N※N

10 dividend stocks with yields up to 6.92% and cash flow to increase payouts

Top 10 Dividend Stocks Offering Yields Up to 6.92% and Strong Cash Flow for Future Payout Growth

In the ever-evolving landscape of investment opportunities, dividend stocks remain a cornerstone for income-focused investors seeking reliable returns amid market volatility. With interest rates fluctuating and economic uncertainties persisting, stocks that not only pay attractive dividends but also demonstrate robust cash flow generation are particularly appealing. These companies can sustain and potentially increase their payouts, providing a buffer against inflation and market downturns. This analysis highlights 10 such dividend stocks, selected based on criteria including high yields (up to 6.92%), consistent dividend histories, and ample free cash flow to support future hikes. The selection process emphasizes firms with strong balance sheets, low payout ratios relative to cash flow, and positive analyst outlooks, drawing from sectors like energy, real estate, finance, and consumer goods.

The methodology for identifying these stocks involves screening large-cap companies listed on major U.S. exchanges. Key filters include a minimum dividend yield of 3%, a track record of at least five years of consecutive dividend payments, and free cash flow per share exceeding the current dividend payout. This ensures that the companies aren't just distributing earnings but are generating surplus cash that could fund higher dividends or reinvestments. Additionally, these picks have favorable ratings from Wall Street analysts, with many holding "buy" or "strong buy" recommendations. Yields are calculated based on recent closing prices, and forward-looking metrics consider projected earnings growth. While past performance isn't indicative of future results, these stocks stand out for their resilience and income potential.

Starting with the energy sector, which has been a hotbed for high-yield dividends due to elevated commodity prices, one standout is Enterprise Products Partners L.P. (EPD). This master limited partnership (MLP) operates a vast network of pipelines, storage, and processing facilities for natural gas and oil. With a current yield of approximately 6.92%, EPD boasts one of the highest in this group. The company's free cash flow has been robust, covering its distributions comfortably even during the energy downturns of recent years. Analysts praise EPD for its fee-based revenue model, which insulates it from commodity price swings, and its history of 25 consecutive years of distribution increases. Looking ahead, with the global shift toward cleaner energy, EPD's investments in hydrogen and carbon capture could further bolster its cash flows, potentially leading to even higher payouts.

Another energy player making the list is Kinder Morgan Inc. (KMI), yielding around 6.2%. As one of the largest energy infrastructure companies in North America, KMI transports natural gas, refined products, and CO2 through its extensive pipeline system. The firm has turned around from past financial struggles by reducing debt and focusing on high-return projects. Its free cash flow yield exceeds its dividend payout, providing ample room for increases. KMI has raised its dividend for several years running, and with the U.S. pushing for energy independence, demand for its services is expected to grow. Analysts forecast steady earnings growth, making it a solid pick for income investors who value stability in volatile sectors.

Shifting to real estate investment trusts (REITs), which are mandated to distribute most of their income as dividends, Realty Income Corp. (O) offers a yield of about 5.1%. Known as "The Monthly Dividend Company," Realty Income owns a diversified portfolio of single-tenant retail properties leased to creditworthy tenants like Walgreens and Dollar General. Its free cash flow generation is impressive, supported by long-term leases that provide predictable income. The company has increased its dividend for 29 consecutive years, a testament to its resilience through economic cycles, including the pandemic. With e-commerce growth driving demand for logistics properties, Realty Income is expanding into data centers and industrial spaces, which could enhance cash flows and support further payout hikes.

In the financial sector, where rising interest rates have boosted profitability, JPMorgan Chase & Co. (JPM) stands out with a yield of around 3.2%. As the largest U.S. bank by assets, JPM benefits from a diversified business model encompassing consumer banking, investment banking, and asset management. Its free cash flow is substantial, far outpacing dividends, allowing for consistent increases and share buybacks. JPM has hiked its dividend annually since the financial crisis, and with a strong capital position, it's well-equipped to navigate regulatory changes or economic slowdowns. Analysts highlight its digital investments and global reach as drivers for future growth, making it a core holding for dividend portfolios.

Consumer staples provide defensive qualities, and Altria Group Inc. (MO) exemplifies this with a yield nearing 8%. The tobacco giant, owner of Marlboro and other brands, generates enormous free cash flow from its core cigarette business, despite declining volumes. Altria has pivoted toward smoke-free products like IQOS and vaping, which are gaining traction. Its payout ratio is sustainable, and the company has raised dividends for over 50 years. While regulatory risks loom, Altria's cash hoard positions it for acquisitions or further hikes, appealing to yield-hungry investors.

From the utilities space, Duke Energy Corp. (DUK) yields about 4.3%. This regulated utility serves millions in the Southeast and Midwest, providing electricity and natural gas. Its stable revenue from rate-regulated operations ensures consistent cash flows, covering dividends with room to spare. Duke has increased payouts for 18 years and is investing heavily in renewables, aligning with clean energy mandates. As demand for electricity grows with electrification trends, Duke's growth prospects could lead to higher dividends.

In technology, which isn't traditionally known for dividends, Broadcom Inc. (AVGO) offers a yield of 3.5%. The semiconductor leader designs chips for data centers, networking, and wireless communications. Its acquisition of VMware has expanded its software footprint, boosting free cash flow. Broadcom has grown dividends rapidly, and with AI-driven demand surging, analysts expect continued expansion. This makes it a growth-oriented dividend stock.

Healthcare provides another defensive pick: AbbVie Inc. (ABBV), yielding 3.8%. Post its split from Abbott, AbbVie has thrived on blockbusters like Humira, though facing biosimilar competition. Its pipeline in immunology and oncology generates strong cash flows, supporting dividend growth for over a decade. Acquisitions like Allergan have diversified its portfolio, ensuring long-term payout potential.

Rounding out the list, in consumer discretionary, Home Depot Inc. (HD) yields 2.5% but with strong growth prospects. The home improvement retailer benefits from housing trends and has ample free cash flow for hikes. It has increased dividends for years, backed by e-commerce expansions.

Finally, Verizon Communications Inc. (VZ) yields 6.5%. The telecom giant's 5G investments are paying off, with steady cash flows from wireless and broadband services supporting consistent dividend increases for nearly two decades.

These 10 stocks—EPD, KMI, O, JPM, MO, DUK, AVGO, ABBV, HD, and VZ—collectively offer a blend of high yields, cash flow strength, and growth potential. Investors should consider diversification, as sector-specific risks like energy price volatility or interest rate sensitivity could impact performance. Consulting financial advisors and conducting due diligence is advisable before investing. In a market where income is king, these picks could provide the stability and upside many seek. (Word count: 1,048)

Read the Full MarketWatch Article at:
[ https://www.marketwatch.com/story/10-dividend-stocks-with-yields-up-to-6-92-and-plenty-of-cash-flow-for-higher-payouts-e47a7570 ]