2 High-Yield Dividend Stocks I’d Buy Right Now

Every so often companies with incredible dividend histories run into some sort of trouble that makes investors think the dividend might be at risk. Sometimes that's a legitimate concern, and sometimes it's an overreaction. Usually, a closer look at the story will tell you if investor fears are overdone. Right now it looks like Buckeye Partners, L.P. (NYSE: BPL) and Tanger Factory Outlet Centers (NYSE: SKT) are two high-yield dividend stocks that are on the sale rack -- there are problems with each, but I think both will manage to survive and thrive in the years ahead. Here's what you need to know.Building for the futureOil and natural gas midstream partnership Buckeye Partners has increased its distribution for 22 consecutive years. That places it in an elite group of midstream companies that includes names like industry bellwether Enterprise Products Partners L.P. with its 21 consecutive annual increases. But Buckeye yields 11.5%, and Enterprise 6.8%.Image source: Getty ImagesA big part of the difference here is distribution coverage. In 2017, Buckeye's coverage was 1, down from 1.06 in 2016. Coverage fell to 0.98 in the third quarter, meaning it didn't cover the distribution in that quarter. To put it simply, Buckeye is cutting it pretty close. That's highlighted by the fact that it has decided to stop increasing the distribution for now so it can more easily fund its capital spending plans, including $325 million this year on new pipelines and facility upgrades. Enterprise's coverage in 2017 was 1.2 times; its disbursement is much safer, and it even has plenty of room to keep increasing it.Despite the reduction in distribution coverage last year, Buckeye remains an interesting income option. Image source: Buckeye Partners, L.P.However, there are some other things to consider here. For example, Buckeye has been through this before, with distribution coverage falling below 1 in 2013 and 2014 while the partnership was investing in its business. Coverage recovered in Continue Reading

Time to Get Greedy With These 2 High-Yield Dividend Stocks

Benjamin Graham, considered the father of fundamental investing, called Wall Street a voting machine, not a weighing machine. It's a view that his protege Warren Buffett has continued to espouse. What these famous investors are explaining is that the market often reacts in dramatic fashion to short-term events that don't really change the long-term future of a company. Right now, giant U.S. utility Southern Company (NYSE: SO) and real estate investment trust (REIT) Tanger Factory Outlet Centers (NYSE: SKT) look like they are on Wall Street's sale rack because of short-term events. Still growing despite the headwind Southern is one of the largest utilities in the United States, operating electric and natural gas assets in 19 states. Its largest business is owning and operating regulated electric power plants and transmission lines, mostly in the South, but it also owns regulated natural gas distribution systems and merchant power plants (like solar farms). Image source: Getty Images. As a largely regulated utility, Southern has to ask the government for approval before it can raise customer rates. Capital spending to expand and improve its utility systems is one of the best things that Southern and other utilities can do to get regulatory approval for rate hikes. That includes actions like storm-hardening power lines and building new power plants. It's the latter that has caused problems for Southern recently. The company's Kemper clean-coal power plant was supposed to be a showcase for technology that would capture carbon dioxide and turn a dirty fuel into a cleaner one. After delays, huge cost overruns, and technology troubles, Kemper will now be fueled with natural gas, not coal. Southern's Vogtle nuclear power plant, meanwhile, has also been hit with delays and cost overruns. Although this project is still moving forward, despite the bankruptcy of contractor Westinghouse, the construction issues at Vogtle have caused friction with regulators, Continue Reading

