stocks that offer a big-time payout that should rise in the future are Energy Transfer (NYSE: ET), Medical Properties Trust (NYSE: MPW), and Verizon (NYSE: VZ).

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A high-octane cash distribution

Energy Transfer has a monster payout. The master limited partnership (MLP) currently pays a 7.8%-yielding cash distribution. That's multiples above the 1.6% dividend yield on an S&P 500 index fund.

Usually, a yield that high is a warning sign. However, that's not the case with Energy Transfer. The MLP generates mountains of recurring cash flow backed by long-term contracts and government-regulated rates. It produced $1.17 billion in cash after paying its high-yielding distribution in the second quarter. That was enough money to fund its entire $825 million of growth capital expenditures with room to spare, enabling the company to make another small acquisition and continue paying down debt.

Energy Transfer has grand plans for its distribution. The energy company wants to bring it back up to its former peak of $0.305 per unit each quarter. That's more than 30% above the current rate. Energy Transfer has already boosted its payout by 50% this year as it steadily works its way back up to that level. Meanwhile, its payout could one day exceed its former pinnacle as the company's expansion projects continue growing its cash flow.

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