5 of the safest high yielding dividend stocks on the planet
This year’s stock rally pushed the dividend yield on the actions of S&P 500 up to only 1.3%. This is its lowest level in about two decades.
While there are stocks that offer higher returns, many require investors to take a higher level of risk. However, there are a few high dividend stocks that stand out for their relatively low risk profile. Here’s a look at five of the safest options.
AvalonBay Communities (NYSE: AVB) is a real estate investment company (REIT) focused on apartment ownership. The company owns thousands of apartments in 11 US states. Although it mainly focuses on the larger, higher cost cities along the coasts, it has started to expand into the faster growing domestic markets of the South.
Apartments are historically very stable investments. This allows AvalonBay to generate stable rental income to support its dividend, which is currently earning 2.9%. In addition to the overall security of the multi-family sector, AvalonBay enjoys a conservative dividend payout ratio of less than 70% of its cash flow and an A-rated balance sheet. For this reason, it has great flexibility. fund to pay a sustainable dividend while developing its multi-family portfolio.
Brookfield Renewable Power
Brookfield Renewable Power (NYSE: BEP)(NYSE: BEPC) operates a globally diversified portfolio of renewable power generation assets. It is one of the largest hydroelectric producers and has growing wind and solar power platforms. Brookfield sells the electricity it produces to utilities and corporate clients under long-term fixed rate contracts. They generate very stable cash flow, supporting Brookfield’s 3.2% dividend.
The company complements this stable cash flow with a conservative dividend payout ratio and a strong investment grade balance sheet. This gives it the financial flexibility to continue to grow. The company currently plans to increase its cash flow per share by up to 20% per year through 2025. This should easily support its plan to increase its high yield dividend from 5% to 9% per year.
Brookfield infrastructure (NYSE: BIP)(NYSE: BIPC) is the Infrastructure brother of Brookfield Renewable. It operates a globally diverse portfolio of utility, mid-level energy, transportation and data infrastructure companies. These activities all generate relatively stable cash flows, backed by long-term contracts and government-regulated tariffs. This helps support Brookfield Infrastructure’s 3.5% dividend.
Like its revolving sister, Brookfield Infrastructure also has a conservative dividend payout ratio and quality balance sheet. These factors give it the financial flexibility to pay a sustainable dividend while continuing to expand its portfolio. Brookfield Infrastructure also plans to increase its dividend from 5% to 9% per annum, thanks to rising rates, expansion plans and new acquisitions.
Enbridge (NYSE: ENB) is a Canadian energy infrastructure company. It operates oil and gas pipelines, natural gas utilities and renewable energy facilities. These assets all generate stable cash flow to support Enbridge’s 6.7% dividend.
Enbridge was a dividend stocks over the years. He has increased his payout in each of the past 26 years, growing it at a compound annual rate of 10%. This growth sequence is not likely to end anytime soon. Enbridge expects to grow its cash flow per share at an annual rate of 5% to 7% over the next several years, fueled by a huge multi-billion dollar backlog of expansion projects, including expansions. oil and gas pipelines and new offshore wind farms in Europe.
While Enbridge’s fossil fuel assets will face longer-term headwinds as the world shifts to renewables, they are already slowly moving in that direction. Combine all of this with a reasonable dividend payout ratio and a strong balance sheet, and Enbridge is in an excellent position to continue to pay its investors a growing dividend.
Real estate income
Real estate income (NYSE: O) is a REIT focused on net rental properties, primarily in the retail sector. It focuses on net leases as the tenant covers the maintenance, property taxes and insurance of the building. This allows him to generate more predictable income, making it easier to support his 4.3% monthly dividend.
Meanwhile, Realty Income complements its stable income with a reasonable dividend payout ratio and one of the best balance sheets in the REIT industry. This gives it a lot of financial flexibility to grow. She is currently working on closing the acquisition of her other REIT TRUTH (NYSE: VER), which will create a $ 50 billion real estate giant. This agreement will immediately increase its cash flow per share by more than 10%, placing its dividend on an even more solid basis. It should also allow Realty Income to continue increasing its payout, which it has done 112 times since its IPO in 1994.
Low risk high dividend stocks
While dividend yields are generally declining in part due to the rally in stock prices over the past year, investors can still find attractive options. What stands out the most about AvalonBay, Brookfield Renewable, Brookfield Infrastructure, Enbridge and Realty Income is the overall security of their payments. All five companies generate very stable cash flow and have conservative dividend payout ratios and strong balance sheets. This gives them the financial flexibility to pay attractive dividends and grow their businesses, which should lead to even higher dividends going forward.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.