This Big-Time Passive Income Producer Keeps Adding Fuel to Push Its Payout Higher
Williams Companies (NYSE: WMB) offers investors a big-time income stream. The natural gas pipeline giant's dividend currently yields 5.4%. That's over three times the S&P 500's 1.6% dividend yield. This payout rate implies that every $1,000 invested in the company can produce $54 of annual passive income.
That annual passive income stream will likely rise in the coming years. Fueling that growth is the continued expansion of the company's pipeline system. Williams recently moved forward with another new expansion project, adding another future fuel source for the payout.
Williams Companies has steadily grown its dividend in recent years. Since 2018, the natural gas pipeline giant has increased it at a roughly 6% compound annual rate -- including giving its investors a 3.7% raise earlier this year -- by investing in $8 billion of high-return expansion projects. Meanwhile, that payout has grown more sustainable during that time frame. Williams Companies' leverage ratio has declined by 21%, while it's generating enough cash flow to cover its dividend by more than two times. That's giving it even more financial flexibility to invest in projects that expand its pipeline network, providing it with more fuel to keep growing its payout in the future.
Source Fool.com
