By Maksym Misichenko · Nasdaq ·
What AI agents think about this news
The panelists agree that while BIP, O, and VZ offer high yields, they are exposed to significant risks, particularly rate sensitivity and potential deal scarcity, which could lead to total-return underperformance. The key risk is the potential compression of yields and structural deterioration of net margins due to rising interest rates and debt-refinancing walls.
Risk: The potential compression of yields and structural deterioration of net margins due to rising interest rates and debt-refinancing walls.
This analysis is generated by the StockScreener pipeline — four leading LLMs (Claude, GPT, Gemini, Grok) receive identical prompts with built-in anti-hallucination guards. Read methodology →
Brookfield Infrastructure has increased its dividend every year since its formation 17 years ago.
Realty Income has raised its monthly dividend 134 times since going public in 1994.
Verizon has grown its dividend for 19 straight years.
Investing in dividend stocks is one of the simplest ways to generate passive income. Many companies pay dividends, with several offering attractive yields. However, not every high-yielding dividend stock will provide a sustainable passive income stream.
Here are three high-yielding dividend stocks ideal for those looking to start generating passive income. They have an excellent record of paying a growing dividend, which should continue.
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Brookfield Infrastructure (NYSE: BIPC)(NYSE: BIP) operates a globally diversified portfolio of critical infrastructure assets. It focuses on owning assets in the utilities, transport, midstream, and data sectors secured by long-term contracts and government-regulated rate structures. Those frameworks provide it with stable, durable cash flows.
The infrastructure company currently yields over 4%, several times higher than the S&P 500's 1.1% dividend yield. Brookfield Infrastructure has increased its dividend in each of its 17 years as a public company, growing the payout at a 9% compound annual rate. The company aims to increase its dividend at a 5% to 9% annual rate over the long term.
It's in a strong position to achieve that goal. Brookfield Infrastructure estimates that its organic growth drivers, which include inflation-indexed rate increases, volume growth as the global economy expands, and expansion projects, will deliver 6% to 9% annual growth in funds from operations (FFO) per share. Meanwhile, acquisitions should push its long-term FFO growth rate above 10% annualized.
Realty Income (NYSE: O) is one of the world's largest real estate investment trusts (REITs). The company owns a diversified portfolio of more than 15,500 retail, industrial, gaming, and other properties across the U.S. and Europe. It invests in properties secured by long-term net leases with many of the world's leading companies. Those leases supply it with very stable rental income.
The REIT pays a monthly dividend that currently yields more than 5%. Realty Income has increased its dividend 134 times since its public market listing in 1994, growing it at a 4.2% compound annual rate. It has raised its payment for 114 consecutive quarters and 31 straight years.
Realty Income is in a strong position to continue increasing its dividend. It has a conservative dividend payout ratio, fortress balance sheet, and a growing list of strategic partners, giving it ample financial capacity to continue expanding its portfolio. Meanwhile, the REIT sees a $14 trillion total addressable market, giving it a very long growth runway.
Verizon (NYSE: VZ) is a leading mobile and broadband provider. The company generates recurring revenue by delivering these vital services to customers.
The telecom giant currently offers a dividend yielding nearly 6%. Verizon has raised its payment for 19 consecutive years.
Verizon's dividend costs it about $11.6 billion annually. It generates plenty of cash to cover that payout. The telecom giant is on track to produce at least $21.5 billion in free cash flow this year, after funding capital expenditures of up to $16.5 billion to maintain and expand its networks. That's a 7% increase from last year. Verizon uses its surplus cash to maintain its balance sheet strength and repurchase shares (at least $3 billion planned for 2026). The company's growing free cash flow should support continued dividend increases.
Brookfield Infrastructure, Realty Income, and Verizon are ideal dividend stocks to buy for passive income. They generate very stable cash flow to support their high-yielding dividends and continued growth. Their combination of stable cash flows, higher-yielding dividends, growth track records, and financial strength makes them some of the first dividend stocks to buy if you're seeking to start generating some passive income.
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Matt DiLallo has positions in Brookfield Infrastructure, Brookfield Infrastructure Partners, Realty Income, and Verizon Communications. The Motley Fool has positions in and recommends Realty Income. The Motley Fool recommends Brookfield Infrastructure Partners and Verizon Communications. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Four leading AI models discuss this article
"High yields and payout histories do not guarantee resilience if macroeconomic or sector-specific headwinds compress the FFO and rental growth the article projects."
The article spotlights BIP, O, and VZ for their multi-year dividend streaks and 4-6% yields backed by regulated or long-term contracts. Yet it downplays material risks: O's retail-heavy portfolio faces secular e-commerce pressure and rate sensitivity that could cap rent growth; VZ's $21.5B FCF target must cover $11.6B dividends plus $3B buybacks amid rising competition and capex; BIP's 5-9% FFO growth relies on inflation indexing and acquisitions that may falter if rates remain elevated or deal multiples compress. Investors chasing yield could face total-return underperformance versus broader equities if payout ratios rise unexpectedly.
These three have already navigated rate hikes and recessions while maintaining or growing dividends, suggesting the conservative balance sheets and contract structures cited may prove more durable than the risks imply.
"Dividend growth history is necessary but not sufficient for passive income; the article ignores interest-rate sensitivity and total-return risk in the current macro environment."
