Ensuring a steady stream of income remains a core goal for many investors. While market fluctuations can cause anxiety, focusing on some of the best dividend stocks for income may offer a sense of stability.
Therefore, investing in robust high-yield dividend stocks such as Energy Transfer LP (ET), MPLX LP (MPLX), and PLDT Inc. (PHI) could provide the consistent income needed to fuel your retirement goals. These companies regularly distribute a portion of their profits to shareholders, ensuring a steady cash flow.
As consumer prices continue to decline, inflation is moving towards a level that might prompt the Federal Reserve to consider cutting interest rates this year. Economists expect the upcoming Consumer Price Index (CPI) report to show a 3.1% annual rise in inflation, down from 3.3% in May. If this prediction holds, it would confirm that inflation is back on a downward trend after a worrisome uptick in the first quarter.
Meanwhile, the Personal Consumption Expenditures (PCE) price index has slowed to its lowest annual rate over three years. The Fed's preferred measure of inflation was up by 2.6% in May from a year ago.
With inflation easing, the Fed might shift its focus from controlling rising prices to preventing a significant economic slowdown, especially after recent data indicated a 4.1% increase in the unemployment rate.
Amidst these macroeconomic changes, high-yield dividend stocks averaging more than 5% dividend yield with positive yearly growth can provide a buffer against inflation and secure your retirement portfolio with stable returns.
Moreover, investor's interest in high-yield dividend stock is evident from the Vanguard High Dividend Yield Index Fund ETF’s (VYM) 17.4% returns over the past nine months.
Let’s delve into the fundamentals of the three high-yield dividend stocks.
Energy Transfer LP (ET)
ET provides energy-related services worldwide. It owns and operates natural gas transportation pipeline and natural gas storage facilities in Texas and Oklahoma; and nearly 20,090 miles of interstate natural gas pipeline. It also sells natural gas to electric utilities, independent power plants, local distribution and other marketing companies, and industrial end-users.
On May 28, the company announced the acquisition of WTG Midstream Holdings LLC (WTG) for approximately $3.25 billion. WTG owns and operates the largest private gas gathering and processing business in the Permian Basin, with significant assets in the core of the Midland Basin.
This acquisition, expected to close in the third quarter of 2024, aims to expand ET’s natural gas pipeline and processing network in the Permian Basin and strengthen its downstream operations.
On May 20, ET paid its shareholders a quarterly dividend of $0.3175 per common unit for the first quarter of fiscal 2024, reflecting an increase of 3.3% year-over-year.
ET pays an annual distribution of $1.27 per unit, which translates to a yield of 7.89% on the prevailing share price. Its four-year average dividend yield is 9.35%. Moreover, the company’s dividend payouts have grown at a CAGR of 18.1% over the past three years.
In terms of forward non-GAAP PEG, ET is trading at 0.74x, which is 61.3% lower than the industry average of 1.91x. Likewise, the stock’s forward EV/Sales multiple of 1.37 is 33.9% lower than the industry average of 2.08. Also, the stock’s 0.62x forward Price/Sales ratio compares to the industry average of 1.43x.
ET’s trailing-12-month asset turnover ratio of 1.74x is 47.8% higher than the industry average of 0.50x.
During the first quarter that ended March 31, 2024, ET’s revenues increased 13.9% year-over-year to $21.63 billion. Its operating income rose 15.4% year-over-year to $2.38 billion. The company’s net income was $1.69 billion, up 16.9% from the previous year’s quarter. Its adjusted EBITDA grew 13% from the year-ago value to $3.88 billion.
In addition, the company’s distributable cash flow came in at $2.87 billion, an increase of 15.8% year-over-year. As of March 31, 2024, its current assets were $15.02 billion, compared to $12.43 billion as of December 31, 2023.
Street expects ET’s revenue and EPS for the second quarter (ended June 2024) to increase 16.8% and 39.2% year-over-year to $21.39 billion and $0.35, respectively. Further, the company’s revenue and EPS are expected to register an 11.8% and 33% year-over-year growth in the fiscal year 2024.
The stock has gained 26.2% over the past year to close the last trading session at $16.09.
ET’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
It has an A grade for Momentum and a B for Growth, Value, and Stability. Within the Energy - Oil & Gas industry, it is ranked #7 out of 79 stocks. Click here to access ET’s rating for Sentiment and Quality.
MPLX LP (MPLX)
MPLX owns and operates midstream energy infrastructure and logistics assets. The company operates through Logistics and Storage; and Gathering and Processing segments. It engages in the gathering, processing, and transportation of natural gas alongside the gathering, transportation, fractionation, storage, and marketing of natural gas liquids.
