Home Enterprise bank The smartest ultra-high dividend stocks to buy with $ 100 right now

The smartest ultra-high dividend stocks to buy with $ 100 right now

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Whether investors realize it or not, they have witnessed history for the past 20 months. First they looked at the benchmark S&P 500 fight its way to the fastest decline of at least 30% of its rich history. This was followed by the strongest rebound on record. It took less than 17 months for the index to double from its pandemic low.

While volatility is always present, so is the opportunity to buy into large companies at a perceived discount. If you invest for the long term, you can always find great deals.

Interestingly, some of the best deals available right now are ultra-high dividend stocks (that is, companies with a yield of 7% or more). Since dividend paying companies are often profitable and proven to be a smart addition to an investor’s portfolio.

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Best of all, you don’t need a load of cash to start earning income or building wealth with dividend-paying stocks. If you have $ 100 ready to invest, which won’t be needed to cover bills or emergencies, the following super high yield stocks are some of the smartest buys right now.

Enterprise Product Partners: 7.94% return

Last year, crude oil saw a record drop in demand, which made financial investors reluctant to invest their money in oil stocks. However, dividend seekers will not have these concerns with the Master LP. Enterprise Product Partners (NYSE: EPD).

Upstream oil companies, like drillers, feel a direct squeeze when crude oil or natural gas prices fall. Enterprise Products Partners is an intermediary supplier. It operates approximately 50,000 miles of pipelines, has 14 billion cubic feet of natural gas storage capacity, and controls 19 natural gas processing facilities.

Because of the way Enterprise Products structures its transportation and storage contracts, it doesn’t feel the same pinch when oil and natural gas prices falter. In fact, with the company enjoying such transparent cash flow, it is able to disburse capital for new infrastructure projects without compromising its payments or profitability.

The company’s payout-to-coverage ratio – the amount of distributable cash flow relative to the amount of distributed cash paid to shareholders – provides further evidence that it is well shielded from fluctuations in crude and natural gas prices. At the height of the initial wave of the coronavirus pandemic, Enterprise Products Partners never saw its payout-to-coverage ratio drop below 1.6. Anything less than 1 or close to 1 would have been of concern.

As the price of crude oil and natural gas skyrocket as global demand increases and supply remains relatively tight, drillers are expected to increase production in 2022 and beyond. This bodes well for Enterprise Products Partners, which has regularly disbursed capital to expand its transportation, storage and refining capacity.

Even as the S&P 500 hits new highs, Enterprise Products Partners and its nearly 8% return remains a boon in the energy sector.

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Mobile telesystems: 10.97% efficiency

The Russian telecoms giant is another smart investor with ultra-high dividend dividend income that investors can buy right now with $ 100. Mobile telesystems (NYSE: MBT), also known as MTS. Note that while MTS does pay an 11% 12-month rolling return, its two annual payments are not fixed. Nonetheless, the company has averaged a return of around 10% over the past six years.

The main driver of MTS cash flow remains its wireless business. Starting this year and over the next two years, it is expected to benefit tremendously from the deployment of 5G wireless infrastructure.

It has been a decade since substantial improvements have been made to wireless download speeds, meaning it is highly likely that MTS will see an increase in data usage and that wireless device upgrades will continue for a long time. years. As a reminder, data is the main driver of Mobile TeleSystems wireless margins.

However, MTS isn’t content to just let this generally slower growing segment do all the work. It has launched a number of new revenue channels that deliver sustainable double-digit growth and could significantly increase sales of add-ons.

For example, the company saw the number of streaming TV users jump from 1.2 million in the quarter ended June 2020 to 3.2 million a year later. Including more traditional pay-TV options, MTS now has 7.4 million active users, up 52% ​​year-over-year.

Beyond streaming, MTS saw 48% sales growth in cloud and digital solutions revenue, and saw gross loans issued by MTS Bank jump 49% from the previous year period. In total, these new channels saw sales growth of 27% in the second quarter of 2021.

Between the predictability of cash flow from its wireless segment and the high-margin organic growth potential of these non-core channels, Mobile TeleSystems is cheap (around nine times estimated earnings for the coming year) and a hell of a superstar. dividends.

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Annaly Capital Management: 10.4% return

Finally, there’s my favorite ultra-high dividend-paying stock and one company that can help investors crush inflation: Annaly Capital management (NYSE: NLY). Annaly has averaged a return of around 10% over the past two decades and has paid over $ 20 billion in dividends since its inception in 1997.

Annaly Capital Management is a Mortgage Real Estate Investment Trust (REIT). Put simply, mortgage REITs are companies that borrow money at low short-term rates and use that capital to acquire higher-yielding long-term assets, such as mortgage-backed securities (MBS). ). Annaly carefully monitors interest rates and seeks to maximize the difference (called the net interest margin) between the average return received from her MBS and the average return on her borrowing rate.

What’s remarkable is that the early stages of an economic recovery favor mortgage REITs. Virtually all recoveries from a decades-long recession have been characterized by a steepening of the yield curve – a widening gap between long-term and short-term Treasury yields. When Treasury bond yields widen, it’s common for Anna to earn higher returns on the MBS she purchases, which ultimately increases her net interest margin.

Another main reason Annaly can be so successful is the company’s reliance on agency assets. An agency guarantee is backed by the federal government in the event of default. While this added protection reduces Annaly’s net return on her MBSs compared to non-agency assets, it also allows the company to use leverage to increase its profit potential.

With Mortgage REITs entering the ideal phase of their growth phase and Annaly generating double-digit return, now is the time for income investors to jump on this smart, super-high-yielding stock.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.


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