My 3 Best Dividend Stocks for Generating Passive Income

Earn money while you sleep. Or while you watch your favorite show. Or while you go out with friends. Or while… you get the picture. I’m talking, of course, about generating passive income.

There are many ways to generate passive income. One of the best is to buy stocks of big companies that pay attractive dividends. Here are my top three dividend stocks right now for generating passive income.

1. Devon Energy

Devon Energy (DVN -1.77%) offers an exorbitant dividend yield of almost 8.8%. It is more than 6 times more than the S&P500the dividend yield. Devon’s dividend is also one you can count on. The oil and gas company has paid a dividend for 29 consecutive years.

I think Devon currently ranks among the best high yielding dividend stocks in the market. Its dividend, however, is only one factor in my view. The stock also beat the broader stock market, jumping more than 30% year-to-date.

Devon also rewards shareholders through share buybacks. The company has repurchased $891 million of its stock so far in 2022. Its board recently expanded the share buyback program to $2 billion.

Of course, the current tailwinds for Devon won’t last forever. However, I think the company should continue to be a winner for investors for some time to come.

2. Enterprise Product Partners

Enterprise Product Partners (EPD 1.65%) stands out as another great source of passive income in the energy industry. The distribution yield of the midstream oil and gas company exceeds 7.6%. Enterprise has increased its distribution for 23 consecutive years.

Like Devon, Enterprise Products Partners has easily beaten major market indexes so far this year. Its shares are up nearly 20% since the start of the year.

Increased demand for crude oil and natural gas has benefited Enterprise. The company’s assets include more than 50,000 miles of pipelines and 24 natural gas processing facilities, as well as 19 deepwater docks.

But as a mid-market leader, Enterprise isn’t dependent on high fuel prices the way oil and gas producers are. The company’s business model helps ensure that the stock will hold up regardless of market conditions.

3. Medical Properties Trust

Medical Properties Trust (MPW 2.86%) increased its dividend for 10 consecutive years. The healthcare-focused real estate investment trust (REIT) is offering a dividend yield that now sits above 7.9%.

The bad news is that shares of Medical Properties Trust have not performed well in 2022. Shares are down almost 40%. But that’s not because the company’s underlying business is struggling.

Medical Properties Trust’s normalized operating funds jumped 15.6% year-over-year in the first quarter to $282 million. Net income nearly quadrupled to $632 million, driven primarily by acquisitions.

Chairman and CEO Ed Aldag said on Medical Properties Trust’s first quarter conference call in April that the company “is in the strongest position in its history.” This is not an exaggeration.

Medical Properties Trust has a healthy balance sheet which has been further strengthened by recent property divestments. It is also well positioned to weather high rates of inflation through annual cash rent increases built into its leases. Investors should easily generate significant passive income with these high yielding dividend stocks.

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