Got $200? 3 Top High-Yield Dividend Stocks to Buy Right Now

In the ever-evolving world of investing, finding the right stocks to put your money into can be a daunting task. With the S&P 500 hitting fresh all-time closing highs, it might seem like the perfect time to dive in. But with market volatility and the recent sell-off in AI-related stocks, it's crucial to make informed decisions. If you have $200 ready to invest, here are three top high-yield dividend stocks that could be game-changers for your portfolio.

1. Enterprise Products Partners (NYSE: EPD)

Enterprise Products Partners is a master limited partnership that operates in the midstream energy sector. Unlike upstream companies that are directly affected by oil prices, Enterprise Products Partners focuses on the transportation and storage of oil, natural gas, and natural gas liquids. This strategic positioning has insulated the company from the volatility of the oil industry, making it a reliable choice for income investors.

The company's extensive infrastructure, including more than 50,000 miles of pipeline and 14 billion cubic feet of natural gas storage capacity, ensures a steady cash flow. Enterprise Products Partners' reliance on fee-based contracts results in predictable earnings, which is a significant driver of its operating earnings. The company's distribution coverage ratio, which has fluctuated between 1.6 and 1.8 for the past year, indicates a strong ability to cover its payouts. This stability makes it a reliable choice for investors seeking to mitigate risks associated with market volatility.

Enterprise Products Partners offers a mammoth dividend that equates to an 8.1% yield, which not only crushes the current inflation rate but is also sustainable. The company is riding a 22-year streak of increasing its base annual dividend, demonstrating a consistent track record of growth. For income investors, this stock is a no-brainer, as it provides a steady and reliable source of income that can help preserve purchasing power in an inflationary environment.

2. Fiserv (NASDAQ: FISV)

Fiserv is a fintech stock that operates in the payment facilitation and management space. The company handles everything from processing digital payments for banks and retailers to managing bank loan and deposit accounts. Fiserv's business model benefits from the cyclical nature of the economy, as it thrives when consumers and businesses are spending more. This makes it a smart way to play the cashless revolution.

Fiserv's price-to-earnings-growth ratio (PEG ratio) of a little over 1 indicates that it is undervalued by investors. This suggests that Fiserv offers the potential for sustainable high single-digit or low double-digit growth, making it a valuable addition to a diversified portfolio. For value-stock investors, Fiserv is arguably the biggest bargain on this list of no-brainer buys.

3. PubMatic (NASDAQ: PUBM)

PubMatic is a small-cap stock that operates a sell-side-focused platform in the programmatic ad space. The company helps publishers sell their display space to advertisers using machine-learning algorithms, which automate the process of buying, selling, and optimizing ads. As advertising goes digital, PubMatic's opportunity grows. The company foresees steady double-digit growth in mobile, digital video, and connected TV/over-the-top programmatic ads through at least 2024.

PubMatic's existing publishers have already increased their spending by 30% in the first quarter from the prior-year period, indicating that its programmatic ad solutions are resonating with publishers. This makes PubMatic well-positioned within the advertising space, and its growth prospects are likely to remain robust over the next five years.

Mitigating Risks in a Volatile Market

The recent sell-off in AI-related stocks highlights the concentration of the U.S. large-cap market into mega-cap techs, which continues to be a risk for investors. However, the sell-off did not affect all stocks equally. For example, Microsoft Corp. (MSFT) and Amazon.com Inc. (AMZN) initially sold off but finished the session in positive territory, indicating that even within the tech sector, there are nuances in how different companies are valued and how they respond to market volatility.

For dividend stocks, the impact of market volatility can be mitigated through diversification. As noted in the materials, "Advisor's Corner is a collection of columns written by certified financial planners, financial advisors and experts for everyday investors like you." The advice from these experts often emphasizes the importance of diversification to guard against volatility in specific sectors. For instance, the J.P. Morgan global investment strategy team noted that "continued competition and innovation will create winners and losers underneath the surface of equity indices." This suggests that while some AI-related stocks may suffer from market volatility, others may thrive, and diversification can help investors navigate these uncertainties.

Investors can employ several strategies to mitigate potential risks associated with market volatility. One key strategy is to focus on dividend-paying stocks that have a history of stable or increasing dividends. For example, Enterprise Products Partners (NYSE: EPD) is highlighted as a no-brainer buy for income investors due to its mammoth dividend that equates to an 8.1% yield. The company's predictable cash flow, resulting from fee-based contracts, allows it to sustain this payout. The company's distribution coverage ratio has fluctuated between 1.6 and 1.8 for the past year, implying there's no concern about covering its payout. What's more, it's riding a 22-year streak of increasing its base annual dividend. This stability makes it a reliable choice for investors seeking to mitigate risks associated with market volatility.

Another strategy is to look for value-stock investments that offer sustainable growth potential. Fiserv (NASDAQ: FISV) is mentioned as a smart way to play the cashless revolution, with a price-to-earnings-growth ratio (PEG ratio) of a little over 1, which is generally viewed as undervalued by investors. This indicates that Fiserv offers the potential for sustainable high single-digit or low double-digit growth, making it a valuable addition to a diversified portfolio.

In summary, the current market volatility, as evidenced by the recent sell-off in AI-related stocks, impacts the valuation and performance of dividend stocks by introducing uncertainties and risks. However, investors can mitigate these risks through diversification and by focusing on dividend-paying stocks with stable or increasing dividends, as well as value-stock investments with sustainable growth potential.