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The appeal of high dividend stocks is that they offer higher yields, which makes them more attractive for income investors. We see opportunities across a variety of sectors, but prefer to stick to the higher quality dividend stocks. In this article, we’ll take a look at three for long-term income that we believe have sustainable combination of high current yield, and long-term dividend growth potential.
Altria Group, Inc. (MO)
Altria is a that sells cigarettes, chewing tobacco, cigars, e-cigarettes, and more under a variety of brands, including Marlboro, Skoal, and Copenhagen, among others. The company also has a 35% investment stake in e-cigarette maker JUUL, and a 45% stake in the cannabis company Cronos Group ().The majority of Altria’s revenue and profit is still made up of smokeable tobacco products. The Marlboro brand still enjoys the leading market share in the U.S. market.Altria Group reported its financial results for the second quarter of 2024, falling short of both EPS and revenue estimates. The company posted an EPS of $1.31, missing expectations by $0.03, and generated revenue of $5.28 billion, reflecting a 2.96% decline year-over-year and missing the mark by $115.38 million. Key financial highlights for the quarter included net revenues of $6.21 billion, a 4.6% decrease compared to Q2 2023.Revenues net of excise taxes were $5.28 billion, down 3.0% year-over-year. Despite these declines, the company reported a significant increase in reported diluted EPS, which rose by 85.7% from the prior year to $2.21. Adjusted diluted EPS remained flat compared to Q2 2023 at $1.31.Altria’s current yield is very high at 8%. The company has increased its dividend for 54 years, placing it on the Dividend Kings list. Given this combination of dividend longevity and enormous yield, we like Altria for income-focused investors.
Universal Health Realty Income Trust (UHT)
Universal Health Realty Income Trust operates as a real estate investment trust (REIT), specializing in the healthcare sector. The trust owns healthcare and human service-related facilities. Its property portfolio includes acute care hospitals, medical office buildings, rehabilitation hospitals, behavioral healthcare facilities, sub-acute care facilities and childcare centers. The trust was founded in 1986. Universal Health’s portfolio consists of 69 properties in 20 states.On July 24, 2024, Universal Health Realty Income Trust (UHT) announced its earnings for the three-month period ending June 30, 2024. The company reported a net income of $5.3 million, or $.38 per diluted share, compared to $3.5 million, or $.25 per diluted share, in the second quarter of 2023. This increase in net income by $1.8 million, or $.13 per diluted share, was attributed to several factors.FFO for the first six months of 2024 was $24.8 million, or $1.79 per diluted share, up from $22.0 million, or $1.59 per diluted share, during the same period in 2023. This $2.8 million, or $.20 per diluted share, increase in FFO was largely due to the rise in net income.Going forward, Universal Health will benefit from changing demographics. The U.S. is an aging society, with over 70 million Baby Boomers, those generally born between 1946 and 1964. As the sizable Baby Boomer generation ages, demand for healthcare facilities is poised to grow.REITs that own healthcare properties, such as Universal Health, are in a prime position to capitalize on the changing demographic landscape. Universal Health’s growth will be accomplished by rising rents on existing properties, and by acquiring new properties.Universal Health can be expected to fare relatively well during economic downturns, but it is not immune from recessions. The trust remained profitable during the Great Recession of 2007-2009, and it continued to raise its dividend each year. Universal Health has a nice dividend yield and a secure payout. UHT currently yields 6.4%.
Enterprise Products Partners LP (EPD)
Enterprise Products Partners was founded in 1968. It is structured as a Master Limited Partnership, or MLP, and operates as an oil and gas storage and transportation company.Enterprise Products has a large asset base which consists of nearly 50,000 miles of natural gas, natural gas liquids, crude oil, and refined products pipelines.It also has storage capacity of more than 250 million barrels. These assets collect fees based on volumes of materials transported and stored.Enterprise Products Partners reported second-quarter 2024 earnings with an EPS of $0.64, missing estimates by $0.03, and revenue of $13.48 billion, which fell short by $787.40 million despite a 26.59% year-over-year increase. Net income attributable to common unitholders was $1.4 billion, a 12% increase compared to $1.3 billion in the second quarter of 2023.Distributable Cash Flow (DCF) rose to $1.8 billion, up from $1.7 billion in the same period last year, providing 1.6 times coverage of the declared distribution. Enterprise increased its quarterly distribution by 5% to $0.525 per unit and repurchased approximately $40 million of its common units.The company’s Adjusted Cash Flow from Operations (CFFO) was $2.1 billion, up from $1.9 billion in the second quarter of 2023, with an annualized Adjusted CFFO of $8.4 billion.Enterprise Products Partners is one of the strongest midstream MLPs. It has credit ratings of BBB+ from Standard & Poor’s and Baa1 from Moody’s, which are higher ratings than most MLPs. It also has a distribution coverage ratio of nearly 2x, leaving room for distribution increases and unit repurchases.EPD has been able to raise its distribution to unitholders for 26 years in a row and currently yields 7.2%.More By This Author:
3 High Yield Stocks For Long-Term Income
