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2 High-Yield Dividend Stocks to Double Down On in 2025

Charles HayesFriday, Apr 18, 2025 5:14 am ET

112min read

As investors navigate economic uncertainty in 2025, dividend-paying stocks remain a cornerstone of portfolios seeking both income and stability. Among the crowded field of candidates, two energy-focused names—Vitesse Energy (VTS) and Energy Transfer (ET)—stand out for their combination of high yields, fortress balance sheets, and growth catalysts. These stocks are not just about collecting checks; they’re positioned to thrive in a world of rising energy demand and infrastructure investment.

1. Vitesse Energy (VTS): The Oil & Gas Dividend Champion

With a 9.3% forward yield, Vitesse Energy is the highest-yielding stock on our radar, offering a compelling payout for income investors. The company’s recent acquisitions, including Lucero Energy, have turbocharged its production profile, enabling a 7% dividend hike in Q4 2024.

Why It’s a Buy Now:
- Sustainable Dividend Growth: Despite its high yield, Vitesse maintains a payout ratio of 1.0x, ensuring dividends are fully covered by cash flow. The Lucero deal added 25 net drilling locations and 10 years of inventory life, providing a runway for future hikes.
- Operational Control: A shift from non-operator to operator roles in its drilling partnerships has enhanced Vitesse’s ability to control costs and pursue accretive deals.
- Valuation Edge: Shares trade at just 4.5x EV/EBITDA, a discount to peers, reflecting market skepticism about oil prices. Yet, with Brent crude averaging $85/barrel in 2025, Vitesse’s break-even costs of $60/barrel leave ample room for profit.

Risks: Oil price volatility remains a wildcard. However, the company’s focus on high-margin assets (e.g., the Permian Basin) mitigates downside, making this a safer bet than pure-play exploration firms.

2. Energy Transfer (ET): The MLP with 7.5% Yield and Infrastructure Momentum

As a master limited partnership (MLP), Energy Transfer delivers a 7.5% yield via its $8.4 billion annual cash flow, 90% of which comes from fee-based contracts. This stability is underpinned by its sprawling network of pipelines, terminals, and LNG facilities—assets that are critical to the U.S. energy transition.

Why It’s a Buy Now:
- Cash Flow Resilience: With a payout ratio below 50%, Energy Transfer has ample room to grow dividends while funding projects like the $2.6 billion Mountaineer XPress pipeline and $3 billion in LNG capacity expansions.
- Strategic Acquisitions: The $1.3 billion acquisition of WTG Midstream added $0.04/unit to distributable cash flow in 2024, with accretion rising to $0.07/unit by 2027. This demonstrates management’s ability to deploy capital efficiently.
- Balance Sheet Flexibility: A $17.5 billion debt reduction since 2021 has lowered leverage to 4.2x EBITDA, a level that permits both dividends and growth.

Risks: MLPs require K-1 tax forms, complicating tax filing. However, the high yield and predictable cash flows justify this minor hassle for long-term holders.

Why These Two?

While other dividend stalwarts like Coca-Cola or PepsiCo offer stability, they lack the yield punch of Vitesse and Energy Transfer. Meanwhile, Energy Transfer’s fee-based model and Vitesse’s production growth create a diversified income play:
- Energy Transfer benefits from secular trends in energy infrastructure, insulated from commodity price swings.
- Vitesse Energy capitalizes on rising global oil demand, with its focus on North American shale positioning it to outperform during price rallies.

Conclusion: A Pair Built for Income and Growth

Combined, Vitesse and Energy Transfer offer a 9.3% to 7.5% yield range, paired with total return potential via dividend growth and modest stock appreciation. Their fundamentals are bolstered by:
- Vitesse: A 10-year inventory life, 4.5x EV/EBITDA valuation, and 7% dividend hikes.
- Energy Transfer: A 50%+ free cash flow payout ratio, $5 billion in 2025 capital projects, and a 12-year dividend growth streak.

For investors willing to embrace energy exposure, these stocks are prime candidates to “double down” on in 2025. Both exemplify the best of dividend investing: safety in cash flow, upside in growth, and income that outpaces inflation.

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