If you’re looking for a way to grow your passive income, dividend stocks are a great option. Many companies pay dividends that far exceed the S&P 500 average of less than 1.5%. Right now, Dominion Energy, Western Midstream Partners, and Chevron are three attractive high-yield stocks worth considering. Each offers a generous payout and long-term potential.
Dominion Energy: A Stable Utility with a Solid Yield
Analyst: Reuben Gregg Brewer
Dominion Energy (NYSE: D) is going through a transformation, but it remains a stable, regulated utility. In recent years, the company had an overly complex business model. To simplify things, Dominion sold off several assets, including pipelines and natural gas utilities. Today, it’s focused mostly on its electric utility business in regions that offer strong demand.
Right now, Dominion offers a dividend yield of 4.8%, much higher than the 2.9% utility sector average. The company has confirmed that the dividend is safe, even though it is not increasing at the moment. That’s because Dominion is prioritizing financial stability and a lower payout ratio.
The company is targeting a healthier balance sheet. Earnings are expected to grow between 5% and 7% per year, which should eventually lead to renewed dividend growth. Once Dominion reduces its payout ratio below 70%, shareholders could see more consistent increases.
In the meantime, investors benefit from an above-average dividend while the turnaround progresses.
Western Midstream Partners: A Nearly 10% Yield You Can Trust
Analyst: Matt DiLallo
Western Midstream Partners (NYSE: WES) is a master limited partnership (MLP) with a focus on midstream energy services. It owns and operates infrastructure that gathers, processes, and transports oil and gas. Much of its income comes from long-term contracts, creating steady, fee-based cash flows.
The most eye-catching part? Its dividend yield sits near 9.5%. That might seem risky, but in this case, it’s backed by strong financials.
Western Midstream expects to generate $1.3 billion to $1.5 billion in free cash flow this year. That’s more than enough to fund both its current dividend and planned investments for future growth. Its balance sheet is healthy too, with a leverage ratio below 3.0, which gives it the room to invest in new projects or make acquisitions.
The company recently increased its distribution by 4% and believes it can grow the payout slowly over time. It aims for organic investments that deliver returns in the mid-teens and looks for strategic acquisitions to expand its business.
One note for potential investors: Western Midstream sends a Schedule K-1 tax form, which is standard for MLPs and can make taxes slightly more complicated.
Chevron: A Reliable Dividend Giant on Sale
Analyst: Neha Chamaria
Chevron (NYSE: CVX) is a leading oil company, and its stock has recently dropped about 20% due to lower oil prices. That has pushed the dividend yield to 5%, making it a strong buy for income investors.
Chevron has an outstanding record of dividend growth. It has raised its dividend for 38 consecutive years, including a 5% increase earlier in 2024. The company returned a record $27 billion to shareholders in 2024, with $11.8 billion of that coming in the form of dividends.
Looking ahead, Chevron expects its oil production to grow at a 6% compound annual rate through 2026. That should bring in an additional $9 billion in free cash flow if Brent crude prices stay around $60 per barrel. If Chevron successfully acquires Hess and gains a stake in Guyana’s oil-rich Stabroek Block, cash flows could rise even faster.
Even without the Hess deal, Chevron’s strong cash flow and consistent dividend policy make it a top-tier dividend stock. It offers both yield and stability, ideal for long-term investors seeking passive income.
Conclusion
All three of these companies offer high yields and unique advantages:
- Dominion Energy provides a secure dividend with future growth potential.
- Western Midstream pays a very high dividend backed by strong cash flow.
- Chevron offers reliability and a long track record of dividend increases.
Each company has a different risk profile, but all three are solid picks for boosting your passive income today.
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