Hundreds of companies pay dividends. Many currently offer higher yields, making them attractive for those seeking passive income. With so many options, it's easy to miss some appealing opportunities.
MPLX(NYSE: MPLX) and Omega Healthcare Investors (NYSE: OHI) are two high-yielding dividend stocks many investors have overlooked. Here's why investors won't want to miss these excellent passive income producers.
High yield and high growth
MPLX doesn't get a lot of attention from investors. It's not as popular as fellow master limited partnerships (MLPs),Energy Transfer(NYSE: ET) and Enterprise Products Partners(NYSE: EPD). However, it stacks up well compared to those high-yielding rivals:
MLP | Distribution Yield | Distribution Coverage Ratio | Leverage Ratio |
|---|---|---|---|
Energy Transfer | 6.7% | 2.0x | 4.0x-4.5x |
Enterprise Products Partners | 6.4% | 1.7x | 3.0x |
MPLX | 7.8% | 1.5x | 3.4x |
Data source: MPLX, Energy Transfer, and Enterprise Products Partners. MLP = master limited partnership.
As the table shows, MPLX has a much higher yield. That's because it has a lower distribution coverage ratio, largely due to its rapid growth in recent years. It recently increased its distribution by 12.5%, which followed 10% increases in 2023 and 2022. That compares to 5% distribution growth from Enterprise Products Partners over the past year and a 3%-5% annual growth target range from Energy Transfer.
MLPX has plenty more growth coming down the pipeline. The company expects to complete its BANGL pipeline expansion next year, while the Blackcomb and Rio Bravo pipelines should enter service in the second half of 2026. The MLP also has a couple more natural gas processing plants under construction that should enter commercial service over the next two years.
In addition to that visible growth, MPLX has ample financial capacity to continue making accretive acquisitions. It has made two deals this year, including boosting its stake in BANGL. These growth drivers should give it the fuel to continue increasing its high-yielding distribution at a healthy clip. That makes it a great option for those comfortable with investing in MLPs that send their investors a Schedule K-1 federal tax form each year.
This high yield is growing healthier
Omega Healthcare Investors has quietly been a very enriching investment over the years. The healthcare real estate investment trust (REIT) pays a 6.7%-yielding dividend, which is a lot higher than the average REIT (around 4%). While its dividend growth has stalled in recent years (it hasn't increased the payout since 2019), it has delivered 7.1% compound annual dividend growth overall since it came public in 2003.
The REIT invests in income-generating skilled nursing and assisted living facilities in the U.S. and U.K. It leases these facilities back to healthcare companies under long-term triple net (NNN) agreements. It will also invest in real estate loans backed by skilled nursing and senior housing properties. Those investments generate very stable rental and interest income for the REIT to support its high-yielding dividend.
Omega Healthcare routinely invests money in additional healthcare properties. For example, it completed $440 million of new investments in the third quarter, including $390 million in real estate acquisitions and $50 million in real estate loans. Its new investments help grow its cash flow, supporting the REIT's high-yielding dividend.
The company currently has a rather high dividend payout ratio (95%), which has prevented it from increasing its dividend. However, with its cash flow per share rising, its dividend is getting even healthier. If it can continue growing its cash flow, it should eventually be able to start increasing its dividend again.
Enticing options for income-seeking investors
MPLX and Omega Healthcare Investors have hefty dividend yields these days. Because of that, they're worth a closer look for those seeking to generate passive income. They could enable investors to collect more income than they would from similar investments.
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Matt DiLallo has positions in Energy Transfer and Enterprise Products Partners. The Motley Fool recommends Enterprise Products Partners. The Motley Fool has a disclosure policy.
