Got $1,000? Here’s how to turn it into a high-octane passive income stream.

Owning dividend paying stocks can be a great way to generate passive income. The average value of dividends is approximately 1.5%. At this rate, an investment of $1,000 would produce dividend income of about $15 each year.

You can supercharge your dividend income by investing in stocks with higher dividend yields. Pipe stocks they are great for those looking for a higher octane income stream. Kinder Morgan (KMI 1.56%), Williams (WMB 0.91%)and One ok (Okay 2.53%) are three top options for those looking for a profitable and growing stream of passive income from the sector.

A top ten income stream

Kinder Morgan operates the nation’s largest natural gas transmission network. It is also a major refined products carrier and terminal operator, one of the largest carriers of carbon dioxide in the country, and has a growing renewable natural gas production business.

These businesses generate a very stable cash flow. About 68% of its cash flow comes from take-or-pay and hedge contracts, meaning Kinder Morgan is paid the contract rate regardless of commodity prices or volumes. Meanwhile, the majority of the rest of its cash flows are fee-based and have only volume risk.

Kinder Morgan expects to generate about $5 billion in cash this year, $2.6 billion of which it expects to pay out in dividends. It uses the money it keeps to fund expansion projects and maintain a strong financial position. The company’s growth projects will increase its cash flow, giving it more fuel to pay dividends. It at present has a dividend yield of almost 5.5%, one of 10 the highest in S&P 500. That means you could collect about $55 in passive income every year of every $1,000 invested in its shares. It had its seventh straight year of dividend hikes earlier this year.

Decades of dividends

Williams is a leader in natural gas infrastructure. It handles about a third of all the gas used in the country each year. It operates the nation’s largest interstate gas pipeline by volume and operates fee-based gathering and processing assets in a dozen key supply areas.

The pipeline giant’s operations generate significant and stable cash flows. It is expected to generate about $5 billion in cash this year. That’s enough to cover its dividend (which yields over 4%) more than twice.

Williams has paid dividends for 50 consecutive years. It has grown its payout at a compound annual growth rate (CAGR) of 6% since 2018. It should have enough fuel to keep raising its dividend going forward.

This view is motivated by the growing demand for natural gas. This has enabled the company to secure several expansion projects that give it visibility into cash flow growth through 2027. It has many other projects under development that could further expand its growth prospects. in the future.

A quarter century of dividend stability and growth

Oneok is one of the largest diversified energy infrastructure companies in the country. It has an extensive network of natural gas liquids, natural gas, refined products, and crude oil pipelines and related assets. These average assets generate very predictable fee-based cash flow.

The pipeline company’s stable assets have allowed it to pay a very sustainable dividend. Oneok has delivered over 25 years of dividend stability and growth. He increased his pay by a peer-leading rate of over 150% over the last one 10 years.

Oneok has significantly improved its ability to continue to increase its dividend in the future. It completed a transformational deal last year, acquiring Magellan Midstream Partners in a nearly $19 billion deal. The highly attractive transaction enhanced its diversification. The company expects the transaction to be accretive to free cash flow per share mediation more than 20% by 2027. This helps fuel its view that it can grow its dividend (which yields more than 4%) by 3% to 4% annually.

The company further enhances its growth profile by achieving another $5.9 billion in purchases this year. It acquires Medallion Midstream and a stake EnLink Midstream. Eventually, it plans to buy the remaining interest in EnLink from public investors. These investments will further increase free cash flow per share, providing additional fuel to increase its dividend in the future.

Your Pipeline to Passive Income

Kinder Morgan, Williams and Oneok generate very stable cash flow. This gives them cash to pay attractive dividends and invest in the growth of midstream networks, which should fuel future dividend increases. These features make them ideal options for investors looking for a high-value income stream.