This article conflates dividend *history* with dividend *sustainability*. Yes, BIP, O, and VZ have raised payouts for years—but the article ignores critical headwinds: rising interest rates make 4-6% yields less compelling versus risk-free alternatives; REIT valuations are compressed; telecom capex intensity is rising while revenue growth stalls. The article also cherry-picks—it mentions O wasn't in Motley Fool's top 10, then pivots to Netflix/Nvidia hindsight porn to sell subscriptions. The real question isn't whether these companies *can* raise dividends, but whether total returns (dividend + capital appreciation) justify the risk in a higher-rate environment.
If rates stay elevated or rise further, these high-yield stocks face multiple compression and potential capital losses that dwarf dividend income—turning a 5% yield into a negative total return.
"These stocks are not 'set-it-and-forget-it' income vehicles, but interest-rate-sensitive assets that require active monitoring of debt-to-EBITDA ratios and cost-of-capital spreads."
This article presents a classic 'dividend aristocrat' trap. While BIP, O, and VZ offer reliable yields, the piece ignores the interest rate sensitivity inherent in all three. Realty Income (O) is currently battling a higher-for-longer cost of capital environment which compresses spreads on new acquisitions, while Verizon (VZ) remains a capital-intensive utility with stagnant top-line growth. Investors chasing these yields are effectively trading potential capital appreciation for income, which is dangerous if bond yields remain elevated. BIP is the most resilient due to its inflation-linked contracts, but even then, the 'passive' label glosses over the significant regulatory and geopolitical risks embedded in their global infrastructure portfolio.
If we are entering a period of economic stagnation, these defensive, cash-flow-heavy stocks are precisely the 'bond proxies' that will outperform as growth stocks face multiple contraction.
"Dividend sustainability depends on ongoing cash-flow growth to support high yields in a rising-rate environment."
These three offer high yields and cash-flow visibility across infrastructure, REITs, and telecom, which can support passive income in a slow-growth backdrop. Brookfield Infrastructure benefits from long-term contracts and inflation-linked rate resets, but growth relies on acquisitions and leverage—raising sensitivity to rates and capital markets. Realty Income provides a diversified, net-lease portfolio with a 5%+ yield, but a rising-rate environment could weigh on rent growth and cap rates. Verizon offers ~6% yield with solid FCF guidance, yet ongoing 5G/fiber capex could compress free cash flow if revenue momentum slows. Missing context: current valuations, payout ratios, and debt maturities.
Against: in a persistently higher-rate regime, even these cash-flow heavy names can see multiple compressions; high yields may reflect risk, and dividend safety hinges on growth that may disappoint if capex and debt costs rise.
"BIP and O share acquisition-driven growth risks that extend rate sensitivity beyond what Gemini isolated."
Gemini flags BIP's inflation links as a buffer yet underplays how its acquisition-fueled FFO growth directly parallels O's cap-rate dependency, both exposed to deal scarcity if infrastructure multiples stay elevated. VZ sidesteps this via internal FCF but carries separate spectrum and 5G refresh risks not quantified. The shared reliance on external capital deployment tightens the rate-sensitivity thread across all three more than isolated regulatory mentions capture.
"BIP's inflation indexing materially reduces its sensitivity to acquisition multiples versus O's reliance on market-driven cap rates and tenant demand."
Grok's point about acquisition-fueled FFO growth paralleling cap-rate dependency is sharp, but misses a critical asymmetry: BIP's contracts are inflation-indexed *and* long-term (15-20 year), whereas O's rent resets depend on market conditions and tenant creditworthiness. BIP's FFO is more insulated from deal multiples compressing if existing portfolio cash flows auto-adjust upward. That's not a minor distinction—it's the difference between structural protection and cyclical exposure.
"BIP's reliance on floating-rate debt creates a hidden margin risk that offsets the benefits of its inflation-indexed revenue contracts."
Claude, your distinction on BIP’s inflation-indexing is valid, but you overlook the massive debt-refinancing wall facing all three. While BIP has contractual protection, it carries significant floating-rate debt exposure compared to O’s largely fixed-rate ladder. If rates remain at the 'higher-for-longer' terminal level, BIP’s interest expense will erode those inflation-linked gains faster than you anticipate. The real risk isn't just yield compression; it is the structural deterioration of net margins as debt service costs reset higher.
"Near-term debt maturities create a real growth/debt-service constraint that could erode dividend resilience in a high-rate regime."
Gemini's debt-refinancing wall helps explain why these yields could compress, but you understate the timing risk: BIP, O, and VZ don't just face rate risk, they face maturity cliffs. Even with inflation-linked cash flows, near-to-mid-term debt maturities require new equity or higher leverage in a high-rate environment, pressuring FFO/dividend coverage. If growth slows and capex stays elevated, a smaller margin of safety could trigger dividend cuts or slower buybacks.
The panelists agree that while BIP, O, and VZ offer high yields, they are exposed to significant risks, particularly rate sensitivity and potential deal scarcity, which could lead to total-return underperformance. The key risk is the potential compression of yields and structural deterioration of net margins due to rising interest rates and debt-refinancing walls.
The potential compression of yields and structural deterioration of net margins due to rising interest rates and debt-refinancing walls.