3 Potential Future Dividend Kings to Buy and Hold for Growing Passive Income

Key Points

• Chevron has the second-longest dividend growth streak in the oil industry at 38 straight years.

• Enbridge has increased its dividend every year over the past three decades.

• Realty Income has raised its monthly dividend for over 30 consecutive years.

• 10 stocks we like better than Chevron ›

Dividend Kings have proven their reliability over the decades. This elite group of companies has increased its dividend payments for at least 50 straight years. It's a select list, with only 56 companies currently qualifying as Dividend Kings.

Three stocks appear well on their way to becoming Dividend Kings: Chevron (NYSE: CVX), Enbridge (NYSE: ENB), and Realty Income (NYSE: O). With more dividend growth ahead, these higher-yielding stocks are excellent choices for those seeking to generate a steadily rising stream of passive income.

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A high-octane dividend stock

Earlier this year, Chevron extended its dividend growth streak to 38 consecutive years -- the oil sector's second-longest. That's impressive considering the industry's volatility.

Chevron supports its over 4% dividend yield with one of the sector's most durable portfolios. With a breakeven level at about $30 per barrel, Chevron can generate substantial cash flow even when oil prices are low. This resilience enables the company to invest in growing its business while consistently returning money to shareholders.

The oil company also has one of the strongest balance sheets in the industry. Its leverage ratio is currently under 15%, which is below its target range of 20%-25% and near the low end of its peer group average.

Chevron's long-term growth outlook has improved following its recent acquisition of Hess, which enhances its resource base and extends its production and free cash flow growth profile into the 2030s. The company is also investing in lower-carbon initiatives such as lithium extraction, carbon capture and storage, and hydrogen, aiming to diversify and futureproof its earnings. These initiatives, alongside a disciplined financial approach, position Chevron to potentially sustain and grow its dividend for many more years to come.

A model of stability

Enbridge has paid dividends for over 70 years and has increased its payout for the last 30 consecutive years. The Canadian pipeline and utility operator earns 98% of its revenue from reliable and predictable cost-of-service agreements and long-term contracts. This setup minimizes exposure to fluctuations in commodity prices and volumes.

The energy infrastructure company pays 60% to 70% of its steady cash flow in dividends, and currently has a yield of 5.5%. It invests the remainder in organic expansions and bolt-on acquisitions. Enbridge also has a solid investment-grade balance sheet, which enables it to maintain flexibility to pursue new growth opportunities.

Enbridge expects continued growth supported by its multi-billion-dollar backlog of capital projects, which includes expanding its oil and gas pipelines, utility growth projects, and new renewable energy assets. The company is also pursuing opportunities in carbon capture and blue ammonia. Enbridge expects to deliver around 5% annual earnings growth over the long term, which it anticipates will support a similar pace of yearly dividend increases.

As dependable as it gets

Realty Income has been a very reliable income stock. The real estate investment trust (REIT) has increased its monthly dividend 132 times since its public market listing in 1994, including annual raises in each of its more than three decades as a public company.

Realty Income's diversified portfolio -- covering retail, industrial, gaming, and other properties -- generates reliable cash flow. Its properties operate under long-term net leases, which require tenants to cover all property expenses. It allocates about 75% of its steady cash flow toward paying dividends, with the remainder invested in additional income-generating real estate. Realty Income also has one of the strongest balance sheets in the REIT sector, giving it ample financial flexibility for future investments.

Realty Income estimates that there's $14 trillion of real estate suitable for the net lease structure across its core focus areas. That provides the REIT with a very long runway to continue growing its portfolio and dividend payments.

Steadily moving toward the throne room

Chevron, Enbridge, and Realty Income stand out as likely future Dividend Kings. They have already proven their ability to increase their dividends over several decades. Their combination of financial strength and visible earnings growth profiles makes them smart stocks to buy for those seeking to create durable, rising passive income. These dynamic income powerhouses could help you fortify your financial future.

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Matt DiLallo has positions in Chevron, Enbridge, and Realty Income. The Motley Fool has positions in and recommends Chevron, Enbridge, and Realty Income. The Motley Fool has a disclosure policy.