1 High-Yield Dividend Stock You’ve Never Heard Of

Income investors are always on the lookout for high yield dividend stocks, preferably the kind supported by stable businesses with ample cash flow and a long history of distributing some portion of it to shareholders. Above average growth opportunities aren't required, but are certainly nice to have. Enter Compass Minerals International (NYSE: CMP). You may have never heard of the company, but its business is simple to understand. It's the largest miner and supplier of road salt and de-icing products -- a stable, non-cyclical, and recession-proof industry-- in North America. It owns a smaller but faster growing portfolio of products in agricultural nutrients, and recently expanded into the all-important Brazilian market. Oh, and it pays a 4.3% dividend yield. That alone means it's at least worth a closer look. Image source: Getty Images. By the numbers Compass Minerals International had a rough month last September. One of its primary salt mines suffered from a partial ceiling collapse, which damaged part of the conveyance system. The good news is no workers were injured. The bad news is it took several weeks to repair the damage, which reduced the mine's output and increased costs. Management wisely delivered that bit of bad news with a cautious update on its South American operations: sales volumes were going to be lower than expected. That pushed the company to lower its full-year 2017 guidance with just three months to go in the calendar year. The timing of those events wasn't great, as Compass Minerals International was already facing challenging market conditions for its salt operations thanks to warmer than usual winters in recent memory. After a rough first nine months of the year, the business ended 2017 with some momentum, although a one-time non-cash adjustment from the new tax law sapped net income. Here's how the business fared in 2017 compared to 2016: Metric 2017 2016 % Change Total revenue $1.36 billion $1.14 Continue Reading

This High-Yielding Dividend Stock Deserves a Gold Medal

After years of struggling to overcome headwinds caused by patent expiration, biopharma giant Pfizer (NYSE: PFE) may be positioned perfectly to return more money to investors through dividends. In this clip from The Motley Fool's Industry Focus: Healthcare, analyst Kristine Harjes and Todd Campbell explain how Pfizer's market-beating 3.7% dividend could climb because of Pfizer's gold medal performance. A full transcript follows the video. 10 stocks we like better than Pfizer When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.* David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Pfizer wasn't one of them! That's right -- they think these 10 stocks are even better buys. Click here to learn about these picks! *Stock Advisor returns as of February 5, 2018 This video was recorded on Feb. 14, 2018. Kristine Harjes: So we want to do an Olympics-themed show today, and talk about, if we could give out gold medals for healthcare companies, what would we give them out for and which companies would win? Todd, do you want to kick us off? Todd Campbell: Sure. There's so many events at the Olympics. If we tried to create categories for as many events as there are at the Olympics, our listeners would probably never finish the show. Harjes: Yeah, we would be here all day. Campbell: Yeah. I picked out three. I think you might have picked out a similar number. Mine, quickly, were gold medal for dividend stocks, gold medal for marijuana stocks, and gold medal for big blue-chip biotechs. Harjes: I also have three. I'll be doing a financial fortitude contest, and also a health tech, and also, because the Olympics are international in scope, I'll be picking my favorite international as a non-U.S. healthcare stock. We'll go back and forth, we'll pause for a break Continue Reading

2 High-Yield Dividend Stocks in Artificial Intelligence

It may seem that dividend investing and a new tech trend like artificial intelligence are two diametrically opposed things. After all, income investors are usually seeking stable investments that they can bank on for years to come, while many tech trends are anything but predictable, and many often fizzle out. But artificial intelligence is more than just a flash-in-the-pan idea. The field has been around for decades, it's expected to add $15.7 trillion to the global economy by 2030, and many tech companies are seeing real growth from their AI investments already. Income investors looking to capitalize on this transformative tech trend don't have sit this one out, because International Business Machines (NYSE: IBM) and Intel Corporation (NASDAQ: INTC) both offer strong dividends -- and both are betting AI will become a huge part of their future. Image source: Getty Images. Intel One of Intel's biggest plays on AI is in supplying chips that power artificial intelligence technology. The company made a big move a few years ago when it purchased a company called Altera for $16.7 billion, which made field programmable gate array chips (FPGA) for AI. The FPGA chips are good for Intel's AI plans because they have a very low latency (i.e. they process lots of information very quickly), they're very energy efficient, and they can be reprogrammed to handle different tasks. But Intel is also in the process of building its own processors that are specifically designed for AI tasks. Intel just started shipping its Nervana Neural Network Processor (NNP), which is the direct result of the company's purchase of Nervana Systems in 2016. By 2020, the NNP chips will eventually make AI deep learning by about 100 times faster than it is right now, and they'll be used for data centers, which is an area of business Intel already knows a lot about. Intel currently holds about 96% of the data center market, and with its new AI chips it should continue that lead as more Continue Reading

