2 Top Dividend Stocks to Load Up On Right Now

We can't say the energy sector has been boring lately. It's been in the news often, and that's thanks to headlines both positive (the revival of the nuclear industry, for one) and negative (conflict in the Middle East).

On balance, though, many of its companies are doing quite well these days, thank you very much. In fact, several actually pay investors to own them in the form of dividends. Here are two such stocks: NextEra Energy (NYSE: NEE) and Enterprise Products Partners (NYSE: EPD).

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1. NextEra Energy

It's a good bet that the average American isn't aware of NextEra Energy, but they should be. The Florida-based company is on the way to becoming the largest electricity producer in the U.S., and one of the mightiest in the world. In May, it announced a splashy deal valued at $67 billion to acquire a peer, fellow industry incumbent Dominion Energy.

To be sure, this buyout won't close anytime soon. The utility industry is heavily regulated, as it directly affects a great many consumers and businesses, so the many approvals required to get the deal closed will take some time.

Nevertheless, when it does finally reach the finish line, it'll turn NextEra into the electricity company on the U.S. East Coast active in both traditional power generation and renewables. It also has a thriving business with large-scale battery storage, which is quite the up-and-coming segment in the market.

In terms of total operating capacity, NextEra's blend of traditional and green power generation leans heavily toward the latter, at around 63%. That makes for a good mix of a foundational, strongly regulated, but dependable business, and a commanding presence in the forms of generation that are only going to become more popular.

It also helps NextEra grow more sharply than many of its sector rivals. Over the past three years, annual revenue has climbed from $22.8 billion to $26.5 billion, which is impressive given how hard it can be to post meaningful growth in this industry. Profitability is a little more up and down but still robust, ranging from $6.8 billion to more than $7.3 billion over that stretch.

Although the capital expenditures needed to sustain and expand this business are considerable, NextEra's core operations generate significant operating cash flow. That, in turn, leaves plenty of room not only for the company's relatively high-yield dividend at 2.9%, but also for frequent increases to the same. In fact, the company's got a raise streak of 32 consecutive years.

Recent softness in NextEra's stock price indicates some investor worry that the payout might be under threat because of the monster price of the Dominion deal. To me, it's clear that management is well aware of the payout's appeal, and therefore will find a way to keep yield high and that raise streak alive.

2. Enterprise Products Partners

Although Enterprise is also a large and prominent member of the energy sector, it's quite a different animal from NextEra. Instead of producing power, it is a "midstream" company, i.e., it specializes in the transportation of materials such as crude oil and the products refined from it, natural gas, and natural gas liquids.

It also isn't structured the same way. Rather than operating as a traditional company that's owned by shareholders, it is a master limited partnership (MLP). The main advantage is that MLPs typically pay much of their distributable cash flow (DCF) -- operating cash flow minus maintenance capital expenditures -- in the form of dividends (or "distributions," in MLP-speak).

That's why MLPs typically boast rather high-yield dividends. Enterprise's yield these days approaches 6%; in fact, it hasn't dipped below 5% in more than a decade.

In our current period of energy price volatility, Enterprise and other pipeline companies look particularly attractive, as their business model doesn't depend on how much such commodities cost. They charge by volume and, since it's always wise for oil companies and the like to secure long-term partners in the transport field, usually operate under long-term contracts.

This shakes out into a steady, largely predictable business with clients that have committed for years and have the capital to pay for the services. That's why "operational" DCF (i.e., headline DCF adjusted for asset sales and other one-offs) has been so high, even growing, for years -- $7.9 billion last year, trailed by just under that figure in 2024, and $7.5 billion for 2023.

In its first quarter of this year, Enterprise's operational DCF was over $2.1 billion. That provided plenty of cash to fund the generous dividend; in fact, it was nearly double the amount needed for the total payout to all of the MLP's unit holders.

Like NextEra, Enterprise is well positioned to capitalize on the dramatically higher energy input needs of data center buildouts for artificial intelligence (AI) technology. That's because the company can readily supply natural gas through that extensive pipeline network, a readily available and extremely reliable solution for the operators of such facilities.

It isn't easy to find a business with this kind of growth potential that also pays a high-yield dividend with plenty of room to grow. Enterprise is well worth a look for any income investor looking to earn some reliable passive income.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends NextEra Energy. The Motley Fool recommends Dominion Energy and Enterprise Products Partners. The Motley Fool has a disclosure policy.