Want to Make More Passive Income? These 2 Dividend Stocks Offer Yields Above 6%
If you’re looking for ways to increase your passive income, high-yield dividend stocks can be a great option. The best dividend stocks not only offer attractive yields but also have the potential to grow over time, ensuring a steady stream of income.
Two stocks that stand out in this category are Energy Transfer (NYSE: ET) and Clearway Energy (NYSE: CWEN) (NYSE: CWEN.A). Both offer dividend yields above 6%, significantly higher than the S&P 500’s modest 1.2% average yield. Even better, these companies are poised to increase their payouts in the coming years, making them strong candidates for investors seeking consistent income growth.
Energy Transfer: A Reliable High-Yield Play
Current Yield: 6.2%
Energy Transfer, a leading midstream energy company, currently offers a 6.2% dividend yield. That means every $100 invested could generate $6.20 annually in passive income—far surpassing the S&P 500 average.
What makes Energy Transfer a strong dividend stock? The company generates about 90% of its earnings from stable, fee-based contracts, providing reliable cash flow. Additionally, it maintains a conservative payout ratio of just over 50% of its free cash flow and has a strong balance sheet with a leverage ratio trending toward the lower end of its target range (4 to 4.5 times EBITDA).
Energy Transfer’s long-term growth strategy includes a $2.5 billion to $3.5 billion annual capital investment in expansion projects, such as the recently approved $2.7 billion Hugh Brinson Pipeline. Additionally, its Lake Charles LNG project and strategic acquisitions—like the recent WTG Midstream purchase—position the company for future earnings growth.
The company has committed to increasing its distribution by 3% to 5% annually, making it a compelling option for income-focused investors comfortable with MLP investments and their tax implications (including receiving a Schedule K-1 form).
Clearway Energy: A Renewable Powerhouse with a Strong Dividend
Current Yield: 6.5%
Clearway Energy, a clean energy infrastructure company, provides a stable 6.5% dividend yield. The company generates revenue by selling power from its renewable energy and natural gas facilities through long-term contracts with utilities and corporate clients. This steady income stream ensures dividend sustainability.
Clearway has been actively reinvesting capital from asset sales into new renewable energy projects, leading to consistent cash flow growth. The company plans to grow its dividend by 6.8% in 2025 and 6.5% in 2026, backed by its strong cash flow and disciplined payout ratio of 70% to 80%.
Looking further ahead, Clearway aims to fund future dividend increases using retained earnings and balance sheet flexibility. With demand for renewable energy rising, the company has plenty of opportunities to invest in new projects, supporting its goal of 5% to 8% annual dividend growth over the long term.
High-Yield Stocks for Growing Passive Income
Energy Transfer and Clearway Energy both offer investors a high-yield opportunity with the potential for long-term growth. Their stable cash flows and strong financial strategies make them attractive options for generating consistent passive income. By investing in these stocks, you can build a portfolio that not only provides immediate returns but also grows over time.
If you’re looking for dividend stocks with yields above 6% and room for future growth, these two companies deserve a spot on your watchlist.
