dividend yield S&P 500 it’s currently around 1.2%, which is near an all-time low. As a result, it becomes difficult to find stocks with attractive dividend yields.
But there are some attractive income opportunities if you know where to look. For example, several master limited partnerships (MLPs) offer much more attractive returns these days; Energy Transfer(NYSE: ET), Enterprise Product Partners(NYSE:EPD)And MPLX(NYSE:MPLX). As a result, they can turn a $2,000 investment into a lucrative passive income stream:
Dividend Stock
Investment
Current Yield
Annual Dividend Income
Energy Transfer
$666.67
8.1%
$53.93
Enterprise Product Partners
$666.67
6.8%
$45.07
MPLX
$666.67
7.8%
$52.07
Total
$2,000.00
7.6%
$151.07
Data source: Google Finance and author’s calculations.
That’s why they are like this clever options for investors looking for income right now.
Image source: Getty Images.
Energy Transfer is one of the largest energy midstream companies in the country. His pipelinesprocessing facilities and export terminals generate stable cash flows, supported primarily by fee-based structures (90% of their earnings). MLP generated about $6.2 billion in cash in the first nine months of the year, conservatively matching the $3.4 billion it distributed to investors. This allowed him to be protected herd Money to finance new investments.
The midstream giant also has a strong balance sheet. His leverage ratio currently in the lower half of 4.0-4.5 times target range. These conservative metrics put Energy Transfer in the strongest financial position in its history.
The company is using its financial flexibility to invest heavily to expand its operations. It plans to spend $4.6 billion on growth capital projects this year and another $5 billion in 2026. They currently have projects that will be operational by 2029. These projects help support the view that it can currently increase its high-yield payout by 3% to 5% per year.
Enterprise Products Partners is in an even stronger financial position than Energy Transfer. MLP’s A-/A3 bond rating It is highest in the energy midstream sector. Enterprise Products Partners has a low leverage ratio of 3.3 times and produces enough Stable cash flow to cover high-yield distribution comfortable 1.5 times.
became MLP using financial flexibility to support a multi-year growth capital deployment phase; It’s coming to an end. The company will put its $6 billion expansion project into commercial service in the second half of this year. They will contribute to meaningful incremental cash flow next year. Capital spending, meanwhile, is on track to fall from $4.5 billion this year to $2.2 billion to $2.5 billion in 2026. should do Generate significantly more free cash flow next year.
This will give Enterprise Products Partners more money for investors. MLP increased distribution payments for 27 years; This is a trend that will undoubtedly continue. Additionally, the company increased its repurchase authority from $2 billion to $5 billion.
MPLX also backs its high-yield payout with very solid financial metrics. MLP provides stable cash flow and has a conservative coverage ratio of 1.3x. Meanwhile, leverage was 3.7x at the end of the third quarter, well below the 4.0x range that stable cash flows could support.
MLP has made several acquisitions this year: payment $2.4 billion for North Wind Midstream. Meanwhile, it has approved a long list of new growth capital projects. There are projects currently being worked on should do Enter commercial service by 2029.
These projects will provide MPLX with the fuel it needs to continue expanding its high-efficiency distribution. It recently increased its payout by 12.5%; This was the second. straight year hiking at this rate.
These MLPs produce a lot stable cash flow, to give them funds pay lucrative distributions when investing is growing their operations. MLPs provide investors with large income streams and some tax advantages. K-1 Federal Tax Form Schedule every year. This combination makes them one of the smartest, high-yield dividend stocks to buy right now.
Before buying shares in Energy Transfer, consider:
Motley Fool Stock Advisor The analyst team just determined what they believe to be Top 10 stocks for investors to buy immediately… and Energy Transfer wasn’t one of them. The 10 stocks that made the cut could deliver monster returns in the coming years.
Think about when netflix You made this list on December 17, 2004… if you invested $1,000 on the date we recommended, You would have $513,353!* Or when Nvidia You made this list on April 15, 2005… if you invested $1,000 on the date we recommended, You would have $1,072,908!*
Now it is worth noting that Stock Advisor total average return 965% — a market-beating performance compared to the S&P 500’s 195%. Don’t miss the latest top 10 list available Stock Advisorand join an investment community created by individual investors, for individual investors.
Matt DiLallo He holds positions at Energy Transfer and Enterprise Products Partners. The Motley Fool recommends Enterprise Products Partners. The Motley Fool has a feature disclosure policy.
