2 high yielding dividend stocks for low risk investors



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<p class = "canvas-atom-canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "The average stock in the S & amp; P 500 currently gives less than 2%. As a result, most investors would rate above 4% high dividend stocks. Some companies, however, pay more than double that level. While many of these very high yields have extremely high risk profiles, a few of them offer long-term payments backed by solid financial data. "Data-reactid =" 11 "> The average stock market S & P 500 currently gives less than 2%. For this reason, most investors would classify high dividend stocks above 4%. Some companies, however, pay more than double that level. While many of these very high yields have extremely high risk profiles, a few of them offer long-term payments supported by solid financial statements.

<p class = "canvas-atom-canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Two of these dynamos generating income are EnLink Midstream (NYSE: ENLC) and MPLX (NYSE: MPLX). Here's why performance seekers will want to take a closer look at these two energies master limited partnerships "Data-reactid =" 12 "> Two of these revenue generating dynamos are EnLink Midstream (NYSE: ENLC) and MPLX (NYSE: MPLX). Here's why performance seekers will want to take a closer look at these two major energy limited partnerships (MLPs).

A bag of money with the word dividends written on it.

Source of the image: Getty Images.

Solid and become stronger

<p class = "canvas-atom-canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "EnLink The median current is currently about 8.6%. A solid return as investors will find in the high-yielding securities segment To begin with, long-term and fee-based contracts are based on approximately 90% of its cash flow, which makes for minimal direct exposure to cash flow. Commodity Price Volatility At the same time, the Company hopes to generate enough cash to cover its very high yield distribution of 1.3 to 1.4 times this year, well above the minimum comfort level of 1.2. times from most countries. intermediate sector companies. In addition, its balance sheet is strong, supported by a leverage ratio that should be between 3.9 and 4.2 times this year. This is about the target of 4.0 times most MLPs. "Data-reactid =" 26 "> EnLink Midstream is currently reporting about 8.6% .This is a solid gain that investors will find in the high-yielding securities segment. In the long run, fee-based contracts block approximately 90% of its cash flow, giving it minimal direct exposure to commodity price volatility, while the company expects to generate sufficient cash to hedge its very high yield distribution in: 1.3 to 1.4 times this year, well above the 1.2-fold minimum comfort level of most mid-market companies, balance sheet being strong, supported by a leverage ratio that should be between 3.9 and 4.2 this year about 4.0 times the target of most MLPs.

Even though EnLink Midstream metrics are today, they are still improving in the years to come. Indeed, the company currently plans to invest between $ 1.2 billion and $ 1.5 billion in high-yield growth projects by 2021. As these extensions materialize, they are expected to increase cash flows at an annual rate greater than 10%. This will support the growth of the distribution in the range of 5% to 10%. Given that EnLink Midstream expects a cash flow increase faster than its payments, its financial indicators should further progress. The MLP's distribution hedge is on average between 1.3 and 1.5 times in the long run, while leverage is expected to be between 3.5 and 4.0 times.

EnLink offers people in search of income the best of both worlds: it now offers ultra-high performance on solid ground. In the meantime, he plans to increase this payment at a steady pace over the next few years, even if his financial parameters improve. This combination of revenue, growth and strengthening financial services makes it a compelling option for those seeking low-risk income.

Already high and higher

MPLX yields around 8.1% at the moment. The company also supports this payment with solid financial measures. The MLP generates stable liquidity backed mainly by fee-based contracts. In addition, it hedged its distribution with a cash flow of 1.36 times last year, while ending 2018 with a debt ratio of 3.9 times. Both are strong numbers for an MLP.

Like EnLink, these measures are expected to improve over the next two years. The company is currently investing $ 4.2 billion to expand its footprint in the midst of the industry. These growth projects are expected to increase the company's cash flow by 11% this year and an additional 13% by 2020. This will support its plan to increase its distribution by approximately 6% annually during this period. At the same time, with cash flows growing at a faster rate than the payment, MPLX's coverage rate is expected to improve relative to its already healthy level. This will allow him to keep more money to finance expansion projects, which will help improve his leverage ratio.

High efficiency is not always high risk

Most investors perceive returns well above average as a sign of increased risk. However, this is not the case with these two MLPs because they have strong financial indicators that support their payments. As a result, investors can achieve extremely high returns for a reasonably low risk.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = " More from The Motley Fool "data-reactid =" 34 "> More from The Motley Fool

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Matthew DiLallo has no position in any of the actions mentioned. The Motley Fool has no position in the mentioned actions. The Motley Fool has a disclosure policy."data-reactid =" 42 ">Matthew DiLallo has no position in the mentioned actions. The Motley Fool has no position in the mentioned actions. Motley Fool has a disclosure policy.

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