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On Monday, Kinder Morgan, a pipeline giant listed on the NYSE, was highlighted for its 6.6% dividend yield. This surpasses the yield from most high-quality bonds including the 10-year U.S. Treasury bond and the average investment-grade corporate bond. Over the last six years, the company’s dividend has seen an upward trend, with a recent increase of 2% for 2023. After paying dividends, Kinder Morgan retains half of its stable cash flow which is predominantly reinvested in expanding its energy infrastructure operations. The company plans to invest around $2.1 billion this year in various capital projects such as pipeline expansions and renewable natural gas production facilities.
Verizon, a telecom giant listed on the NYSE, provides a dividend yield of 7.9%. The company recently marked its 17th consecutive year of dividend growth with an increase of 1.9%. Following a $10 billion spending program to boost its 5G network plans, Verizon expects to free up approximately $1.8 billion in cash flow each quarter. This will be initially used to fortify its robust investment-grade balance sheet. The company’s investments in 5G and cost-saving initiatives are expected to increase revenue and reduce interest expense respectively, leading to a rise in free cash flow.
W.P. Carey, a diversified Real Estate Investment Trust (REIT) listed on the NYSE, offers a dividend yield of 6.7%. The company has increased its dividend payment every year since it was listed on the public market in 1998. It generates steadily rising rental income from its large-scale real estate portfolio through long-term net leases with tenants. These leases often feature an annual rental rate escalation clause tied to the inflation rate or a fixed rate. W.P. Carey’s growth is driven by acquisitions of income-producing real estate in sale-leaseback transactions, build-to-suit development projects, and single-tenant net lease properties.
In a climate where investors are seeking dividends with higher yields than many bonds, these three companies stand out. Their payouts are predicted to increase over time, potentially offsetting the impact of inflation on purchasing power.
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