Average stock in the S&P 500 is currently below 2%. However, dividend investors can do much better than that if they know where to look. One place where they can score provides more than tripling that frequency in the midstream energy segment.
Three such stand-out companies are Enbridge (NYSE: ENB) Enterprise Products Partners (NYSE: EPD) and Crestwood Equity Partners (NYSE: CEQP) . Here's why I had no problem buying any of these high yield dividends right now.
Canadian pipeline giant Enbridge is currently offering investors an attractive dividend yield of 6.3%. While higher-yield dividends often have higher risk levels, this is not the case with Enbridge. That's because the company prides itself on having a low-risk model. A key aspect of the strategy is to focus on assets that generate predictable cash flow. Long-term contracts and other stable sources will yield 98% of the company's revenue this year as a result. Enbridge compliments it with a healthy investment quality balance and a comfortable dividend yield of around 65%.
Thanks to the strong financial profile, the company has the flexibility to invest in projects that expand operations. Currently, it is on track to complete $ 9 billion Canadian ($ 6.8 billion) expansions this year, which will give it the fuel to boost its dividend by another 10% next year. Meanwhile, the company believes it can fund between $ 5 billion and $ 6 billion ($ 3.8 billion – $ 4.5 billion) of expansion projects per year after 2020. That's a high enough investment rate to increase cash flow by around 5% to 7% per year. Enbridge's big-time dividend is therefore looking to increase even higher in the coming years, which is why I had no problem buying shares right now.
61 and counting
Enterprise Products Partners & # 39; payment controls to a 6.4% dividend. Like Enbridge, the payment of the master limited partnership is ground-based. First, long-term fee-based contracts currently deliver more than 85% of the company's cash flow. Meanwhile, it only spends around 60% of the money to pay its well above average distribution. Add that to the company's top-level balance sheet, and it has plenty of financial flexibility to invest in growth projects while maintaining payout.
Enterprise currently has $ 6 billion in construction under construction and a further $ 5 billion to $ 10 billion in development. These projects should provide a lot of fuel to increase cash flow in the coming years, and that means MLP should have no problem with continuing to increase its payout, which it has done throughout its 61 quarters. The ever-growing revenue stream is why I believe Enterprise Products Partners is one of the best dividend stocks to buy right now.
High octane growth ahead
Crestwood Equity Partners has the highest return on this trio of 6.8%. Like the others on this list, MLP's distribution is on a solid foundation. That's because it gets about 85% of revenue from predictable sources and only pays out around 60% of the money to support the big return. Add a healthy balance, and Crestwood also has the financial flexibility to expand operations.
The company is now nearing the end of a major three-year expansion program. This makes it possible to increase cash flow with a peer-leader rate of more than 20% per year through 2020. As a result of the high octane growth, Crestwood's financial profile will strengthen significantly by the end of next year. This should allow the company to start increasing its already well above average. MLP's combination of income and upside makes it an excellent purchase these days.
Top Revenue Options
Investors seeking large dividend income should take a closer look at this mid-stream trio. All three companies offer ultra-high returns of more than 6% that they support with sound financial profiles, which means they have the means to continue expanding. This should allow all three to increase payouts that are already above average in the coming years and make them excellent purchases right now.