4 High-Yield Dividend Stocks Without the Risk

High-yield dividend stocks can be tempting for a variety of reasons for investors, whether they're looking for cash flow or market-beating returns. But high yields can also be a sign of high risk or the market's lack of confidence that a dividend payout will continue long-term. Seadrill and Kinder Morgan are just a couple examples of energy stocks with high yields that ended up being very risky for investors. But not all high-yield stocks are high risk. The advent of renewable energy yieldcos in the last decade has created a group of companies that have very low-risk business models and very high dividend payouts for investors. Here are my top picks for 2018. Image source: Getty Images. NextEra Energy Partners One of the leading yieldcos in the U.S. is NextEra Energy Partners (NYSE: NEP), an offshoot of utility NextEra Energy (NYSE: NEE). The company owns 3.1 GW of wind, 600 MW of solar, and 542 miles of natural gas pipelines (fossil fuel assets added to increase diversification and cash flow). The renewable energy assets in NextEra Energy Partners' portfolio have on average 18 years left in their power purchase agreements, primarily with investment grade off-takers like utilities. This ensures cash flows that ultimately fund a dividend yield of 3.9% at Friday's closing price. What should really excite high-yield investors is that the dividend is going to grow. Management has a pipeline large enough to grow the dividend 12% to 15% through 2022. The implication is that the dividend could be $3.16 per share at the end of 2022. But it gets better. Due to tax rules that allow companies to return capital to investors, NextEra Energy Partners' dividend should be tax-free for the next 8 years or more, and the company itself isn't expected to pay significant taxes for more than 15 years. High-yield, low tax, and long-term contracted cash flows are just what investors should be looking for. Brookfield Renewable Partners Brookfield Renewable Partners Continue Reading

3 High-Yield Tech Stocks

As many people search for the best high-yield dividend stocks, the fast-changing tech sector is often the last place they look. But make no mistake; some of the market's most promising dividend stocks hail from the world of technology. So we asked three top Motley Fool investors to each pick a high-yield tech stock that they believe investors would be wise to consider today. Read on to learn why they chose Verizon Communications (NYSE: VZ), Cisco Systems (NASDAQ: CSCO), and Seagate Technology (NASDAQ: STX). IMAGE SOURCE: GETTY IMAGES A juicy yield from a telecom giant Steve Symington (Verizon Communications): Things were looking up for Verizon shareholders after the company's latest quarterly results exceeded expectations two weeks ago. But the telecommunications leader has all but given up those gains as the broader market pulled back hard over the past few days. However -- keeping in mind Verizon has increased its dividend for 11 straight years -- patient investors can take solace knowing that its dividend yields around 4.72% annually as of this writing. And its underlying wireless business remains strong, with the company adding an impressive 1.2 million retail postpaid wireless subscribers last quarter. Verizon also achieved healthy postpaid phone churn of 0.77%, demonstrating exceptional customer loyalty and marking its 11th straight period of keeping the metric under 0.9%. What's more, that loyalty should be cemented with Verizon's planned commercial launch of its next-generation 5G network in 2018. Though to be fair, investors should watch closely to ensure the Trump administration doesn't follow through with potentially disastrous plans to nationalize the wireless industry. Meanwhile, Verizon is expected to benefit greatly from recent U.S. tax reform initiatives, with management estimating the changes will result in a net increase to cash flow from operations in the range of $3.5 billion to $4.0 billion this year. Add to that the potential Continue Reading

These 2 High-Yield Dividend Stocks Went Crazy This Week (Which Makes 1 an Even Better Buy)

