Three High-Earning Stocks Worth Investing In Prior to 2024's Conclusion
Three High-Earning Stocks Worth Investing In Prior to 2024's Conclusion
The typical stock's dividend yield has taken a hit over the past year due to the stock market boom. For instance, the dividend yield of the S&P 500 has dropped from 1.6% a year ago to approximately 1.2% currently, nearing a low not seen in over 20 years.
Nevertheless, some stocks continue to provide satisfying dividend yields. Shares of Enterprise Products Partners (-0.23%), Clearway Energy (-0.65%) (CWEN.A -0.85%), and Brookfield Renewable (-0.26%) (BEP -0.70%) (BEPC -0.70%) have caught the attention of a few contributors at Fool.com as excellent investment options heading into the new year. Let's delve into why these stocks make great income-generating picks at the moment.
Enterprise Products Partners is primed to reward you well
*Reuben Gregg Brewer (Enterprise Products Partners):* If you're interested in purchasing an investment-grade-rated energy company with a remarkably stable business and a princely 6.5% yield, then consider adding North American midstream giant Enterprise Products Partners to your portfolio before 2024 concludes.
From a business standpoint, this high-yielder oversees the energy infrastructure that facilitates the global movement of oil and natural gas. The energy sector wouldn't function without the pipelines, storage facilities, transportation, and processing assets that Enterprise owns. And its customers are more than willing to pay the fees necessary to utilize Enterprise's infrastructure, making it a simple toll-taking business.
The key takeaway? Volatile commodity prices don't have a significant impact on financial results. This is a major reason it has managed to reliably increase its distribution for 26 consecutive years.
Add in an investment-grade-rated balance sheet and the fact that distributable cash flow covers the distribution by around 1.7 times, and there's plenty of room for adversity before a distribution cut would pose a significant risk. While the lofty yield may make up the majority of an investor's return here, Enterprise has about $6.9 billion in capital investment projects underway and the scale to act as an industry consolidator. Slow and steady distribution growth seems likely to persist for years to come from this high yielder.
The potential to augment its dividend in 2025 and beyond
*Matt DiLallo* (Clearway Energy): Clearway Energy now provides investors with a 6.5% dividend yield. That's a substantial payout compared to the S&P 500, which yields around 1.2%.
The clean energy infrastructure owner is having a strong year. It's on track to meet or surpass its financial guidance of generating $395 million in available cash flow for distribution (CAFD) in 2024. This has given it the means to boost its dividend by 7% so far in 2024, hitting its goal of delivering dividend growth towards the upper end of its 5% to 8% annual target range.
Clearway has already laid the groundwork for 2025 and beyond. Previously funded investments are expected to elevate its CAFD to $420 million by the midpoint of its target range in 2025, enabling it to hike its dividend by about 6.8% in 2025.
The company has already secured numerous renewable energy projects for 2025 and is already building toward 2027. These initiatives should help boost CAFD per share at a 7.5% to 12.5% compound annual growth rate (CAGR) in the 2026 to 2027 timeframe from 2025's baseline, supporting another 6.5% increase in the dividend in 2026 and growth toward the lower end of its target range in 2027.
Beyond 2027, Clearway sees the potential to continue growing its CAFD and dividend at a mid-to-high single-digit annual rate as it continues investing in new renewable energy assets.
Given its already high yield, Clearway has the potential to deliver impressive total returns in the coming years as it grows its CAFD and dividend payments. That combination of yield and growth makes it an enticing income stock to purchase before the year ends.
More dividend growth is on the horizon
*Neha Chamaria(Brookfield Renewable):* Brookfield Renewable's shares have lagged behind the S&P 500 in 2024, but Brookfield Renewable has ambitious expansion plans, is consistently increasing its funds from operations (FFO), and is continuously raising its dividend payments to shareholders.
Brookfield Renewable grew its FFO per unit by around 7% during the nine months that ended September 30, 2024, and expects to increase it by more than 10% in the full year, thanks to its recent acquisitions and development projects. In fact, 2024 will be the company's busiest year for investment in growth as it continues to raise funds to invest from two sources: cash-flow growth and proceeds from the sale of mature assets.
Brookfield Renewable expects to commission 7 gigawatts (GW) of renewable energy capacity in 2024, a company record. Its total development pipeline surged to a monumental 200 GW at the end of the third quarter, 2024. Brookfield Renewable plans to grow its pipeline even further in 2025 and 2026 and believes it should be able to elevate its annual FFO per unit by 10% or more over the next five years and beyond.
Investors might find an opportunity in Brookfield Renewable's boost in Funds From Operations (FFO), potentially leading to increased dividends. The company projects a 5% to 9% annual dividend growth. Adding this to its substantial dividend yield, with corporate shares offering a 5.1% yield and partnership units providing a 6.3%, makes Brookfield Renewable an attractive dividend pick ahead of 2024 winding down. It's worth noting that investing in corporate shares also exempts U.S. investors from submitting a complicated 1065 tax form and dealing with foreign tax withholding.
Investors interested in seeking higher yield returns might consider looking into other finance options beyond the S&P 500's current dividend yield of 1.2%. For instance, shares of Enterprise Products Partners offer a yield of 6.5%, providing investors with a more attractive income-generating opportunity.
The strategic investment in Enterprise Products Partners shall not only reward investors with a substantial yield but also offer potential growth prospects. With an extensive energy infrastructure network and a history of reliable distribution increases, the company seems poised for slow and steady growth in dividends for years to come.