On April 23, MPLX’s Board of Directors declared a quarterly cash distribution of $0.85 per common unit for the first quarter of 2024. The distribution was paid on May 13, 2024, to common unitholders of record on May 3, 2024.
MPLX pays an annual dividend of $3.40 per unit, which translates to a yield of 8.03% on the current share price. Its four-year average yield is 10.25%. The company’s dividend payouts have grown at a CAGR of 6.5% over the past three years, and it has raised its dividends for ten consecutive years.
In terms of forward non-GAAP P/E, MPLX is trading at 10.41x, which is 5.3% lower than the industry average of 10.99x.
The stock's trailing-12-month gross profit margin of 56.53% is 26.8% higher than the industry average of 44.58%. Likewise, its trailing-12-month EBITDA margin and ROTA of 51.58% and 10.94% are 51.7% and 96.5% higher than their respective industry averages of 33.99% and 5.57%.
MPLX’s total revenue and other income increased 4.9% year-over-year to $2.85 billion during the first quarter that ended March 31, 2024. Its income from operations grew 4.6% from the prior year’s quarter to $1.25 billion. Net income attributable to MPLX came in at $1.01 billion and $0.98 per limited partner unit, up 6.6% and 7.7% year-over-year, respectively. Also, the company’s adjusted EBITDA rose 7.6% from the year-ago value to $1.63 billion.
The consensus revenue estimate of $2.95 billion for the fiscal second quarter (ended June 2024) represents a 9.8% increase year-over-year. The consensus EPS estimate of $0.99 for the about-to-be-reported quarter indicates an 8.9% improvement year-over-year. The company has an excellent earnings surprise history; it surpassed the consensus EPS estimates in each of the trailing four quarters.
Shares of MPLX have surged 22.8% over the past year and 15.3% year-to-date, closing the last trading session at $42.33.
MPLX’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
MPLX has an A grade for Momentum and a B for Stability and Quality. It is ranked #5 out of 24 stocks in the A-rated MLPs – Oil & Gas industry.
In addition to the POWR Ratings we’ve stated above, we have also rated MPLX for Growth, Value, and Sentiment. Get all MPLX ratings here.
PLDT Inc. (PHI)
Based in Makati City, the Philippines, PHI delivers cellular mobile services, Internet broadband distribution, operations support, software development, and satellite information and messaging offerings. It also retails Wi-Fi access equipment. The company’s segments include Wireless; Fixed Line; and Others.
On June 11, PHI’s Board of Directors declared a dividend of ₱2.44 million ($41.62 thousand) on all of the outstanding shares of Voting Preferred Stock of the company for the quarter ending July 15, 2024. The dividend is payable on July 15 to the record holders as of June 28, 2024.
PHI pays an annual dividend of $1.62 per share, which translates to a yield of 6.39% on the current share price. Its four-year average dividend yield is 6.93%. The company’s dividend payouts have grown at CAGRs of 20.8% and 17.8% over the past three and five years, respectively.
In terms of forward non-GAAP P/E, PHI is trading at 9.48x, 25.3% lower than the industry average of 12.68x. Likewise, the stock’s forward EV/EBIT multiple of 10.62 is 27.7% lower than the industry average of 14.70.
PHI’s trailing-12-month gross profit margin of 73.56% is 46.6% higher than the industry average of 50.17%. Also, its trailing-12-month net income margin ROCE of 12.89% and 26.23% compares favorably to the respective industry averages of 2.83% and 3.42%.
For the first quarter that ended March 31, 2024, PHI’s revenues from contracts with customers increased 3.6% year-over-year to ₱54.22 billion ($925.91 million). Its net income grew 9.3% from the year-ago value to ₱9.89 billion ($168.93 million).
Also, EPS attributable to PHI's common equity holders came in at ₱45.40, up 8.9% year-over-year. The company’s consolidated EBITDA grew by 5% from the prior year to ₱27.32 billion ($466.42 million), with an EBITDA margin of 52%.
Analysts expect PHI’s EPS to increase 7.9% year-over-year to $2.67 for the fiscal year ending December 2024. The company’s revenue for the same period is expected to be $3.74 billion. For the fiscal year 2025, the company’s EPS and revenue are expected to grow 10% and 4.4% year-over-year, respectively.
Over the past nine months, the stock has gained 18.4% to close the last trading session at $25.34
PHI’s sound prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to Buy in our proprietary rating system.
It has an A grade for Stability and a B for Quality. PHI is ranked #14 out of 44 stocks in the A-rated Telecom - Foreign industry. Click here to access the additional PHI ratings (Growth, Value Momentum, and Sentiment).
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MPLX shares were trading at $42.19 per share on Tuesday afternoon, down $0.14 (-0.33%). Year-to-date, MPLX has gained 19.92%, versus a 17.74% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.
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