Even after the broad market pullback in recent days, the S&P 500 is still only offering investors a miserly 1.2% yield or so. You can do way better than that with these three stocks, all of which offer yields of more than 4%. Here's why Chevron (CVX 1.00%), Black Hills (BKH 0.96%), and Enterprise Products Partners (EPD 2.80%) are no-brainer high yielders right now whether you have $200 or $200,000 to invest.
1. Chevron has it all, at least for an energy stock
Chevron's dividend yield is roughly 4.2% today. That's well above the broader market and notably higher than the average energy stock's 3.3% yield. Making that yield even more attractive is the fact that Chevron has increased its dividend annually for 37 consecutive years. That is not a minor fact to consider when considering Chevron for your portfolio.
The energy sector is very volatile, with oil and natural gas prices often rising and falling quite swiftly. Chevron has clearly shown it knows how to weather that volatility while continuing to reward dividend investors well.
A strong balance sheet is a key part of the story, but so, too, is the company's diversified business, which includes upstream (production), midstream (pipeline), and downstream (chemicals and refining) assets. This diversification helps to soften the industry's inherent swings, while a low level of leverage allows Chevron to lean on its balance sheet in downturns.
If you are looking for a broad-based energy play that can provide you with a reliable, and growing, dividend, high-yield Chevron is easily one of the best choices out there today.
2. Black Hills is a boring but reliable utility
Electric and natural gas utility Black Hills' dividend yield is 4.6%. That's well above the broader market and the utility sector's roughly 3% yield. But what really sets Black Hills apart from the utility pack is the fact that it is a Dividend King. Very few utilities can claim to have achieved this elite status. That said, don't feel bad if you've never heard of Black Hills; it is a fairly small utility with a market cap of just $4 billion.
Black Hills serves roughly 1.3 million customers in parts of Arkansas, Colorado, Iowa, Kansas, Montana, Nebraska, South Dakota, and Wyoming. Truth be told, it is a fairly simple, boring, regulated utility. It believes that its $4.3 billion worth of capital spending plans over the next five years will support earnings growth of between 4% and 6% a year, on average.
The dividend will likely grow along with earnings. Slow and steady is the name of the game. If that sounds good to you, you'll want to add high-yield utility Black Hills to your buy list today.
3. Enterprise Products Partners is in the energy sweet spot
Midstream master limited partnership (MLP) Enterprise Products Partners has a distribution yield of 6.5%. That's nearly double the average yield of the broader energy sector. To be fair, most midstream stocks have high yields, but Enterprise has a 26-year streak of annual dividend increases, too, which isn't nearly as common. There's no reason to believe the increases are about to end.
As a midstream company, Enterprise is a toll taker, collecting fees for the use of its energy infrastructure assets. This is why it can generate highly reliable cash flows. It also has contracts that include built-in rate increases, which should lead to slow and steady growth over time. Adding to that growth will likely be modest capital investment projects and the occasional acquisition.
Meanwhile, the MLP's distributable cash flow is roughly 1.7 times its distribution. If you are looking for an ultra-high yield that looks solid as a rock, you'll want to buy Enterprise right now.
Boring high-yield stocks are awesome
Chevron, Black Hills, and Enterprise are not exciting businesses, and they aren't meant to be. They are reliable, financially strong, and prove their worth by returning cash to investors. If you have money to put to work and are trying to find an attractive dividend stock in the broader energy sector (or in the market as a whole), one of these three high yielders, if not all of them, should probably be on your short list.