I have a keen interest in generating passive income as it allows me to invest more and grow my assets. The ultimate aim, of course, is to create enough passive income to cover my basic living costs and achieve financial independence.
While I enjoy all forms of passive income investments, I have a particular liking for a few that offer a consistent stream of higher returns. At the top of my list are: Brookfield Infrastructure (BIPC), Enterprise Products Partners (EPD), and Realty Income (O). Let me explain why I prefer these dividend stocks for passive income.
boredom is beautiful
Brookfield Infrastructure manages a globally diversified portfolio that includes pipelines, toll roads, power lines, and data centers. Now, I know this might sound a bit mundane, but the consistent cash flow they generate is anything but boring. Last year, they produced $2.6 billion in cash flow and returned about three-quarters of that to shareholders in dividends. The current dividend yield stands at 3.6%, which is notably higher than the S&P 500’s yield of 1.1%.
The company just raised its dividend by another 6%, marking the 17th consecutive year of increases. This trend is expected to continue.
Brookfield is investing heavily to strengthen its infrastructure portfolio. This includes developing several data centers worldwide and two semiconductor manufacturing units in the U.S. Additionally, they recycle capital by selling mature assets, which allows them to attract new investments. Last year, they secured $1.5 billion in new investments, including a significant U.S. refined products pipeline, a bulk fiber network, and a North American rail vehicle network. The company anticipates that these investments will boost annual cash flow per share by over 10%, supporting annual dividend growth between 5% and 9%.
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Enterprise Products Partners is a top player in the U.S. energy midstream sector, operating pipelines, processing plants, and export terminals. These assets yield stable cash flow, supported by favorable distributions associated with their master limited partnership (MLP), currently yielding 6.2%.
This pipeline company has increased its payouts by 2.8% over the last year, extending its growing streak to 27 years.
Enterprise has substantial potential to keep increasing its dividends. They completed a major $6 billion expansion project last year, and revenue is set to grow significantly in 2026 as the project progresses. This year, they plan to invest another $2.5 billion in expansion initiatives, which will provide additional cash flow through next year, ensuring continued distribution growth.
Built to pay growing dividends
Realty Income’s goal is clear: “provide reliable monthly dividends that grow over time.” This real estate investment trust (REIT) has successfully fulfilled this mission, announcing 667 consecutive monthly dividends since its founding. They’ve also increased their dividend for 113 consecutive quarters, with growth occurring in all 31 years as a publicly traded entity, at a compound annual rate of 4.2%.
The current dividend yield for Realty Income is about 5%, and considering its conservative payout ratio, they have the flexibility to invest in additional income-generating real estate. The company has one of the strongest balance sheets in the REIT sector.
Realty Income’s varied investment strategy allows investment in areas with the most promising opportunities. For instance, it recently allocated $800 million to preferred equity in gaming properties and formed a $1.5 billion partnership to invest in build-to-suit logistics facilities. Overall, REITs like Realty Income aim to tap into a massive real estate investment market estimated at $14 trillion across the U.S. and Europe. Future investments in income-producing properties should ensure continued dividend growth.
lots of things to love
Brookfield Infrastructure, Enterprise Products Partners, and Realty Income all provide high-yield dividends and are growing consistently. This is why I’m inclined to invest in these dividend stocks—they continually generate more passive income, bringing me closer to financial freedom.
