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3 High-Yield Dividend Stocks You Don't Have to Babysit

By Tyler Crowe – Sep 12, 2016 at 12:50PM

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Brookfield Infrastructure Partners, StoneMor Partners, and Suburban Propane Partners have that rare combination of sustainable and generous payouts.

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One of the tricky parts about finding high-yielding dividend stocks is that many have high yields because there are concerns that the company won't be able to maintain its payout. Companies that do have this combination of high yield and payout sustainability aren't that common, but there are some out there. Three companies that fit the bill that you should look into are Brookfield Infrastructure Partners (BIP -1.89%), StoneMor Partners (STON), and Suburban Propane Partners (SPH -0.31%). Here's why these three fit the bill of a stock you don't have to look after all the time. 

Strong dividend through diversification

Many companies that are structured as master limited partnerships are much like one-trick ponies. They all do something rather well, but they mostly only operate in one or two industries. What sets Brookfield Infrastructure Partners apart is the diversity that its portfolio has to offer. The company's business operates in toll-booth model businesses like electric distribution lines, oil and gas pipelines, rail lines, and -- go figure -- toll roads themselves. Brookfield's assets are also geographically diverse as it owns assets and properties in 15 countries spanning five continents. This helps to prevent the company from becoming too reliant on the economic growth of a single company. 

Some of the other things that make Brookfield seem like a promising investment is its capital allocation strategy. Infrastructure investments are capital intensive and many companies in this industry make the mistake of taking on too much debt and expecting to "grow into the balance sheet" as some executives have put it. Brookfield, on the other hand, maintains a policy where it pays out about 60%-70% of funds available for distribution, and uses the rest to pay for new projects. These are the kinds of moves that will make Brookfield's payout much more sustainable over the long term. So you can have confidence that its 4.95% yield is on pretty solid footing. 

Investing in one of life's certainties

StoneMor Partners is truly a unique company with quite possibly one of the most consistent business models: funeral and end-of-life services. The fact of the matter is, our lives are finite, and a company will need to help guide a family through end-of-life services. That is where StoneMor Partners comes in. It is one of the nation's largest funeral services companies in the U.S. This kind of consistent demand service means that StoneMor is able to churn out relatively regular cash flows that produce a distribution yield today of 10.6%. 

The past couple of quarters have been a struggle for the company as it has found its sales force wanting and there has been a high turnover rate. But the company is looking to address this as it hires and trains new staff. Despite these headwinds, it has enough cash on hand from prior quarters to make up for the modest shortfall this past quarter. This may end up being something worth watching in the coming quarters, but StoneMor's management has shown over the years to be prudent with its payout to shareholders and the ramp-up of its new sales hires should help to bring the company back to better results.

I'll admit right off the bat that StoneMor Partners isn't a high-growth stock, but no investor should expect it to be with a 10.6% yield. Slow and steady growth accentuated by some modest acquisitions to consolidate the fragmented end-of-life care industry is StoneMor's path forward, and patient investors should be able to reap a decent return from its dividend alone. 

What more could you want from a 10% yielding stock?

Suburban Propane Partners is an easily overlooked company. For one, technically, it's in a commodity industry, as a supplier and distributor of propane to residential, commercial, and industrial customers. However, because it is a supplier and distributor, much of its revenue and earnings is more predicated on the total volume moved rather than the price of the commodity itself. This helps the company produce pretty consistent cash flows that allows management to pay out a very generous yield of 10.8%. 

One thing to keep in mind about Suburban is that since so much of its business is distributing propane, which is used for home heating, much of the company's results will be predicated on the weather in the winter months. This past winter was especially warm in Suburban's core markets, so results were a little less robust than in prior years. Sill, even during a down year, the company's cash flow was still in relatively decent shape. Perhaps another year of record warm temperatures might spoil Suburbans payout, but we'll need to see if this past winter was just a fluke. 

Like StoneMor Partners,  investing in Suburban Propane Partners isn't for share price appreciation or massive dividend growth. Propane distribution is a pretty saturated market and today Suburban mostly grows through acquisition. That being said, a yield of 10.8% doesn't need huge share price appreciation to generate decent returns. For investors looking for a stable dividend with a high yield, Suburban Propane Partners is worth a look. 

Tyler Crowe has no position in any stocks mentioned. You can follow him at or on Twitter @TylerCroweFool.

The Motley Fool recommends Brookfield Infrastructure Partners and StoneMor Partners. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Stocks Mentioned

Suburban Propane Partners Stock Quote
Suburban Propane Partners
$16.04 (-0.31%) $0.05
StoneMor Partners Stock Quote
StoneMor Partners
Brookfield Infrastructure Partners Stock Quote
Brookfield Infrastructure Partners
$35.35 (-1.89%) $0.68

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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