The 2 Best High-Yield Dividend Stocks In A Decade

The company is growing earnings and has been consistently doing so for decades. Investors are not seeing the value right now. But the stock is dirt cheap, and probably has limited downside in another downturn and a good prognosis for future appreciation. And that yield is phenomenal.

Best High-Yield Dividend Stock #2: Enterprise Product Partners (EPD)

Yield: 8.60%

Enterprise is one of the largest midstream energy companies in the country with a vast portfolio of service assets connected to the heart of American energy production. It has $36 billion in annual revenues from an unparalleled reach in the industry that is connected to every major U.S. shale basin and 90% of American refiners east of the Rockies and offers export facilities as well in the Gulf of Mexico.

The energy sector is getting killed by this pandemic as demand has fallen off a cliff during the lockdown. Oil prices have crashed and energy has been the worst-performing stock sector during this recession. But, as a midstream energy company, Enterprise makes money from the services of piping and storing oil and gas. It isn’t highly exposed to energy prices but makes its money on the fact that there is a lot of oil and gas sloshing around this country. And the U.S. is now the world’s largest producer of oil and gas.

That said, Enterprise makes money on volumes going through its systems. Those volumes have been diminished during the crisis, temporarily. But midstream companies are not taking it on the chin like most of the energy sector. And volumes will resume with the economic restart.

The Distribution

Because of the financial devastation brought by the pandemic-induced lockdowns, many companies in the energy sector will be forced to cut dividends and distribution payouts to free up cash in order to survive. That will also include many midstream companies.

But Enterprise is highly likely to maintain or even grow its distribution. As a Master Limited Partnership (MLP), EPD pays out the bulk of earnings in the form of distributions. But, unlike most MLPs, EPD has only about a 60% payout ratio of funds from operations. The partnership keeps it low so it can fund growth projects internally. But it has since suspended those investments for the remainder of the crisis.

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Now, if you want to know what other dividend stocks I like now – some of the high-yield variety, others more focused on dividend growth and safety – you can subscribe to my  more

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