How would you like to have heaps of passive income deposited into your brokerage account on a reliable schedule? It almost seems too good to be true, but income investors of all sizes regularly receive steady payments from the businesses they own shares of.
All three of these special stocks have to return nearly all of their profits to investors in the form of dividends. Here's why they could have lots of spare cash to distribute in the years ahead.
Medical Properties Trust
Right now, shares of Medical Properties Trust (MPW -1.88%) offer a tempting 7.7% dividend yield. Investors will be glad to know that this dividend payout is supported by reliable rent payments from hospital operators around the world.
Medical Properties Trust is a real estate investment trust (REIT) that owns hospitals and rehabilitation centers in the U.S. and Europe. The COVID-19 pandemic has been disruptive to hospital operations but had little effect on Medical Properties Trust because the company makes nearly all of its operators sign net leases that pass all of the variable costs of building ownership on to its renters.
As a REIT, Medical Properties Trust avoids paying income taxes if it distributes at least 90% of its profits to investors as dividend payments. There is a lot to distribute, too. In the second quarter, normalized funds from operations rose 7% year over year to $0.46 per share. That's more than enough to cover a dividend payout currently set at just $0.29 per share.
With annual rent raises built into long-term leases, Medical Properties Trust has reliable cash flows that should let it meet its dividend obligation and raise those payouts in the years ahead.
Enterprise Products Partners
Enterprise Products Partners (EPD 0.30%) is an oil and gas stock that offers a juicy 7.1% dividend yield. Income investors love the company because it has steadily raised its dividend payout for 23 consecutive years.
Enterprise is able to distribute steadily growing cash flows despite unpredictable energy prices because it owns more than 50,000 miles of pipelines that transport oil, gas, and refined products all over the U.S. As a midstream player, this company only underperforms when the amount of energy that needs to be stored and transported falls.
Prices can fluctuate rapidly but overall demand for oil and gas is relatively constant. Enterprise and its investors aren't too worried about a green revolution, either. Every new renewable energy source leads to lower prices for fossil fuels, which makes them more attractive all over again. This is why the International Energy Agency expects global demand for oil and gas to increase 18% by 2040.
AGNC Investment Corp.
This is a REIT that doesn't even own any real estate. Instead, AGNC Investment Corp. (AGNC 0.56%) owns lots of mortgage-backed securities that pay relatively high long-term interest rates. When AGNC Investment buys mortgage-backed securities with money it borrowed at relatively low rates, the company profits and everybody's happy.
Right now you can receive a mind-blowing 11.7% yield on AGNC Investment shares because short-term and long-term rates aren't behaving like they normally do. Inverted yield curves are nerve-wracking situations in which short-term rates exceed long-term rates.
The important thing to remember about inverted yield curves is that they don't last very long. Once the Federal Reserve has inflation under control, yield curves will most likely return to normal for a very long time. Right now may be a risky time to trade interest-sensitive stocks, but it's a great time to buy AGNC shares with the intention of holding them for the long run.