Last year, these 5 High-Dividend Shares Delivered Me the Most Passive Annual Earnings (with Potential for More in 2025)
I've got a portfolio filled with dividend stocks, and they're a major part of my investing strategy. I'm working towards generating enough passive income to cover my basic living expenses. Last year, five of these stocks gave me more than $500 in dividend income each. Here's a look at these top performers, which I expect to continue providing me with passive income by 2025.
Energy Transfer
Last year, Energy Transfer topped my income list. This master limited partnership (MLP) pays a generous quarterly cash distribution, making it an attractive income source. At nearly 6.5%, its yield is impressive, but for me, it's even higher due to a lower purchase price and steady distribution increases. Energy Transfer increased its payout every quarter in 2021, by more than 3%. I'm keeping this MLP as a top income-producing investment, although I'm not planning to add more at the moment. It has a low payout ratio, a strong balance sheet, and growing earnings, making its steady distribution increases likely to continue.
Brookfield Renewable
Brookfield Renewable came in second place on my dividend income list in 2021. Its high yield is currently 5.5%, although my yield is higher due to lower purchase costs and steady dividend growth. The company has increased its payout at a compound annual rate of 6% over the last 20 years, and I expect this trend to continue. Brookfield Renewable aims to raise its payout by 5% to 9% annually in the long term, thanks to its strong balance sheet and growth potential.
Brookfield Infrastructure
Brookfield Infrastructure came in third, just behind its renewable energy sibling. My yield is currently more than 7.5% because of lower purchase costs and steady dividend growth. This globally diverse infrastructure operator (utilities, energy midstream, transportation, and data) has increased its payout at a 9% annual rate since its formation 15 years ago. Like its renewable energy sibling, Brookfield Infrastructure aims to raise its payout by 5% to 9% annually. It has the means to achieve this thanks to its strong balance sheet and growth potential.
Enterprise Products Partners
Enterprise Products Partners has been a reliable income producer for me. Its quarterly lucrative distribution is currently nearly 6.5%, and for me, it's even higher due to lower purchase costs and steady distribution increases. The MLP has increased its payout for 26 consecutive years, a trend it has continued into 2022. Enterprise Products Partners has the resources to continue raising its distribution, thanks to its elite balance sheet and major growth projects.
Kinder Morgan
Kinder Morgan rounds off my top five for 2022. Its current yield is around 4%, although it's higher due to lower purchase costs. Kinder Morgan has increased its distribution for seven consecutive years and plans to raise it by another 2% this year. Thanks to its robust balance sheet and growing cash flows, it can easily afford this increase. Kinder Morgan will continue to support its rising dividend with ongoing expansion projects and an attractive area for growth, like AI data centers.
I've taken advantage of opportunities to invest in higher-yielding energy stocks when prices were lower. This strategy has paid off, and energy stocks now provide me with a significant portion of my dividend income. I expect to see further growth in my income as these companies increase their payouts in 2022. While I'm satisfied with my top five income producers, I plan to diversify my income portfolio by increasing my dividends from non-energy stocks, like REITs. This could potentially change my top five by the end of 2022.
In my investment strategy, I allocate a portion of my money towards high-yielding finance options in the energy sector. I believe that Energy Transfer's impressive yield and solid financial performance make it a wise choice for further investing in finance.
The consistent profitability of my dividend-generating stocks, such as Energy Transfer and others, encourages me to keep a substantial portion of my money in finance, with a focus on generating passive income.
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