After months of speculation, the Federal Reserve has finally started cutting interest rates. Furthermore, the Fed has indicated that it will continue to reduce rates.

Falling rates have vast implications. You might have already noticed that your bank lowered the interest rate on your savings account or that the rates on CDs and U.S. Treasuries aren’t quite as attractive as they once were.

However, while rates on some investments are falling like the autumn leaves, many dividend stocks expect to continue increasing their payouts. Enbridge (NYSE: ENB), Kinder Morgan (NYSE: KMI), and NextEra Energy (NYSE: NEE) stand out to a few Fool.com contributors for their ability to increase their dividends despite changing market conditions. That makes them ideal for those who want to receive more income in the future.

Enbridge isn’t sitting still

Reuben Gregg Brewer (Enbridge): The big draw for most investors with midstream giant Enbridge will probably be the company’s sizable 6.6% dividend yield. That’s reasonable, noting that the dividend has been increased annually (in Canadian dollars) for 29 consecutive years. But Enbridge offers so much more than just a dividend.

A key part of the company’s approach is to adjust its portfolio along with the changes taking shape in global energy demand. That’s why the company’s portfolio includes oil pipelines, natural gas pipelines, natural gas utilities, and renewable power investments. Natural gas is expected to be a key transition fuel as the world shifts toward cleaner alternatives, and renewable power is the direction in which the world is heading. But oil is still important, which is allowing Enbridge to use its oil tied profits to increase its natural gas exposure and build things such as wind and solar farms.

The most recent transaction, buying three natural gas utilities from Dominion Energy, is a great example of the goal. Before the deal Enbridge generated 57% of earnings before interest, taxes, depreciation, and amortization (EBITDA) from oil. After the deal that will be down to 50%. As an added bonus, the regulated natural gas utilities have highly reliable, though slow, growth opportunities ahead of them. These businesses, which expanded natural gas utilities from 12% of EBITDA to 22%, help to solidify Enbridge’s ability to reach its long-term target of 5% distributable cash flow growth.

Enbridge looks boring, but a high yield backed by a slow and steady business becomes very exciting over time. Particularly when the company is purposefully adjusting to the changing dynamics in the market it serves.

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The fuel to continue rising

Matt DiLallo (Kinder Morgan): Interest rates have acted as a headwind for Kinder Morgan in recent years. For example, the company noted in late 2022 that its distributable cash flow would see a $0.15-per-share hit in 2023 because of the impact of higher interest rates. That’s because a quarter of its debt has a floating rate, meaning the interest expenses on this debt rise and fall with rates.

Despite that headwind, Kinder Morgan has continued to increase its high-yielding dividend, which currently sits at more than 5%. It delivered its seventh consecutive annual dividend increase earlier this year.

With interest rates falling, they’ll shift from a headwind to a tailwind for Kinder Morgan. The interest expenses on the company’s floating rate debt should fall over the next year, which will save it money. Meanwhile, lower rates will make it cheaper to refinance maturing debt and to issue new debt to fund acquisitions as attractive opportunities arise.

Rates aren’t the company’s only tailwind. It’s capitalizing on growing demand for natural gas to supply liquified natural gas export facilities and utilities, with the latter positioning for a surge in electricity demand from AI data centers. Kinder Morgan has already lined up $5.2 billion of expansion projects to support this growing demand. That includes a $1.7 billion pipeline project to supply more gas for utilities in the Southeast that should enter service in late 2028.

Kinder Morgan’s backlog gives it a lot of visibility into its ability to grow its robust and stable cash flows. That rising cash flow should give the company plenty of fuel to continue increasing its dividend in the coming years, even if interest rates start rising again.

Plenty of power to continue growing its payout

Neha Chamaria (NextEra Energy): NextEra Energy owns the largest utility in the U.S., Florida Power & Light, and is also the world’s largest producer of wind and solar energy. The company relies heavily on debt to fund growth in its utility and renewable energy businesses, so falling interest rates should be good news for NextEra Energy shareholders in more ways than one, including dividends.

NextEra Energy has a strong dividend track record. Between 2003 and 2023, it grew its dividend by a compound annual growth rate (CAGR) of 10%, backed by around 9% CAGR in its adjusted earnings per share (EPS). That dividend growth has generated significant returns for shareholders who reinvested the dividends over the decades, and it should continue doing so given NextEra Energy’s goals.

NextEra Energy is targeting 6% to 8% growth in adjusted EPS and 10% average growth in dividend per share through 2026, driven by cash-flow growth for its growth investments in both businesses. For example, the company expects to invest $65 billion to $70 billion in renewables alone over the next four years. Lower interest rates should make growth funding cheaper for NextEra Energy and these investments should drive its cash flows higher and support bigger dividends. In short, this 2.5%-yielding dividend stock should continue to raise its dividend payout year after year.

Should you invest $1,000 in Enbridge right now?

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Matt DiLallo has positions in Enbridge, Kinder Morgan, and NextEra Energy. Neha Chamaria has no position in any of the stocks mentioned. Reuben Gregg Brewer has positions in Dominion Energy and Enbridge. The Motley Fool has positions in and recommends Enbridge, Kinder Morgan, and NextEra Energy. The Motley Fool recommends Dominion Energy. The Motley Fool has a disclosure policy.

Interest Rates (and Leaves) Are Falling, but Here Are 3 Dividends That Should Continue Rising No Matter What was originally published by The Motley Fool