The S&P 500 index is only offering investors a 1.3% or so yield today, which is pretty slim by just about any standard. You can do much better than that. If you have $100, $1,000, $10,000 or more, you'll want to look at high-yield stocks like Enbridge(NYSE: ENB), WEC Energy(NYSE: WEC), and Brookfield Renewable(NYSE: BEP)(NYSE: BEPC). Here's a quick overview of each one.
1. Enbridge has a lofty 7.4% yield
Enbridge is an energy infrastructure company, with a portfolio that includes oil pipelines, natural gas pipelines, regulated natural gas utilities, and renewable power. The vast majority of its revenue comes from its pipelines, which make up about 75% of earnings before interest, taxes, depreciation, and amortization (EBITDA). Meanwhile, all of its assets are driven by fees, contracts, or regulated income streams, so the cash flows it generates are highly consistent over time.
This is how Enbridge has managed to increase its dividend annually for 29 consecutive years. The dividend is also backed by an investment-grade-rated balance sheet. And the distributable-cash-flow payout ratio is well within management's 60% to 70% target range. The impressive 7.4% dividend yield looks like it is on a rock-solid foundation. The one drawback is that the yield will likely make up the bulk of the return here, with growth expected to be modest over time. But if you are an income investor that probably won't bother you.
2. WEC Energy is a steady dividend grower with a 4.1% yield
WEC Energy is a fairly boring natural gas and electric utility serving 4.7 million customers in parts of Wisconsin, Illinois, Michigan, and Minnesota. That said, it has increased its dividend for 21 years and at a fairly rapid 7% annualized rate over the trailing one-, three-, five-, and 10-year periods. Now that's consistent, and maybe a bit boring. Note, however, that 7% dividend growth would be around twice the historical growth rate of inflation, which means that the buying power of WEC Energy's dividend has grown strongly over time. That's actually pretty exciting.
The company's yield is 4.1% right now, which is well above the utility industry average of roughly 3.2%. The dividend yield is also near the highest levels over the past decade for WEC Energy. However, that's more a function of utilities being out of favor than anything else, given that management is still projecting earnings growth of between 6.5% and 7% through at least 2028. The dividend will likely grow about in line with earnings.
3. Brookfield Renewable has a long runway for growth and a yield as high as 5.4%
Brookfield Renewable's yield is 5.4% if you buy the partnership units. It is a bit lower at 4.7% if you buy the corporate shares. Both represent the same entity, which is focused on investing in the clean energy sector. This is a focused play on the world's transition from carbon-based power to renewable energy sources, like hydroelectric, solar, wind, and battery storage, among other things. The transition is likely to last decades, which suggests that Brookfield Renewable has plenty of growth ahead of it.
But why are there two share options? Brookfield Renewable's parent is Brookfield Asset Management(NYSE: BAM), which is a large Canadian asset management company known for serving institutional level clients. It created Brookfield Renewable so it could allow smaller investors to participate in its deals. And after initially creating the Brookfield Renewable Partners entity, Brookfield came out with the related Brookfield Renewables Corporation because some investors shy away from owning partnerships. That said, it is important to recognize that Brookfield Renewable is operated like an investment company, so it buys and sells assets all the time. But if you think clean energy is a long-term opportunity, this is a great way to collect dividends while investing in that opportunity.
Three great ways to get paid
Enbridge, WEC Energy, and Brookfield Renewable all offer above-market yields and strong businesses. If you are trying to find a place to invest some of your hard-earned savings, each one is worth a closer look. And, if you buy one, or more, you'll put yourself into position to start collecting attractive dividend checks quarter after quarter.
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Reuben Gregg Brewer has positions in Enbridge and WEC Energy Group. The Motley Fool has positions in and recommends Brookfield Asset Management, Brookfield Renewable, and Enbridge. The Motley Fool recommends Brookfield Renewable Partners. The Motley Fool has a disclosure policy.
