Passive income is probably what you want if you're trying to live off your nest egg in retirement. That means you're looking at dividend stocks. Three things to have on your radar today are: Black hills (NYSE:BKH), Chevron (NYSE: CVX) and Enterprise Products Partner (NYSE:EPD). Here's why.
1. Black Hills is a high-yield dividend king
There's nothing exciting about Black Hills. And that's exactly why the stock and its generous dividend yield of 4.8% are so interesting. First of all, the company is a regulated electricity and natural gas supplier. This means the company has a monopoly in the markets it serves, but must seek government approval for its tariff increases and investment plans. Slow and steady growth is the best you can hope for. But given that it has achieved Dividend King status, Slow and Steady has stood the test of time well for income investors.
But what about the future? In this regard, Black Hills is rather small, serving 1.3 million customers in parts of Arkansas, Colorado, Iowa, Kansas, Montana, Nebraska, South Dakota and Wyoming. But here's the exciting thing: customer growth in the areas where it operates is nearly three times the population growth in the United States. Customer growth supports capital investment in the utility sector, which in turn supports rate increases. In other words, Black Hills' impressive dividend streak is likely to continue.
2. Chevron is the strongest giant
Integrated energy giant Chevron competes with some of the world's largest energy companies. And its 36-year streak of annual dividend increases isn't the most impressive of the bunch. That would ExxonMobil's (NYSE: XOM) 41 years. But there is one area in which the company shines significantly better than all of its closest competitors: the balance sheet. Chevron's debt-to-equity ratio is the lowest among its peers, giving it more leeway to deal with the inherent fluctuations in oil and natural gas prices. Currently, its debt-to-equity ratio is a tiny 0.12, meaning Chevron is well prepared for the next downturn in the industry.
The story goes on
To be fair, ExxonMobil isn't far behind, with a still-impressive debt-to-equity ratio of 0.2. But here's the thing: If you're a dividend investor looking to maximize your portfolio's returns, Chevron's 4.2% yield is a step above ExxonMobil's roughly 3.9%. Add in its stronger balance sheet, and Chevron will likely be a better choice for most dividend investors looking for a dividend they can rely on for decades.
3. Enterprise is willing to collect a toll
Of course, investors might be concerned about Chevron's carbon-focused business. However, Enterprise Products Partners points out that demand for oil and natural gas is expected to remain strong until at least 2050, as forecast by the world's top industry observers. Current forecasts currently end in 2050, but even after that, demand for oil and natural gas, two of the most important global energy sources, is unlikely to fall off a cliff. So there's plenty of time for Chevron to produce oil and for US midstream giant Enterprise to help producers transport the oil around the world.
The key for Enterprise is that it charges fees for the use of its pipelines, storage, transportation and processing facilities. The price of the goods it moves is less important than demand. Even when energy prices are low, demand tends to remain strong. So the whopping 7.4% payout yield is supported by a reliable cash flow stream, which explains the 25-year streak of payout increases the company has recorded. There is no reason to believe that this series will end.
Decades of dividend growth lie ahead for this trio
There's no way to predict the future, but when you look at Black Hills, Chevron and Enterprise, you can see that they all have strong businesses and ample opportunity to protect their attractive dividends well into the future. Add in generous dividend yields, and even the most conservative income investors today will likely find at least one, if not several, of these stocks attractive.
Should you invest $1,000 in Enterprise Products Partners now?
Before you buy Enterprise Products Partners stock, consider the following:
The analyst team at Motley Fool Stock Advisor just found out what they think they are The 10 best stocks so investors can buy it now… and Enterprise Products Partners wasn't one of them. The ten stocks that made the cut could deliver huge returns in the years to come.
Stock Advisor offers investors an easy-to-understand roadmap to success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of the S&P 500 since 2002*.
Check out the 10 stocks
*Stock Advisor returns from January 22, 2024
Reuben Gregg Brewer holds positions in Black Hills. The Motley Fool recommends Chevron and Enterprise Products Partners. The Motley Fool has a disclosure policy.
Do you want decades of passive income? 3 stocks to buy now. was originally published by The Motley Fool