It can be tough to find high-yield stocks that qualify as "forever" holdings, since they often tumble as interest rates rise and turn bonds into safer income investments. But today, a trio of our contributors will highlight three income stocks that should generate steady returns in choppy markets: China Mobile (NYSE:CHL), Realty Income (NYSE:O), and Enterprise Product Partners (NYSE:EPD).
China's biggest telco
Leo Sun (China Mobile): China Mobile is China's largest wireless provider. The company and its main competitors, China Unicom and China Telecom, are all state-backed enterprises. China Mobile stock has tumbled nearly 10% this year thanks to ongoing concerns about trade tensions, slower growth in wireless subscribers, and higher costs related to the rollout of its 5G network.
However, China Mobile's long-term growth remains intact. Its total wireless customer base grew 5% year over year to nearly 910 million in July 2018. Within that total, the company's 4G customer base grew 13% to 683.3 million, indicating that plenty of its 2G/3G users still need to upgrade to faster devices and pricier plans. Once China Mobile finishes its 5G rollout, it can upgrade its 4G users to 5G plans.
China Mobile also owns a newer broadband business, which grew its customer base by 44% against the prior year to 138.1 million in July. This gives China Mobile plenty of fresh bundling opportunities between its wireless and wireline segments.
Analysts expect China Mobile's sales and earnings to both dip slightly this year before returning to low single-digit growth next year. However, the stock trades at just 11 times forward earnings, and it could rebound on any positive news regarding U.S. / China trade talks.
China Mobile pays semi-annual dividends that are declared every half-year based on a payout ratio of about 50%. This dividend varies from year to year, but it generally remains between 3% and 5%. China Mobile also occasionally pays special dividends, as it did last year to commemorate its 20th anniversary as a public company.
Get the dividends you want when you want them
Dan Caplinger (Realty Income): Many investors who crave high dividend yields turn to real estate investment trusts to maximize their income, and Realty Income is one of the dominant REITs in the business. Calling itself "The Monthly Dividend Company," Realty Income sports a 4.5% yield and has made monthly payments of dividend income to shareholders for 577 months in a row -- more than 48 years. Moreover, for more than 20 years, the REIT has also increased its monthly dividend payments at least once every quarter, resulting in compounded annualized dividend growth of nearly 5% since the stock first became eligible for trading on the New York Stock Exchange almost a quarter-century ago.
Realty Income generates its dividend payments through a portfolio of more than 5,400 commercial properties, mostly in the retail space. With more than 250 different commercial tenants, Realty Income has a diverse portfolio, and it aims to minimize the risks of retail holdings by focusing on tenants that are involved in key areas of the industry. Among its tenants, you'll find fitness centers, drugstores, movie theaters, wholesale clubs, and other companies that have largely defied the downturn that big-box department stores have suffered.
Most investors don't have as much real estate exposure in their investment portfolios as they should, and Realty Income effectively fills this void. Add to that its dividend prowess, and Realty Income enhances nearly any investor's holdings.
Solid as a...pipeline
John Bromels (Enterprise Products Partners): For high yields, master limited partnerships (MLPs) often can't be beaten. In exchange for special tax treatment from the government, MLPs pay out almost all their earnings as distributions to their investors. Pipeline operator MLP Enterprise Products Partners' current yield of 5.9% is pretty standard for the industry, but its performance has been extraordinary, and that's what makes it a great candidate to buy and hold forever.
Enterprise has diversified within the pipeline space. While some of its peers focus exclusively on natural gas pipelines, or crude oil pipelines, Enterprise's 50,000 miles of pipelines cross the energy spectrum, transporting dry gas, natural gas liquids, crude oil, refined products, and petrochemicals. It also owns storage, processing, and export facilities. With U.S. oil and gas supplies expected to continue growing, Enterprise's network of pipelines and facilities should remain busy well into the future.
But the company isn't just resting on its laurels. It's invested more than $5 billion in expansions serving the red-hot Permian Basin, where production is close to outstripping transport capacity. Enterprise is also building out its export network in anticipation of a not-too-distant future, when U.S. petroleum supply exceeds both domestic demand and current export capacity. Management continues to do an excellent job of making investments to satisfy current market needs while also anticipating the future. It's why investors can feel secure hanging onto this high-yield partnership for a very long time.
Dan Caplinger has no position in any of the stocks mentioned. John Bromels has no position in any of the stocks mentioned. Leo Sun owns shares of China Mobile. The Motley Fool recommends Enterprise Products Partners. The Motley Fool has a disclosure policy.