Many people dream of the day they can live off the income generated by their investments. Whether you’re well on your way to achieving that goal or just getting started, there are smart actions you can take to begin making more passive income today.
Dividend-paying companies can help you earn money from the stock market in the form of regular, and often sizable, cash payouts. Here are three high-yield dividend stocks that are particularly attractive buys right now. All of them can help you earn passive income in 2023 and beyond.
AT&T (T -1.10%) is a favorite among income-seeking investors. It’s easy to see why. The telecommunications giant pays a generous dividend, and its value-priced shares currently yield a wealth-building 5.7%.
Rising demand for high-speed connectivity services, such as 5G wireless and broadband internet, is fueling AT&T’s growth. The wireless carrier is racking up subscriber gains, which, together with its cost-cutting initiatives, is strengthening AT&T’s already impressive cash flow generation.
All told, AT&T is on track to pay out roughly $8 billion in annual dividends from its $14 billion in forecasted free cash flow. Those figures are projected to head even higher in 2023, driven by further customer growth and expense reductions.
Better still, AT&T’s stock is cheap. Its shares can be had for less than 8 times earnings. That’s less than half the price-to-earnings (P/E) ratio of the S&P 500 broad-market index. It’s also quite a bargain for a high-quality, cash-producing business.
The low price of AT&T’s shares combined with its high, yet well-funded, dividend yield should lessen the risk for investors who buy the stock now. That makes the wireless titan a particularly attractive passive income investment today.
Enterprise Products Partners
Conflict-driven disruptions to the energy markets in Europe and other international markets are shining a bright light on the vital need for reliable and cost-effective power sources. As a leading provider of midstream services, Enterprise Products Partners (EPD 1.28%) is well positioned to profit as governments and consumers place a higher value on dependable supplies of energy.
Midstream companies transport oil, natural gas, and other products from upstream producers to downstream refiners, distributors, and consumers. Enterprise Products Partners owns a massive network of processing facilities, storage terminals, and more than 50,000 miles of pipelines across North America.
As a master limited partnership (MLP), Enterprise Products Partners is specifically designed to pass the bountiful cash flow it generates from its operations on to its investors as passive income. With a hefty distribution yield of 7.7%, this energy services giant excels at doing just that.
If you’d also like to cash in on the growth of clean energy, look no further than Brookfield Renewable (BEP 3.36%) (BEPC 2.48%). Brookfield owns and operates a vast and valuable collection of power-generating assets across North and South America, Europe, and Asia.
With climate change concerns mounting, governments and businesses around the globe are intensifying their efforts to curtail their carbon emissions. That’s leading to booming demand for wind, solar, and hydroelectric power projects — all areas in which Brookfield holds a leading presence.
Brookfield’s renewable power assets tend to generate strong returns on investment and robust cash flow. It sends much of these profits to its investors via a steadily rising cash payout, which yields nearly 5%.
With its development pipeline well stocked with intriguing new projects, Brookfield appears set to deliver on its goals of 5% to 9% distribution growth and 12%-15% total returns to investors in the coming years. Generating those types of long-term investment gains could help you build lasting wealth, while earning bountiful passive income along the way.
Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Brookfield Renewable. The Motley Fool recommends Brookfield Renewable Partners and Enterprise Products Partners. The Motley Fool has a disclosure policy.