AT&T (T -1.00%), Enterprise Products Partners (EPD -0.11%), and National Health Investors (NHI -0.09%) all offer dividends with yields above 6%, at a time when the S&P 500's average is only about 2%. Yet they are priced well compared to competitors in their sectors -- all three companies' shares have tumbled more than 16% over the past year, giving investors a good price point to buy in for those dividends.

These are stable, mature companies, where you're not likely to see double-digit growth, but they have predictable cash flows, making their high-yield dividends safe.

Businessman holds coins that fall through his hands.

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1. AT&T is a good answer for dividend investors

AT&T is a Dividend Aristocrat that pays an annual dividend of $2.08 per share, giving it a yield of 7.1%. It paid out $15 billion in dividends last year, and with 2020 free cash flow of $27.5 billion, that leaves it with a payout ratio of just below 55%. That's plenty safe, particularly since the company has raised the dividend by just 6.12% over the past three years.

The concern is that AT&T's shares have tumbled 24% over the past year. Reported revenue for 2020 was $171.8 billion, down 5.2% over 2019, and operating income was down 77% from 2019. But management is addressing the issues it faces; the company is in the process of selling off its unprofitable DirecTV business, giving it a path to better margins in the coming years. 

In the fourth-quarter earnings call, management noted that it had added 1.5 million postpaid phones over the year, the most in a decade, and increased subscriptions to HBO Max and HBO by 7 million. It also said it expects revenue to increase by 1% in 2021 over 2020. That may not knock your socks off, but the point is, AT&T looks to be more profitable this year and its dividend is plenty safe.

2. Enterprise Products Partners keeps the distributions flowing

Enterprise Products Partners' stock has fallen more than 16% over the past year, but this is a steady midstream energy master limited partnership (MLP) with 50,000 miles of natural gas liquids (NGL), crude oil, natural gas, petrochemicals, and refined products pipelines. The company has raised its distribution (MLPs call their dividends "distributions," and they have different tax structures than dividends) for 22 consecutive years, including a 1.1% bump this year. The quarterly distribution of $0.45 per share works out to a yield of 8.28%.

The company's revenue was $27.2 billion in 2020, down 17% year over year. Net income was $3.9 billion, also down 17% compared to 2019, and cash flow from operations (CFFO) was listed as $5.9 billion, down 9% year over year. Those numbers aren't surprising, because last year was a terrible year for energy companies. People drove less because of the pandemic, and oil prices were already down before coronavirus hit.

Enterprise fared better than most energy companies, however, because it is diversified beyond oil. In the fourth quarter, there were signs of financial improvement as the company reported EBITDA of $2.05 billion, a rise of nearly 2% year over year. In the fourth-quarter earnings call, management said they expect stronger domestic and international demand for NGL, ethylene, propylene, and refined products this year as the economy bounces back.

For an MLP, the best indicator of distribution safety is the cash flow from operations (CFFO) payout ratio, which the company said was 70%. That's extremely good, as MLPs often have CFFO payout ratios of 90% or more. On top of that, Enterprise has a low debt-to-EBITDA ratio at 3.55 for the trailing 12 months.

NHI Dividend Yield Chart

NHI Dividend Yield data by YCharts

3. NHI is still turning a healthy profit

National Health Investors had a rocky 2020, thanks to the pandemic, and its shares have fallen more than 24% over the past year.

The real estate investment trust (REIT) is invested heavily in senior independent residences, assisted living centers, memory-care facilities, and medical office buildings. The coronavirus had a strong negative effect on senior housing, and that has dampened business for NHI's tenants. However, that's likely only a short-term, pandemic-related trend -- the number of baby boomers who will need some type of senior housing is still expected to surge in the coming years. Government data indicates that the number of people in the U.S. aged 65 and over increased to 38.8 million in 2018, a 35% rise in one decade. The study said that number is expected to grow to 94.7 million by 2060.

NHI relies on triple-net leases, where the tenant is responsible for the taxes, utilities, insurance premiums, repairs, and other charges regarding properties. So, far, in February, the company collected 99.4% of its rent. Management just raised the quarterly dividend by 5% to $1.1025 per share, the 19th consecutive year it has raised its dividend, giving it a yield of 6.46%.

Despite the problems its tenants faced, NHI still had a decent year. In the fourth quarter, normalized adjusted funds from operations (AFFO) per share were $1.30, flat with the previous year. Normalized AFFO for the year was $5.29, an improvement of 3.7% over 2019, and net income for the year per diluted common share was $4.14, up 12.8% year over year.

It's not all rosy, though -- occupancy rates for NHI's tenants have declined nearly every month since March, and the company has offered rent deferrals to some of its tenants, allowing them to delay payment with 8% interest. Two of the company's main tenants, Bickford Senior Living and Holiday Retirement, saw further drops in occupancy in January, though another tenant, Senior Living Communities, saw its first rise since September. NHI, in its fourth-quarter release, said it expected occupancy numbers to start climbing again in 2021 as vaccines take effect.

Look for the right opportunity

These three stocks all are undervalued right now. They're cash-making machines with debt-to-EBITDA ratios (TTM) below 5. Their dividends are high, but safe.

Of the three, I see the most opportunity with NHI; long-term demographics work in its favor, and it has a current price-to-earnings (P/E) ratio below 16.5. Enterprise Products Partners is in a similar situation, but with an even higher yield, with oil expected to bounce back this year and a P/E below 13.

AT&T is probably the best pick for cautious investors, though it is a little pricier with a P/E just below 19, and the company has a tougher road to turn things around. However, if the company is able to sell off its DirecTV business, it will have better margins in the future, and its dividend safety is the best of the three.