High-Yield Midstream Stocks: 2 to Buy, 1 to Avoid
Thursday, Nov 14, 2024 5:09 am ET
9min read Investing in high-yield midstream stocks can provide attractive returns and steady income streams. However, not all midstream companies are created equal. This article will highlight two midstream stocks to buy and one to avoid, based on their dividend history, corporate structures, and growth prospects.
1. Enterprise Products Partners (EPD)
Enterprise Products Partners is a master limited partnership (MLP) with a strong track record of dividend growth. EPD has increased its distribution for 26 consecutive years, demonstrating its commitment to returning cash to shareholders. With a current yield of 6.8%, EPD offers an attractive income stream. Its diverse asset portfolio and geographical reach enhance its resilience and long-term growth prospects. EPD's MLP structure allows it to distribute a larger portion of its cash flows to investors, resulting in a higher yield. However, it is important to note that MLPs can be more complex tax-wise.
2. Enbridge (ENB)
Enbridge is a Canadian energy infrastructure giant with a consistent dividend growth history. ENB has raised its dividend for 29 consecutive years, providing investors with a growing income stream. With a current yield of 6.1%, ENB offers a competitive income opportunity. Its extensive network of crude oil and natural gas pipelines, combined with its growing renewable energy business, positions it well for long-term growth and diversification. Enbridge's traditional company structure may be more familiar to U.S. investors, but its dividends are paid in Canadian dollars, which may be subject to currency fluctuations.
3. Kinder Morgan (KMI) - The one to avoid
Kinder Morgan is one of the largest owners of energy infrastructure in North America, but its dividend history is less compelling compared to its peers. KMI's dividend cuts in 2015 and 2020, driven by energy industry downturns and the COVID-19 pandemic, have led to trust issues among investors. While KMI's 4.2% dividend yield is attractive, its spotty dividend history and management's trust issues make it less appealing for income investors. KMI's corporate structure may be more straightforward than MLPs, but its dividend history remains a concern.
In conclusion, Enterprise Products Partners and Enbridge stand out as attractive high-yield midstream investments due to their consistent dividend growth histories, diverse asset portfolios, and strong cash flow generation. While Kinder Morgan offers an attractive yield, its dividend history and management's trust issues make it less appealing for income-focused investors. By carefully evaluating the dividend history, corporate structures, and growth prospects of midstream stocks, investors can make informed decisions and build a strong portfolio.
1. Enterprise Products Partners (EPD)
Enterprise Products Partners is a master limited partnership (MLP) with a strong track record of dividend growth. EPD has increased its distribution for 26 consecutive years, demonstrating its commitment to returning cash to shareholders. With a current yield of 6.8%, EPD offers an attractive income stream. Its diverse asset portfolio and geographical reach enhance its resilience and long-term growth prospects. EPD's MLP structure allows it to distribute a larger portion of its cash flows to investors, resulting in a higher yield. However, it is important to note that MLPs can be more complex tax-wise.
ADXN, ALGS, ALT, AMBC, AMCX...Market Cap, Turnover Rate
2. Enbridge (ENB)
Enbridge is a Canadian energy infrastructure giant with a consistent dividend growth history. ENB has raised its dividend for 29 consecutive years, providing investors with a growing income stream. With a current yield of 6.1%, ENB offers a competitive income opportunity. Its extensive network of crude oil and natural gas pipelines, combined with its growing renewable energy business, positions it well for long-term growth and diversification. Enbridge's traditional company structure may be more familiar to U.S. investors, but its dividends are paid in Canadian dollars, which may be subject to currency fluctuations.
ADXN, ALGS, ALT, AMBC, AMCX...Market Cap, Turnover Rate
3. Kinder Morgan (KMI) - The one to avoid
Kinder Morgan is one of the largest owners of energy infrastructure in North America, but its dividend history is less compelling compared to its peers. KMI's dividend cuts in 2015 and 2020, driven by energy industry downturns and the COVID-19 pandemic, have led to trust issues among investors. While KMI's 4.2% dividend yield is attractive, its spotty dividend history and management's trust issues make it less appealing for income investors. KMI's corporate structure may be more straightforward than MLPs, but its dividend history remains a concern.
ADXN, ALGS, ALT, AMBC, AMCX...Market Cap, Turnover Rate
In conclusion, Enterprise Products Partners and Enbridge stand out as attractive high-yield midstream investments due to their consistent dividend growth histories, diverse asset portfolios, and strong cash flow generation. While Kinder Morgan offers an attractive yield, its dividend history and management's trust issues make it less appealing for income-focused investors. By carefully evaluating the dividend history, corporate structures, and growth prospects of midstream stocks, investors can make informed decisions and build a strong portfolio.
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