It's hard to believe, but not long ago, ExxonMobil was the most valuable company in the world. Those days, however, are long gone. Apple is worth three times Exxon's $360 billion valuation.
But all has not been lost for investors. Over the past four years, for instance, Exxon has paid out almost $50 billion to shareholders via dividends! And that doesn't look likely to change anytime soon: Its current yield is 3.8%.
That doesn't mean, however, that it's the only dividend-paying star on the block. Below, three Fool.com contributors have highlighted stocks that have even higher payouts: wood pellet producer Enviva Partners (EVA), telecom giant Verizon Communications (VZ -0.68%), and REIT Retail Opportunity Investments (ROIC -0.32%).
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Who knew wood pellets could pay out so much?
Brian Stoffel (Enviva Partners): You've probably never heard of Enviva Partners, but if you're a serious income investor, it should be on your radar. Enviva has operations in the American Southeast manufacturing wood pellets. While those pellets have long been the fuel for cold Northeastern cabins, they have new big customers: European and Asian power companies that need "greener" inputs than coal.
If management can meet expectations, it will be paying out $2.53 in dividends this year, which equates to a 7.9% yield at today's prices. This isn't, however, a dividend without risks. Enviva suffered a fire at one of its Virginia ports earlier this year, which could threaten the financial flexibility of the balance sheet. Investors should watch the company's coverage ratio -- where anything above 1 is a good thing -- to check on the sustainability of the payout.
The other hot-button issue to watch is the length of the average contract with these power companies. Right now, those contracts average 8.5 years, but that's down from last year and represents another important metric that investors should keep an eye on.
Verizon is still cheap
Jamal Carnette, CFA (Verizon Communications): Verizon has missed out on the "Trump rally," as shares have only increased by 15% since the election, less than half the return of the greater S&P 500. As a result, the stock currently yields 4.4%, more than double the yield of the greater index. Additionally, shares remain cheap: As of this writing, Verizon trades at 11.5 times forward earnings versus 18 times for the S&P 500.
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Verizon's bearish thesis is that the company is tied to two declining segments -- cable television and wireline telephony -- and the third, wireless telephony, is no longer the growth business it once was. While this thesis is directionally accurate, the severity of each problem has been overstated. Through the first six months of 2018, wireless revenue increased 5.2%, with wireline reporting a 2.8% decrease. Yet Verizon grew operating income 11% over the prior year on account of higher wireless margins.
While it should be noted Verizon's dividend payout ratio is high, last year's corporate tax cut should afford the company more breathing room to continue to service and hike its dividend, continuing its 13-year streak of raises. For income-hungry value investors, Verizon may be worth a serious look.
This market lull won't last forever
Steve Symington (Retail Opportunity Investments): I've pounded the table twice in recent months encouraging investors to buy shares of Retail Opportunity Investments, particularly while its lull in making new acquisitions persists. Thanks to the broader market's pullback in recent weeks, the stock is down around 10% since the beginning of September and offers a juicy 4.4% dividend as of this writing.
In case you're unfamiliar, Retail Opportunity Investments is a real estate investment trust (REIT) that focuses on buying and revitalizing necessity-based retail properties -- which typically means those properties are anchored by a large grocery store -- in affluent communities on the West Coast. When the company reported second-quarter results in late July, CEO Stuart Tanz noted that while the first half of 2018 was punctuated by "considerable hesitation among buyers and sellers across [their] markets, [ROIC is] now starting to see more favorable conditions again for attractive off-market acquisition opportunities."
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Of course, that hasn't stopped Retail Opportunity Investments from steadily building its empire with a small number of strategic property purchases this year. But I suspect we'll see its efforts begin to pick up the pace again in the coming quarters, potentially starting with its third-quarter report less than two weeks from now. When that happens, and when the company's per-share funds from operations begins to climb higher as a result, I think the stock price will follow suit.
