If you are looking for dividends, now is a good time to consider this boring high-yield stock, or this high-yield turnaround, or this reliable Dividend King.
If you are a long-term income investor looking for dividend stocks to add to your portfolio, now is a good time to consider Enterprise Products Partners (EPD +0.00%), Bank of Nova Scotia (BNS +1.72%), and/or PepsiCo (PEP 0.32%). And if you already own them, you might even want to double up on your investment. Here’s a look at each one and why now is an attractive time to buy.
1. Enterprise is boring and reliable
Enterprise’s average distribution yield over its history is roughly 6.2%. The current yield of nearly 6.7% is a touch above the historical average. That suggests you are getting a fair to slightly discounted price, using yield as a rough gauge of valuation. But the real key here is that Enterprise’s distribution has been increased every year for 27 consecutive years, which is about as long as the midstream master limited partnership (MLP) has existed.
Enterprise Products Partners
Today’s Change
(0.00%) $0.00
Current Price
$32.61
Key Data Points
Market Cap
$71B
Day’s Range
$32.55 – $32.70
52wk Range
$27.77 – $34.53
Volume
2.4M
Avg Vol
4.1M
Gross Margin
12.74%
Dividend Yield
6.62%
What you are getting when you buy is one of the largest owners and operators of energy infrastructure, like pipelines, in North America. These are vital assets that customers pay a fee to use, generating fairly reliable cash flows regardless of what is happening with energy prices. Although the yield is likely to make up most of your return over time, conservative income investors should find Enterprise a very compelling opportunity. An investment-grade-rated balance sheet adds to the safety, as does the fact that the distribution is covered by around 1.7x with distribution cash flow.
Image source: Getty Images.
2. Bank of Nova Scotia has paid dividends since 1833
Bank of Nova Scotia is a turnaround story, but one that is very low risk. Yet you can still collect an attractive 4.6% dividend yield from this Canadian banking giant. Interestingly, the bank has paid a dividend continually since 1833, which is a streak closing in on 200 years. This is not a fly-by-night dividend stock.
However, even good companies go through hard times. Right now, Bank of Nova Scotia, also known as Scotiabank, is rejiggering its business to improve its profitability and growth prospects. That involves shifting away from less profitable operations in Central and South America and refocusing on Mexico and the United States. The good news is that the company’s Canadian banking foundation remains strong, so there’s a backstop here to keep the business trucking along while the revamp plays out.
Today’s Change
(1.72%) $1.21
Current Price
$71.70
Key Data Points
Market Cap
$89B
Day’s Range
$70.65 – $71.73
52wk Range
$44.09 – $71.73
Volume
1.6M
Avg Vol
1.6M
Gross Margin
0.00%
Dividend Yield
4.29%
If you are a dividend lover, you shouldn’t overlook this Canadian bank just because its yield is nearly twice the 2.4% average for a large U.S. bank. Yes, there’s more risk because of the business overhaul, but the added risk is likely more than made up for by that lofty yield.
3. PepsiCo is a Dividend King
If you are a truly finicky dividend investor who only looks at the creme de la creme, then Dividend King PepsiCo could be your best choice. It has increased its dividend every single year for over five decades, which is not something that happens by accident. A streak like that requires a strong business plan that gets executed well in good times and bad. The company is one of the largest consumer staples makers on the planet, with leading positions in the beverage, snack, and packaged food spaces.
Today’s Change
(-0.32%) $-0.47
Current Price
$145.02
Key Data Points
Market Cap
$198B
Day’s Range
$144.51 – $145.80
52wk Range
$127.60 – $161.50
Volume
6M
Avg Vol
7.2M
Gross Margin
54.21%
Dividend Yield
4.81%
PepsiCo stands toe to toe with any peer with regard to distribution, brand management skills, and innovation. Still, now is not the best of times for the company, with its business trailing behind some of its peers. That’s why the 3.8% dividend yield is near the highest levels in the company’s history, hinting that the stock is on the discount rack. If you think in decades, however, the high yield is an investment opportunity. Given the Dividend King’s strong operating history, it seems highly likely that it will muddle through the current headwinds and get back on track again. To that end, it has already acquired a pair of on-target brands that better align its portfolio with current consumer trends.
Maybe buy more if you already own them
If you don’t own Enterprise, Scotiabank, or PepsiCo, now is a good time to do a deep dive. You might find you add one or more to your portfolio. If you do own them, now could be a good time to consider doubling up. Great dividend stocks don’t go on sale very often, and it pays to take advantage of the opportunity when they do.
