Beginner passive income
Unlike many of its peers, however, Realty Income issues its dividends on a monthly basis, helping long-term investors to compound their returns even quicker than with those stocks that pay dividends on a quarterly basis. Raising its distribution for 27 consecutive years, Realty Income is one of the distinguished stocks that belongs to the group known as Dividend Aristocrats. While its history of returning capital to shareholders isn't as long as 3M's, Realty Income's track record is certainly noble. While it's wise to make room for more aggressive stock choices, buttressing one's holdings with a conservative utility stock like Essential Utilities is also a valuable strategy. Developing a well-diversified portfolio is a premier way to mitigate risk. While the stock doesn't offer a mouth-wateringly high yield, it's important for new dividend investors to recognize that there's more to income investing than merely gobbling up high-yield stocks. Shares of Essential Utilities currently offer investors a 2.6% forward yield.
In addition, because the company relies on regulated markets for the lion's share of its revenue - 98% in 2021, for example - investors need not worry that an economic downturn will jeopardize the company's financials as acutely as those operating in other industries. This affords management the ability to plan well for future capital expenditures, including infrastructure upgrades as well as dividend payments. Providing water, wastewater, and natural gas service to more than 5 million customers, Essential Utilities deals primarily in regulated markets - so while it can't raise prices arbitrarily, it does have good foresight into future cash flows. Like Brookfield Renewable, Essential Utilities is another utility that warrants attention. In addition, the company's investment-grade balance sheet suggests that it's in sound financial health, which provides additional reassurance that the company is well-positioned to continue with its dividend payments. This provides some clarity for investors who wonder about how the company will be able to grow its dividend, which currently has a forward yield of 3.5%, in the coming years. The company's portfolio currently includes 21 gigawatts (GW) of operating capacity, while it has 69 GW of projects in the pipeline. Operating a global portfolio of renewable energy assets, Brookfield Renewable secures multi-year agreements with customers to purchase power from its assets, securing long-term cash flows. According to the International Energy Association, for example, global renewable energy capacity is projected to rise 60% from 2020 to 2026. Clean energy solutions are currently having their day in the sun, and the growing adoption of solar and wind power (among other sources) is bound to continue. Brookfield Renewable Corporationįrom a titan in the industrials sector to one in renewable energy, Brookfield Renewable is a savvy selection to include in a new basket of dividend stocks. Over the past 10 years, 3M has averaged a payout ratio of 54%, suggesting that management isn't willing to jeopardize the company's financial health to make investors happy.
While the company's track record of dividend raises isn't a guarantee that the trend will continue in the future, it does provide some confidence that management will succeed in deftly navigating the challenging macro environment looming on the horizonīesides its position as a leading provider of products and solutions for various industries, the company's financials illustrate why it's a good choice. Not only do you receive the reassurance that management has the wherewithal to maintain (and raise) its distribution to shareholders - it's been doing it for 64 consecutive years - but you receive an attractive 4.6% forward yield. A wise choice for inexperienced investors, 3M, an industrials stalwart in an elite group of stocks: the Dividend Kings.