Investing in dividend-paying stocks can be a great way to generate passive income. Many of them offer attractive yielding payouts that they steadily increase. Meanwhile, it often doesn't take much money to start since many great dividend stocks have reasonable share prices.
Brookfield Renewable (NYSE: BEPC)(NYSE: BEP), Invitation Homes(NYSE: INVH), and Williams Companies(NYSE: WMB) offer investors attractive and growing dividends for share prices below $50. That makes them ideal ways to put a little bit of money to work generating dividend income.
A powerful combination
Brookfield Renewable currently trades at less than $24 per share, putting its dividend yield around 5.8%. That's an attractive current yield, considering that the S&P 500's dividend yield is around 1.6%.
The leading global renewable energy company has an excellent track record of increasing its dividend. It gave investors a 5.5% raise earlier this year, marking its 12th straight year of growing the payout by at least 5%. That trend should continue. Brookfield aims to increase its dividend by 5% to 9% per year over the long term.
Brookfield Renewable has very visible growth prospects. A combination of rising power prices, development projects, and acquisitions should power 10% or more annual growth in its funds from operations (FFO) per share through 2028. That easily supports the company's dividend growth plan. Meanwhile, the combination of income and earnings growth should enable Brookfield Renewable to produce attractive total returns, potentially in the mid-teens.
Dual drivers will continue pushing this payout higher
Invitation Homes' current stock price is below $33 per share. That gives it a 3.2% dividend yield, which is double what an S&P 500 index fund offers these days.
The residential real estate investment trust (REIT) focused on single-family rentals has an excellent track record of increasing its dividend. The company gave its investors a more than 18% raise earlier this year and has grown its payout by over 225% since it initiated its dividend in 2017.
Invitation Homes has two important growth drivers. It's capitalizing on strong demand for single-family rentals, driven by the high cost of buying. That's enabling the company to steadily raise rental rates, which is driving above-average net operating income growth across its portfolio.
In addition, the REIT continues to expand its portfolio via acquisition. It has relationships with several builders who construct purpose-built homes for the company. It purchased 157 of these homes in the second quarter while adding 173 more to its pipeline, which now has nearly $900 million in homes. Meanwhile, the REIT recently acquired about 1,900 homes for $650 million in a portfolio transaction. These acquisitions will grow Invitation Homes' rental income, which should allow it to continue increasing its dividend.
Two fuel sources to grow its dividend
Williams currently trades around $36 a share, putting its dividend yield at 5%. The natural gas pipeline giant has an exceptional dividend track record. It has paid a dividend every quarter since 1974 while growing its payout at a 6% compound annual rate since 2018.
Organic investments and acquisitions fuel its growing dividend. The pipeline giant expects to invest $1.6 billion to $1.9 billion on growth projects this year. That's part of a large backlog of capital projects that provides it lots of visibility into future growth. For example, the company has several projects in the deepwater Gulf of Mexico that will come online in the 2024 to 2025 time frame and double its earnings from that region.
Meanwhile, Williams made three acquisitions last year, which helped boost its income and growth profile. The company has a strong balance sheet, giving it the financial flexibility to continue making acquisitions as attractive opportunities arise.
Earnings growth from expansion projects and acquisitions will increase Williams' cash flow, which should enable the company to continue raising its dividend.
Turn idle cash into high-yielding and steadily rising income streams
Brookfield Renewable, Invitation Homes, and Williams have reasonably low share prices. That enables investors with a little bit of cash to quickly put it to work generating attractive and steadily rising dividend income. That combination makes them great dividend stocks to buy.
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Matthew DiLallo has positions in Brookfield Renewable, Brookfield Renewable Partners, and Invitation Homes. The Motley Fool has positions in and recommends Brookfield Renewable and Invitation Homes. The Motley Fool recommends Brookfield Renewable Partners. The Motley Fool has a disclosure policy.
