Premier High-Return Selections That Produce [Podcast]

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Premier High-Return Selections That Produce [Podcast]

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We explore a somewhat atypical subject for us—high-yield dividend stocks! While we don’t concentrate solely on yield, we recognize that many investors seek dependable income. How can you spot a high-yielder that will stand the test of time? Mike discusses his favorite selections, how to distinguish between secure income and the risky varieties, and why the figures are more significant than the narrative behind the yield.

Key Insights

Yield Isn’t Just a Treat
A high yield may look attractive, but it usually signals deeper problems. Mike clarifies that merely noticing a substantial payout isn’t enough—you must grasp the reasons behind it.

  • Companies don’t provide 7–12% yields without justification.
  • A high yield typically involves risks: stagnating growth, excessive debt, or waning cash flow.
  • The greater the yield, the more meticulous your research should be.

What Defines a High Yield Today
We consider 5% as the benchmark—even though it may shift depending on market dynamics.

  • In rising markets, even a 4.5% yield might be seen as high.
  • In downturns, reliable blue-chip stocks can momentarily exhibit high yields due to falling stock values.

How to Pinpoint a Secure High-Yield
You require more than an enticing narrative—assess the company’s fundamentals.

  • Examine the Dividend Triangle: revenue, earnings, and dividend growth.
  • Evaluate free cash flow, payout ratios, and levels of debt.
  • Emphasize numbers over the story.

Mike’s Preferred High-Yield Selections
These firms are recognized for their solid fundamentals paired with significant income.

  • AllianceBernstein (AB): Investment manager with a dynamic dividend policy. Ongoing fees from institutional clients enhance its resilience, although it is susceptible to market declines and ETF rivalry.
  • Enterprise Products Partners (EPD): A robust pipeline leader with long-term agreements and a prudent balance sheet. However, reliance on fossil fuels and MLP tax intricacies constitute risks.
  • Vici Properties (VICI): REIT specializing in casinos, featuring leases that guard against inflation and generate strong cash flow. However, growth potential is restricted, and tenant concentration could challenge performance during downturns.
  • Brookfield Renewable (BEP.UN/BEPC): A worldwide frontrunner in renewable energy, receiving solid support from Brookfield. Its complicated structure and unclear financial reporting necessitate a high level of investor confidence.
  • First National (FN.TO): The largest non-bank mortgage lender in Canada. Strong risk assessment and reliable dividends, though it faces exposure to real estate cycles and risks related to third-party funding.
  • Telus (T.TO): A 7.5% yield might look inviting, yet increasing debt and slowing expansion pose warning signs. Management has implemented a less aggressive dividend growth strategy through 2028.

A Brief Guide to Prevent Dividend Cuts
Steering clear of most cuts requires vigilance. Here is Mike’s 3-step method:

  • A high yield always raises a flag—investigate it.
  • Review dividend growth and payout ratios over a period.
  • Validate your thesis using the Dividend Triangle: if patterns appear negative, investigate further.

Further Resources

Here is an extensive step-by-step guide on identifying high dividend yielders.

High-Yield Stocks I’d Actually Consider (Yes, Really)

Let’s explore real estate investment trusts (REITs), analyzing their operations, challenges, and which ones continue to be viable.

REITs Under