3 Dividend Stocks I Plan to Invest $250 Into This Week for Passive Income

Key Points

• Coca-Cola has raised its dividend every year for more than 60 consecutive years.

• Brookfield Renewable has grown its dividend at a 6% compound annual rate since 2001.

• W.P. Carey is back on track with increasing its dividend.

• 10 stocks we like better than Brookfield Renewable ›

I aim to achieve financial independence through passive income. My strategy is to expand my income streams until they cover my basic living expenses. One part of my plan is to contribute $250 to my brokerage account each month to buy high-yield dividend stocks.

With my next monthly transfer scheduled for later this week, I plan to use the cash to purchase more shares of Coca-Cola (NYSE: KO), Brookfield Renewable (NYSE: BEP)(NYSE: BEPC), and W.P. Carey (NYSE: WPC). Here's why I believe they are great dividend stocks to buy for passive income.

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Satisfying income seekers for six decades

Coca-Cola has been an extremely reliable dividend stock. It has increased its dividend payout for 63 consecutive years, earning a place among the elite Dividend Kings -- companies with at least 50 years of continuous dividend growth. The global beverage leader currently yields over 3%, more than twice the S&P 500's yield (below 1.2%).

The iconic beverage company backs its dividend with durable and steadily rising cash flow. Coca-Cola currently pays out about 73% of its adjusted free cash flow after capital expenditures in dividends. The remaining surplus enables the company to maintain its strong balance sheet. It also uses its financial flexibility to repurchase shares and make acquisitions.

Coca-Cola expects its capital investments to help support 4% to 6% annual organic revenue growth and 7% to 9% earnings-per-share growth over the long term. Future acquisitions could help further boost these results. Since 2016, a quarter of the company's earnings growth has come from acquisitions. Coca-Cola's rising earnings and cash flows should enable it to continue increasing its high-yielding dividend.

A high-powered dividend stock

Brookfield Renewable has delivered impressive income growth over the decades. This global renewable energy producer has increased its dividend at a 6% compound annual rate since 2001. Today, its payout yields over 4%.

The clean power producer generates very stable and steadily rising cash flows. It sells over 90% of the electricity it produces to utilities and large corporations under long-term power purchase agreements (14-year remaining term), most of which link rates to inflation (70% of its revenue). These contracts should increase Brookfield's funds from operations (FFO) by 2% to 3% annually. Meanwhile, with power prices growing faster than inflation due to surging demand, Brookfield should be able to sign even more lucrative contracts in the future. This catalyst should add 2% to 4% to its FFO per share each year.

Additionally, Brookfield expects to invest billions of dollars in the coming years to expand its portfolio via development projects and acquisitions. These growth catalysts should help boost its FFO-per-share growth rate above 10% annually. This outlook easily supports Brookfield's plan to increase its high-yielding payout at a 5% to 9% annual rate over the coming years.

Building back even better

W.P. Carey had increased its dividend every year for a quarter of a century. That streak ended in late 2023. The diversified real estate investment trust (REIT) reset its dividend payment to better align with its cash flows following a strategic decision to exit the office sector.

The REIT has spent the past couple of years slowly rebuilding its portfolio and dividend. It has recycled the capital from office and other non-core property sales into new properties with better long-term growth drivers, such as industrial real estate. It has already spent $1.3 billion on new properties this year, putting it on track to meet its full-year forecast of investing between $1.4 billion and $1.8 billion.

These new investments are growing the REIT's adjusted FFO per share, which is on track to increase by about 4.5% this year. This earnings growth has enabled the REIT to steadily increase its dividend. It has raised its payment every quarter since the start of 2024, including by 4% over the past 12 months. As a result, its dividend yield is now over 5%. That steady growth should continue as W.P. Carey expands its real estate portfolio.

Top-notch passive income investments

Coca-Cola, Brookfield Renewable, and W.P. Carey are ideal dividend stocks to buy for passive income. They pay high-yielding and steadily rising dividends backed by durable and growing cash flows. That's why I plan to invest another $250 across this trio this week as I continue to grow my sources of passive income.

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Matt DiLallo has positions in Brookfield Renewable, Brookfield Renewable Partners, Coca-Cola, and W.P. Carey. The Motley Fool recommends Brookfield Renewable and Brookfield Renewable Partners. The Motley Fool has a disclosure policy.