Discover Two Lucrative Dividend Stocks That Shouldn't Be Overlooked
In the realm of high-yield dividend stocks, two names that buck the trend of slower-growing companies are MPLX and Plains All American Pipeline. Rather than relying solely on income, these companies boast fast-growing dividends, which could potentially lead to greater total returns.
MPLX, currently offering a 7.1% cash distribution—significantly higher than the S&P 500's 1.2% and its peers' yields—has managed to grow its payout at a higher rate. Last year, it increased its distribution by 12.5%, marking the third consecutive year of double-digit distribution growth. This outpaces Energy Transfer and Enterprise Products Partners, which have seen annual growth rates in the 3% to 5% range.
The robustness of MPLX's dividend is underpinned by a strong financial profile. It comfortably covered its distribution with cash flow, had a 3.1 leverage ratio, and maintains a credit rating similar to Enterprise Product Partners, the sector's highest-rated firm. In addition, MPLX has recently added several capital projects to its growth outlook, extending its high-yielding payout growth outlook through the end of the decade.
Meanwhile, Plains All American Pipeline yields 7.7%. Following a 20% distribution increase last year, its payment now stands at $1.52 annually. This growth doesn't just appear out of nowhere; Plains All American Pipeline cut its payout in the past to invest in growth and reduce debt. Now, with a stronger balance sheet, it's rebuilding its payout. Leverage should remain below the low end of its target range this year, giving the company room to grow its payment at a pace of around 10% annually.
These MLPs have been delivering robust dividend growth, making them attractive for income investors seeking rapid growth. Just keep in mind that as MLPs, they send out a Schedule K-1 Federal Tax Form.
Sources:1. Company annual reports2. Yahoo Finance3. FactSet Research Systems Inc.
MPLX's high cash distribution of 7.1% significantly surpasses the S&P 500's 1.2% and its peers' yields, demonstrating its financial strength in the realm of finance and money.
The company's notable dividend growth is evident in its ability to increase its distribution by 12.5% last year, marking the third consecutive year of double-digit growth in investing.
MPLX produces significant cash flows, which allows it to comfortably cover its distribution and maintain a credit rating similar to that of Enterprise Product Partners. This financial stability enables the company to pursue new capital projects and further its high-yielding dividend payout.
Plains All American Pipeline's dividend growth is noteworthy, as demonstrated by its 20% distribution increase last year and its target of 10% annual growth moving forward. This growth is supported by the company's improved financial profile and reduced debt.
