2 Fat Dividends To Retire With Growing Passive Income

The most common retirement advice you receive revolves around building a portfolio, and slowly selling it down to pay the bills.

At High Dividend Opportunities, we take a different approach. Our objective is to build a portfolio that generates cash flows in the form of dividends, distributions, and interest, while allowing the underlying investments to continue participating in long-term economic growth.

Today, we're looking at two very different income investments that fit this approach. Western Midstream Partners (WES) offers a 7.7% distribution yield backed by rapidly expanding energy infrastructure and rising cash flows, while NextGen Infrastructure Income Fund (NXG) offers a monthly distribution yielding over 13%, with exposure to the infrastructure supporting America's AI economy.

Both are designed to turn essential economic activity into current cash flow for investors.

Why Passive Income Matters In Retirement

Through your career, you earn regular paychecks, whether weekly, biweekly, monthly, or other arrangements. You use these to cover your regular and cyclical expenses all year round. When you retire, your paycheck(s) stop, but your expenses don't.

This is why at HDO, we believe generating passive income is necessary for retirees. When cash is needed, investors don’t need to sit and decide what to sell, because their investments regularly send cash back to them.

The best income investments are those that maintain high and sustainable payouts, with periodic raises to produce cash flows that help offset the effects of inflation.

Let us look at our top picks.

8% Yield From America's Energy Infrastructure - Western Midstream

Western Midstream Partners (WES) operates critical infrastructure across the energy value chain, including gathering, processing, transportation, storage, and produced-water services for oil, natural gas, and NGLs.

This is the kind of infrastructure we particularly like for income investing. WES doesn't need to guess which energy company will discover the next major oil field. It owns the infrastructure that energy producers need to move, process and store what they already produce.

WES maintains a rapidly growing business, with record Q2 adjusted EBITDA of $737 million, up 19% year over year, while distributable cash flow reached $537 million, up 8% sequentially.

A Growing Opportunity In Produced Water

One of the less appreciated opportunities for WES is produced water. The Delaware Basin has exceptionally high water-to-oil ratios, creating growing demand for the gathering, transportation, treatment, and disposal of produced water.

WES is investing heavily in this opportunity. The company has two major projects — North Loving II and Pathfinder Pipeline — expected to enter service in 2027. It also completed its $1.6 billion acquisition of Brazos Delaware II, further strengthening its position in natural gas processing and produced-water infrastructure.

These investments provide WES with additional avenues for growth beyond simply increasing volumes of oil and gas.

Growing Cash Flow, Growing Distributions

WES generated $537 million of distributable cash flow in Q2 while paying $346 million to unitholders. Management has also raised its 2026 adjusted EBITDA guidance by $250 million to $2.75-$2.95 billion, with distributable cash flow expected at $2.05-$2.25 billion.

The partnership recently declared a $0.93/unit quarterly distribution, representing a 7.7% yield, and reaffirmed its commitment to mid-to-low single-digit annual distribution growth.

Note: WES is a master limited partnership and issues a Schedule K-1 to investors.

13%+ Yield From The Infrastructure Behind The AI Economy - NXG

NextGen Infrastructure Income Fund (NXG) gives us exposure to companies that build and operate the infrastructure required to run data centers, AI models, and semiconductor chips. That includes utilities, energy infrastructure, engineering and construction companies, communications infrastructure, cybersecurity, and natural gas infrastructure.

In other words, NXG is positioned to benefit from the enormous amount of infrastructure spending required to support the next generation of the economy.

Investing In The Infrastructure, Not The Hype

AI may be one of the fastest-growing areas of the economy, but AI companies aren't the only businesses benefiting from its growth. Data centers require enormous amounts of electricity. They require natural gas and other energy infrastructure, communications networks, engineering and construction, cybersecurity, and cooling systems.

NXG gives investors exposure to many of these infrastructure businesses without having to pick which individual AI company will ultimately emerge as the winner.

The fund currently has approximately 50 holdings, with its largest sectors including engineering and construction, utilities, cybersecurity, large-cap diversified corporations, and natural gas gathering and processing.

A 13%+ Monthly Income Stream

The fund currently pays $0.60 per share each month, following an approximately 11% year-over-year increase, translating to a yield of more than 13% at recent prices.

That's a very attractive income stream for investors seeking monthly payouts. We believe the underlying opportunity is still in its early stages. America will need substantially more power, energy infrastructure, data centers, communications networks, and industrial capacity in the years ahead. NXG is positioned to participate in all that spending, transforming it into monthly income for shareholders.'

Building A Portfolio That Pays You Back

Retirement shouldn't look like a yard sale with your portfolio, where random strangers bargain over the value of your prized possessions. We believe it should be about investing in assets that generate cash flows to fund your lifestyle, without selling a single share.

At High Dividend Opportunities, this is the foundation of our Income Method. We help retirees build portfolios comprising REITs, BDCs, MLPs, and equities across utilities, energy, royalties, financials, as well as preferred stocks and baby bonds. This diversification ensures steady payouts, even if markets are volatile and certain sectors experience headwinds. 

This way, in retirement, you won't be asking, “What should I sell?” Instead, you'll be asking, “How much am I collecting this week?”

That's the essence of the HDO Income Method.

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