If you are an investor like me, your goal is to generate passive income as soon as you start investing. While it is possible to enjoy capital appreciation on your investment, you must consider the different ways you can make money while you remain invested. Picking dividend stocks is one way of taking home steady income but not all dividend stocks are the same. You need to identify durable companies with stable balance sheets and consistent dividend payouts. With that in mind, let’s take a look at the best dividend stocks that you should be following.
Enterprise Products Partners (EPD)
Enterprise Products Partners (NYSE:EPD) provides energy services to other companies and consumers of crude oil, natural gas, and natural liquid gas. The company has an impressive dividend yield of 7.45% and is one of the best dividend stocks to own. One solid reason to invest in the stock is its diversified portfolio of assets which include liquid pipelines, natural gas pipelines, and marine terminals. The company continues to grow and aims to build two new natural gas processing plants in the Permian Basin.
Enterprise Products Partners makes money by charging a fee to the companies that use its assets. That results in predictable, steady revenue. The reason it can sustain a high dividend yield is the low debt balance sheet. It has paid consecutive dividends for the past 25 years and pays a quarterly dividend of $0.51.5 per share.
Fundamentally, the company enjoys a strong position and can transport 12.2 million barrels of crude oil every day. This doesn’t include the export capacity it holds. The management is making significant investments to expand and grow in the coming year and has invested more than $2.3 billion in the first nine months of 2023. In the third quarter, the company announced a 5.3% dividend increase as compared to the same period the previous year. Owning EPD will not disappoint and it could be a great addition to your portfolio.
Kinder Morgan (KMI)
Another company in the oil and gas sector, Kinder Morgan (NYSE:KMI) has the largest independent pipeline and terminal network in the United States. While the stock saw a dip due to the pressure on oil prices in 2023, it is ready for a rebound this year. As the Federal Reserve reduces the interest rates, we will see higher oil demand, and it will benefit companies like Kinder Morgan.
One solid reason to invest in the company is its strong pipeline network. It has 140 terminals and over 82,000 miles of pipelines which gives it an edge in the industry. Since the company operates on a fixed-fee contract, it does not have to worry about the price fluctuations. It generates steady revenue through the transportation and storage of the commodity.
The company has been able to keep debt at a minimum while making acquisitions without letting it impact the balance sheet. It aims to achieve higher growth through pipeline expansion. KMI stock hasn’t moved much over the past year and has been trading in the range of $16 to $18. It is exchanging hands for $18.11 today. KMI is one of the most overlooked dividend stocks right now.
The company has a strong balance sheet which helps sustain the stock buybacks and dividends. It has a dividend yield of 6.25% and pays a quarterly dividend of $0.2825 per share. Do not expect the stock to show immediate upside. It will continue to trade within this range, but the passive income will help grow your investment.
Amcor PLC (AMCR)
If you are chasing dividends, you have to consider Amcor PLC (NYSE:AMCR). The company is a packaging provider with a presence across Europe, North America, Asia, and Latin America. It has a massive addressable market, a strong global presence, and enough liquidity. While AMCR stock has been trading sideways for the past six months, it does enjoy a strong dividend yield of 5.10%. It has dropped 19% over the past year, and the revenue saw a 7% drop in the recent quarter, but this should not be a cause of concern for investors.
Amcor PLC saw a drop in revenue due to weak demand and low consumer spending, but this shouldn’t be the case in 2024. For the first half of the year, the company anticipates weak demand but expects a better second half. The company is focusing on emerging markets and is expected to achieve long-term growth.
Despite a drop in revenue, it beat the EPS forecast by 5% and the revenue came in at $3.44 billion. It has paid a quarterly dividend of $0.125 per share and is trading close to $9. Amcor is ideal for passive income seekers, and it has a history of over 25 years of consistent dividend increases.
On the date of publication, Vandita Jadeja did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.