The S&P 500 Index currently only offers investors a yield of around 1.3%, which is a pretty low yield by almost any standard. You can get a lot better than this. If you have $100, $1,000 or even $10,000 to spare, consider high-yield stocks like Enbridge (NYSE: ENB), WEC Energy (NYSE: WEC) and Brookfield Renewable (NYSE: BEP)(NYSE: BEPC). Here’s a quick rundown of each stock:
1. Enbridge has a high yield of 7.4%
Enbridge is an energy infrastructure company whose portfolio includes oil pipelines, natural gas pipelines, regulated natural gas utilities, and renewable energy. The majority of its revenue comes from its pipelines, which account for approximately 75% of its EBITDA (earnings before interest, taxes, depreciation, and amortization). Meanwhile, all of its assets are driven by fee, contract, or regulated revenue sources, which means the cash flows generated are very stable over time.
Enbridge has thus increased its dividend every year for 29 consecutive years. The dividend is also supported by an investment-grade rated balance sheet, and the distributable cash flow payout ratio is within management’s target range of 60% to 70%. The impressive 7.4% dividend yield appears to be built on solid foundations. The only downside is that the dividend yield will likely take up the majority of the returns, and growth is expected to slow over time. But if you’re an income investor, that probably won’t bother you.
2. WEC Energy has a steady dividend growth rate with a 4.1% yield.
WEC Energy is a fairly unassuming natural gas and electric utility serving 4.7 million customers across Wisconsin, Illinois, Michigan, and Minnesota. That said, the company has been growing its dividend for 21 years, with a fairly rapid increase rate of 7% per year over the past 1-, 3-, 5-, and 10-year periods. This is consistent and maybe a little unassuming. However, a 7% dividend increase equates to roughly double the historical rate of inflation, meaning the purchasing power of WEC Energy’s dividend has grown substantially over time. This is really exciting.
The company’s dividend yield, currently at 4.1%, is well above the utility industry average of about 3.2%. The dividend yield is also near its highest level in the past decade for WEC Energy. However, this is more due to utilities’ growing unpopularity than anything else, given that management is projecting 6.5% to 7% earnings growth through at least 2028. Dividends should grow roughly in line with earnings.
3. Brookfield Renewable has a lot of room to grow and a yield that’s as high as 5.4%.
Brookfield Renewable has a yield of 5.4% if you buy partnership units. If you buy company shares, the yield is a little lower at 4.7%. Both represent the same corporate entity and are focused on investing in the clean energy sector, which is investments focused on the world’s transition from carbon-based electricity to renewable energy sources like hydro, solar, wind, and battery storage. This transition is likely to last for decades, so Brookfield Renewable has strong growth potential.
The story continues
But why have two stock options? Brookfield Renewable’s parent company is Brookfield Asset Management (NYSE: BAM), a large Canadian asset manager known for serving institutional-level clients. Brookfield Renewable was created to allow smaller investors to participate in the deal. After first forming a legal entity called Brookfield Renewable Partners, Brookfield created an affiliated Brookfield Renewables Corporation because some investors were hesitant to own a partnership. That said, it’s important to realize that Brookfield Renewable operates like an investment company, so it’s constantly buying and selling assets. But if you believe clean energy is a long-term opportunity, this is a great way to receive dividends while investing in that opportunity.
3 Great Ways to Earn Rewards
Enbridge, WEC Energy, and Brookfield Renewable all offer above-market yields and strong businesses, so each company is worth a closer look if you’re looking for a place to invest some of your hard-earned savings. Buying one or more of them could mean you stand to receive attractive quarterly dividends.
Should I invest $1,000 in Enbridge right now?
Before you buy Enbridge stock, consider the following:
The analyst team at Motley Fool Stock Advisor just identified the 10 best stocks for investors to buy right now, and Enbridge isn’t on the list — all of which have the potential to generate big gains over the next few years.
Consider the date when Nvidia made this list: April 15, 2005… If you had invested $1,000 at the time of recommendation, you would have made $722,626!*
Stock Advisor gives investors an easy-to-follow blueprint for success, with portfolio construction guidance, regular updates from analysts, and two new stock picks every month. The Stock Advisor service has more than quadrupled S&P 500 returns since 2002*.
View 10 stocks ยป
*Stock Advisor returns as of July 15, 2024
Reuben Greg Brewer owns shares of Enbridge and WEC Energy Group. The Motley Fool owns shares of and recommends Brookfield Asset Management, Brookfield Renewable, and Enbridge. The Motley Fool recommends Brookfield Renewable Partners. The Motley Fool has a disclosure policy.
3 High Yield Stocks to Buy Right Now with $1,000 was originally published by The Motley Fool.
