Alternative Investment

5 Dividend Stocks Yielding Over 5% to Boost Your Passive Income This September

Stock prices have been under pressure this year as the Federal Reserve raises interest rates to combat inflation. That’s increasing the income yield on lower-risk investments like bonds and bank CDs. Dividend stock prices are falling as a result, boosting their yields to compensate investors for their higher risk profiles relative to bonds.

For investors willing to take on a bit more risk, many solid dividend stocks are looking more attractive as their prices fall and yields rise. Here are five high-quality companies with dividend yields above 5%. Those higher yields can provide a big boost to an investor’s passive income portfolio this September.

Cashing in on the rise of alternatives

Blackstone (BX -2.66%) is the world’s largest alternative asset manager. The company collects steady fee-based income as it manages clients’ money. It also generates performance-based revenue as its investment funds deliver on their return objectives. Those two sources supply Blackstone with lots of income. 

The company returns most of that money to shareholders. It repurchases shares and pays a dividend that varies from quarter to quarter, depending on its earnings. Based on its payments over the past year, Blackstone’s dividend yields 5.4%. While that payout will fluctuate in the future, it should continue to rise overall as Blackstone grows its alternative asset business, driven by investors increasingly seeking alternatives to the volatile stock and bond markets.

Firming up its funding plans

Shares of semiconductor giant Intel (INTC 1.39%) have been under enormous pressure this year. Investors have concerns about the company’s ability to finance its ambitious manufacturing capacity expansion plan, with some worried it might need to cut the payout to fund its strategy. That has pushed its stock price down over 40%, boosting its dividend yield up to 5.1%.

Intel took a big step toward addressing those concerns by securing Brookfield Infrastructure (BIPC 1.57%) (BIP -1.55%) as a funding partner for two plants. Brookfield and its partners will invest up to $15 billion, half the expected cost. That will protect Intel’s balance sheet, allowing it to fund a healthy and growing dividend. It has a long history of increasing its payout, which seems likely to continue following the Brookfield deal.   

A steady pipeline of dividend income

Kinder Morgan (KMI -2.62%) currently pays a 6.1%-yielding dividend. The natural gas pipeline giant supports that payout with a rock-solid financial profile. It generates very stable cash flow backed by long-term contracts and government-regulated rate structures. Meanwhile, Kinder Morgan pays out about half its cash flow via the dividend. That allows it to retain money to strengthen its already solid balance sheet, repurchase shares, and fund expansions. 

Kinder Morgan is investing money to expand several pipelines, build a renewable natural gas platform, and develop several renewable fuel hubs. These investments should help grow the company’s cash flow, enabling it to continue increasing the dividend, something it has done for the past five years. 

A healthy, high-yielding dividend

Walgreens Boots Alliance (WBA 0.12%) has an exceptional dividend track record. The healthcare, pharmacy, and retail company has paid a dividend for 359 straight quarters (over 89 years), increasing it for the last 47 consecutive years. That qualifies it as a Dividend Aristocrat and puts it a few years shy of the even more elite class of Dividend Kings

Walgreens’ dividend currently yields 5.6%. The company can easily cover that payout. It produced $2.6 billion of free cash flow over the last three quarters. While that was down over $700 million from the prior year period due to lower volumes and pandemic-related government support, it easily covered its $1.25 billion dividend outlay. That enabled it to retain funds to invest in its continued growth. 

A real estate-backed payout

W.P. Carey (WPC 1.37%) is a real estate investment trust (REIT) that pays a 5.1%-yielding dividend. The company generates very stable rental income to support that payout. It has a diversified real estate portfolio across the office, retail, industrial, warehouse, and self-storage sectors. It leases these operationally critical properties to tenants under long-term net leases, making the tenant responsible for the variable costs of real estate taxes, maintenance, and building insurance. Most leases feature inflation-linked annual rate escalation clauses. W.P. Carey thus produces steadily rising rental income.

That has helped support W.P. Carey’s ability to increase its dividend. The REIT has given its investors a raise every year since its public listing in 1998. Another dividend growth driver is its ability to continue acquiring income-producing real estate. The company has an excellent track record of making accretive deals. Its solid balance sheet allows it to capitalize on its broad mandate to find deals across property sectors worldwide.

Attractive passive income producers

Slumping stock prices have pushed up dividend yields to compensate for their higher risk profiles relative to bonds as the Fed raises interest rates. That’s providing investors with the opportunity to lock in higher yields from some high-quality income payers this September. Blackstone, Intel, Kinder Morgan, Walgreens, and W.P. Carey have excellent dividend track records of steadily increasing their dividends. That makes them great options for those seeking to boost their passive income this month.

Matthew DiLallo has positions in Blackstone, Brookfield Infrastructure Corporation, Brookfield Infrastructure Partners, Intel, Kinder Morgan, and W.P. Carey and has the following options: short November 2022 $55 calls on Intel and short October 2022 $35 puts on Walgreens Boots Alliance. The Motley Fool has positions in and recommends Blackstone, Intel, and Kinder Morgan. The Motley Fool recommends Brookfield Infra Partners LP Units, Brookfield Infrastructure Corporation, and Brookfield Infrastructure Partners and recommends the following options: long January 2023 $57.50 calls on Intel and short January 2023 $57.50 puts on Intel. The Motley Fool has a disclosure policy.

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