I’m about to get a big cash infusion in my portfolio. Last year, private equity giant Blackstone agreed to buy one of my holdings, Retail Opportunity Investments Corp., in an all-cash deal. That transaction should close soon.
As a result of that sale, I’ll lose the dividend income that the real estate investment trust (REIT) produced. That’s why I plan to quickly redeploy that cash across several other income-generating investments. Among the dividend stocks I can’t wait to buy are Vici Properties (VICI -0.70%), Medtronic (MDT 0.16%), and Enbridge (ENB -0.33%). This trio of higher-yielding dividend stocks will enable me to generate more passive income each year than I was collecting from Retail Opportunity Investments Corp., which is why I can’t wait to buy them.
A low-risk wager with a big payoff
Vici Properties is a REIT focused on experiential real estate, like gaming, hospitality, and entertainment destinations. It owns several iconic properties, including Caesars Palace Las Vegas and the Venetian Las Vegas. It leases these and other properties to operating tenants under long-term triple net leases (NNN). Those leases provide it with very stable rental income because its tenants cover all operating costs, including routine maintenance, building insurance, and real estate taxes. Meanwhile, a growing percentage of its leases escalate rents at rates tied to inflation. The figure stood at 40% last year and will rise to 90% by 2035. As a result, its rental income grows each year.
The REIT pays out about 75% of its stable income through a dividend that currently yields 5.8%, several times higher than the S&P 500‘s 1.2% dividend yield. It retains the rest to help fund new income-generating property investments. Vici also has an investment-grade balance sheet, giving it additional financial flexibility to continue investing in new experiential properties.
Vici Properties has steadily expanded its portfolio, which has allowed it to increase its high-yielding dividend. It has raised its payout in all seven years since its formation, growing it at a peer-leading 7% compound annual rate. It has lots of ways to continue growing, including acquisitions, funding expansion projects at its existing properties, and providing financing to experiential property developers. Continued new investments and rent growth should enable the REIT to keep increasing its dividend and supplying me with more passive income.
A very healthy dividend stock
Medtronic pays a high-yielding dividend, currently at 3.1% and steadily rising. The medical technology giant has increased its payout for 47 straight years. It has grown its dividend at an impressive 16% compound annual rate during that period.
The company’s diversified portfolio of medical technology products and solutions generates lots of free cash flow. Medtronic aims to return at least half its free cash flow to shareholders each year through dividends and share repurchases. It sent them $5.5 billion in its 2024 fiscal year.
Medtronic retains the rest of its excess cash to maintain a very healthy financial profile. It had nearly $8 billion of cash and investments on its balance sheet at the end of last quarter. That gives it the financial flexibility to make acquisitions as opportunities arise. Medtronic also invests heavily in research and development to expand its product portfolio organically. These growth-related investments should enable the company to continue increasing its cash flow so that it can keep raising the dividend.
Ample fuel to continue growing its dividend
This year will be the 30th year Enbridge has increased its dividend, which currently sits at a 5.9% yield. The Canadian pipeline and utility company pays one of the most reliable dividends in the energy sector.
The company’s low-risk business model is a big driver of its dividend stability. About 98% of its earnings come from steady cost-of-service or fee-based assets. Enbridge’s business is so predictable that it was on pace to deliver its 19th straight year of achieving its annual financial guidance in 2024.
Enbridge is in an excellent position to continue growing its high-yielding dividend in the future. The company has a very conservative financial profile, with a 60%-70% dividend payout ratio and a leverage ratio toward the lower half of its target range. That gives it lots of financial flexibility to fund expansion projects and bolt-on acquisitions. Enbridge currently has a multi-billion-dollar backlog of secured capital projects that should come online and contribute incremental cash flow through 2029. That fuels the company’s view that it can deliver 3% to 5% annual cash flow per share growth over the medium term, which should support a similar dividend growth rate.
Excellent passive income producers
Vici Properties, Medtronic, and Enbridge have the characteristics I love to see in income-focused investments. They offer higher-yielding income streams backed by low-risk business models and rock-solid financial profiles. They also have long records of increasing their payouts, which should continue. That’s why I can’t wait to buy more of each one with my upcoming cash infusion.
Matt DiLallo has positions in Blackstone, Enbridge, Medtronic, Retail Opportunity Investments Corp., and Vici Properties. The Motley Fool has positions in and recommends Blackstone, Enbridge, and Retail Opportunity Investments Corp. The Motley Fool recommends Medtronic and Vici Properties and recommends the following options: long January 2026 $75 calls on Medtronic and short January 2026 $85 calls on Medtronic. The Motley Fool has a disclosure policy.