SCANA Corporation (NYSE: SCG) started 2018 with a bang, rising nearly 14% after agreeing to merge with fellow utility Dominion Energy (NYSE: D) in a $14.6 billion transaction. However, while that deal sent SCANA's stock up sharply, Dominion's went in the opposite direction, falling 5.3% for the week, which is a big drop for a utility stock. In fact, it was such a significant decline that it nearly wiped out Dominion's entire gain from 2017. Furthermore, that sell-off pushed Dominion's yield to an even more attractive 4%, which is more than double that of the average stock. That higher yield and cheaper stock price, when combined with its growth prospects -- which will see a nice bump as a result of the SCANA deal -- makes Dominion an even more compelling stock for investors seeking a low-risk income stream. Image source: Getty Images. Taking advantage of the situation SCANA Corporation is coming off an atrocious 2017, when its stock plunged more than 45%. It began melting down after the company and its partner decided to abandon a nuclear project in South Carolina after the contractor developing the facility went bankrupt. Investors became gravely concerned that the company would no longer be able to recoup what it spent on that project by passing the costs on to electricity customers, which would significantly impact its financial situation and could force the utility to stop paying its 5.4%-yielding dividend. With the pressure mounting and its stock in a free fall, SCANA agreed to sell itself to Dominion Energy in an all-stock deal. Dominion saw it as an opportunity to buy an attractive utility in a fast-growing region for a discounted price. Powering high-end growth In fact, Dominion believes that the deal will enable it to grow earnings by a more than 8% compound annual rate through 2020, which is above its prior view that profits would increase by a 6% to 8% compound annual rate over that time frame. That bolstered outlook comes even though Continue Reading

5 Facts About High-Yield Dividend Stocks Every Investor Should Know

It can be tempting to jump right into a high-yield dividend investment. The prospect of receiving a high (and potentially continuing) income stream might convince you to take much more risk with your money than you're really comfortable doing. High-yield stocks can be a minefield that destroys your capital. Yields that are too high are frequently a sign of a company in major distress -- and of a dividend that's not sustainable. Still, done intelligently, investing in companies with decent distribution payouts can be a lucrative proposition, despite the risks. If you're going to venture down that path, however, there are five essential facts about high-yield dividend stocks that you should know. Real estate investment trusts (REITs) are required by law to pay out 90% of their income as dividends in order to retain the corporate tax advantages associated with being that kind of company. Key among those advantages: REITs can deduct their dividends as an expense, thus avoiding corporate taxes on the income they generate by passing that along to their shareholders. The downside to shareholders, however, is that REIT dividends are not qualified and thus are taxed as ordinary income. Many REITs even go beyond that and pay out more than 100% of their income in their distributions. Those excess payments are frequently characterized as either capital gains or return of capital, depending on how the money was generated by the REIT. That portion of shareholders' distributions may receive favorable tax treatment for the recipients compared to ordinary income. Note, however, that those distributions take capital out of the company -- there's no such thing as a free lunch. REITs generally come in two types, equity REITs and mortgage REITs. Equity REITs own physical properties, and mortgage REITs invest in mortgages or Continue Reading

The Best High-Yield Dividend Stocks of 2017

There's no rule that high-yield stocks can't produce great capital gains for their investors. Want proof? Alon USA Partners, L.P. (NYSE: ALDW), NextEra Energy Partners (NYSE: NEP), and Triton International Limited (NYSE: TRTN) all pay out above-average yields and saw their share prices soar in 2017. What's driving the gains, and could there be more profits ahead? Let's take a closer look at each to find out. Alon is a master limited partnership (MLP) that's in the oil-refining business. Like all MLPs, Alon doesn't have to pay corporate taxes as long as its profits are paid out to its unitholders as a quarterly distribution. Alon's main asset is a crude oil refinery located in Big Spring, Texas. Like most oil and gas companies, the collapse in energy prices a few years back hit Alon's profits -- and stock price -- very hard. That forced the company's distribution to shrink considerably. However, the share price had been hit so hard that investors were still earning a 4% yield at the beginning of the year in spite of the slimmed-down payout. Over the summer, investors had to hold their breath as Hurricane Harvey plowed through Texas. The superstorm disrupted the Texas oil markets but, thankfully, Alon's assets were untouched. When that stroke of luck combined with the general recovery in energy prices, Alon's profits -- and dividend -- rebounded sharply. Investors have responded to the surging profits by bidding up shares. Is the prosperity here to stay? Unfortunately, investors won't get a chance to find out. Alon's majority shareholder -- Deltek US Holdings (NYSE: DK) -- recently decided to buy out the company. Alon's investors will receive 0.49 shares of Delek for each share of Alon that they currently own once the deal closes. NextEra Energy Partners Continue Reading