Hundreds of stocks pay a dividend, and it can be easy to overlook some great options.
Three impressive ones that many investors probably have yet to hear about are Atlantica Sustainable Infrastructure(NASDAQ: AY), Delek Logistics Partners(NYSE: DKL), and Getty Realty(NYSE: GTY). These smaller companies offer higher dividend yields and have excellent track records of increasing their payouts, which should continue in the future. That makes them great options for those seeking to generate some passive income.
A sustainable income stream
Atlantica Sustainable Infrastructure operates a growing portfolio of cleaner power and water assets. They generate fairly stable cash flow backed by long-term contracts and government-regulated rate structures. That gives Atlantica the funds to pay an attractive dividend that currently yields 6.4%, several times above the S&P 500's 1.6% dividend yield.
The company has a solid balance sheet with lots of liquidity, giving it the flexibility to continue expanding its portfolio. Atlantica has secured $150 million of new investments in the third quarter, including adding a 100-megawatt-hour battery system to its geothermal plant in California and buying an operating solar energy project in Chile, where it will add battery storage capacity. These investments will help grow its cash flow in the coming years.
The company has multiple sources of future growth, including expanding existing assets, working with strategic partners on development projects, and acquiring assets from third parties. Those future investments should enable Atlantica to grow its cash flow and dividend. Atlantica has steadily grown its payout since rebranding and resetting its dividend in 2017, increasing it an impressive 15 times.
As consistent as they come
Delek Logistic Partners is a midstream master limited partnership (MLP) that supports refinerDelek US (NYSE: DK). It also has a growing third-party oil and gas gathering and storage business. Most of its assets generate predictable cash flow backed by long-term contracts with Delek and other customers. That gives it the funds to pay a hefty 7%-yielding distribution.
Delek Logistic Partners has an impressive track record of growing its distribution. The MLP delivered its 39th straight quarter of distribution growth earlier this year.
The MLP expects to have the fuel to continue growing its distribution in the future. It ended the quarter with a distribution coverage ratio of 1.62. That gives it a nice cushion while enabling it to retain earnings to strengthen its balance sheet and fund growth opportunities as they arise. Delek ended the period with a solid leverage ratio of 4.35, allowing it to borrow money as needed. Meanwhile, the company should be able to continue finding attractive investment opportunities. It can acquire logistics assets owned by Delek and third parties and invest in organic expansion projects. That should give it the fuel to continue growing its payout in the future.
Plenty of fuel to keep growing the payout
Getty Realty is a real estate investment trust (REIT) focused on owning properties where people spend money in or on their cars, like gas stations, car washes, and auto service centers. It leases those properties to operators under long-term contracts that supply it with very stable rental income that helps support its 5.3%-yielding dividend.
Getty Realty has grown its dividend at an impressive 5.4% compound annual rate since 2015. Three catalysts have helped drive Getty's growing dividend: contractual rental rate escalation clauses, acquisitions, and redevelopment projects. Rents rise at a 1.6% annual rate on average. Meanwhile, the company has spent about $800 million to acquire over 300 properties since 2016 while completing more than two dozen high-return redevelopment projects.
The company has committed to investing over $150 million to develop or acquire 44 convenience stores, auto service centers, and car wash properties. These and other future investments should help grow Getty's rental income, enabling it to continue increasing its dividend.
Attractive options for income seekers
Atlantica Yield, Delek Logistics Partners, and Getty Realty have flown under the radar of most investors, who are missing out on these impressive dividend stocks. They offer high-yielding dividends that these companies have steadily increased over the years. With more dividend growth likely, passive income-seeking investors will want to take a closer look at this trio.
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Matthew DiLallo has positions in Atlantica Sustainable Infrastructure plc. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
