In this post, we will be presenting 5 high dividend stocks. These stocks offer a very attractive yield while having an acceptable level of debt and growing revenues. The purpose here is to select businesses that are likely to continue paying dividends in the near and medium future.
Please do your own research or consult with a tax professional or investment advisor before making any financial decisions.
–Growing revenues: Growth in revenues is necessary to keep any a business a float. It’s even more important for businesses that are expected to pay dividends;
–Low Price/Cash Flow: This ratio is the relationship between the price and the cash available per share. A low ratio indicates the company has enough cash flow to justify its current prices. A ratio below 15 is considered low.
–High dividend yield;
–Low Debt to Equity ratio: This ratio is a measure of how much debt the company contracted versus its own equity. Viable dividend stocks should always have a low level of debt.
–High interest coverage: This ratio measures how much a company is paying to service its debt versus its earnings. A business that spends most of its earnings on paying interests in loans is not a good choice for dividend investors.
–Low Dividend Payout Ratio: This ratio is the relationship between dividends and earnings. Companies that offer safe dividends usually have a low ratio.
Mplx LP (MPLX)
MPLX LP owns and operates midstream energy infrastructure and logistics assets primarily in the United States.
Segments: Logistics and Storage (crude oil and refined petroleum products) and Gathering and Processing (natural gas and natural gas liquids).
+ MPLX offers an attractive yield (over 8%);
+ Over the past year, the stock rose 31.52%. It’s important to check for historical performance, often, high dividend yield is caused by depression in the stock price;
+ Low Price/Cash Flow ratio is a good sign!
– The debt ratio (1.51) is bit high but the Interest coverage ratio is acceptable at 4.97;
+ The company continue to grow its revenues through organic growth and acquisitions;
– Strong balance sheet.
|Market Cap, $B||33|
Magellan Midstream Partners LP (MMP)
Magellan Midstream Partners is a Master Limited Partnership, or MLP. The company has the longest pipeline system of refined products.
+ MMP has a fee-based model (90% of its revenues). The stock price movement is not related to commodity prices;
+ MMP offers an attractive yield at 8%;
+ The dividend payout ratio is low at 87.04%. The company pays dividends and has room to invest in its growth;
+ High debt ratio at 2.67; the interest coverage ratio is at 5.13 which is acceptable;
+ Revenues have grown in the past 5 years by 23.93%.
|Name||Magellan Midstream |
|Market Cap, $B||10,5|
Enterprise Products Partners LP (EPD)
Enterprise Products Partners L.P. provides midstream energy services to producers and consumers of natural gas, natural gas liquids (NGLs), crude oil, petrochemicals, and refined products.
Segments: NGL Pipelines & Services, Crude Oil Pipelines & Services, Natural Gas Pipelines & Services, and Petrochemical & Refined Products Services.
+ Recent acquisition of Navitas Midstream for $3.25B in January. (additional 1,750 miles of pipelines to their existing portfolio);
+ EPD offers an attractive yield at 7.58%;
+ The dividend payout ratio is low at 81.19%. The company pays dividends and has room to invest in its growth;
+ A low price to Cash Flow ratio
+ Low debt ratio at 1.08; the interest coverage ratio is at 4.76 which is acceptable;
+ Revenues have grown in the past 5 years by 77% thanks to both organic growth and acquisitions.
|Name||Enterprise Products |
|Market Cap, $BK||54,3|
Altria Group (MO)
Altria Group sells the Marlboro cigarette brand in the U.S. and a number of other non-smokeable brands, including Skoal and Copenhagen.
+The flagship brand continues to be Marlboro, which commands over 40% retail market share in the U.S.
+ Offers an attractive dividend at 6.75%. The dividend is relatively safe considering the company’s dividend payout ratio is 75.97%;
– Growth opportunities are limited for Altria (highly regulated industry);
+ Altria is a dividend king with over 50 years of dividend increases;
+ Company continues its expansion with a large stake in Juul (Vaping products manufacturer). In addition, the company has 10% stake in global beer giant Anheuser-Busch InBev
|Market Cap, $B||96,7|
Ares Capital Corp (ARCC)
Ares Capital Corporation is a business development company. The company specializes in acquisition, recapitalization, mezzanine debt, restructurings, rescue financing, and leveraged buyout transactions of middle market companies.
+ Healthy and diversified portfolio of investments;
+ High dividend yield at 8%;
+ Dividend payout ratio at 83.65%;
+ Revenues have grown in the past 5 years by 79% thanks to both organic growth and acquisitions.
– The interest coverage is low which poses a risk for dividend payments;
|Name||Ares Capital |
|Market Cap, $B||10|