Investing $10,000 in This Basket of Dividend Stocks Should Give You $550 in 2022 Income – Motley Fool
Most investors buy a stock hoping its share price goes up over time. Stocks that pay dividends provide a cherry on top of this underlying investment thesis. However, income stocks flip the script. With high-yield dividend stocks, the dividend is the ice cream, and if the stock price goes up that’s the cherry on top.
If you invest $10,000 into equal parts of Kinder Morgan (NYSE:KMI), Clearway Energy (NYSE:CWEN), and Schweitzer-Mauduit (NYSE:SWM) you should earn $550 in 2022 income. Here’s what makes each dividend stock a great buy now.
The more boring, the better
Daniel Foelber (Kinder Morgan): Pipeline behemoth Kinder Morgan is unlikely to wow growth-orientated investors with its stable, high-cash-flow business model. But what it lacks in flair it makes up for with one of the highest dividend yields of any S&P 500 member.
With a yield of 6.7%, Kinder Morgan’s dividend isn’t merely chump change. Rather, it is essentially the full investment thesis for buying the stock. Kinder Morgan’s share price hasn’t done much in recent years as the natural gas industry faces short-term and long-term challenges — namely the energy transition. Kinder Morgan’s response to this threat is to simply invest in safe options like pipelines in oil and gas fields that desperately need higher takeaway capacity. These new investments, as well as acquiring existing assets on the cheap, can generate a lot of free cash flow (FCF), which Kinder Morgan can then use to buy back shares and raise its dividend.
Even as the world embraces electrification, there is still likely going to be a need for Kinder Morgan’s infrastructure for decades to come. The transportation and storage of natural gas is a critical element that fuels the industrial economy. Income investors looking for high-yield dividend stocks are mostly concerned with a company’s ability to pay and raise its dividend, not the stock price itself. Given Kinder Morgan’s low spending, vast existing portfolio, and much-improved balance sheet, the company is better suited than its peers to pay and raise its dividend over time. Investors looking to generate low-tax income from dividends in 2022 should look no further than Kinder Morgan.
A green way to passively collect plenty of green
Scott Levine (Clearway Energy): Interested in electrifying your passive income stream next year? You’re not alone. Many of us get charged up at the prospect of getting paid for doing nothing. But the opportunity to feel that your investment is also …….
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