The conventional wisdom is that ultrahigh-yield dividend stocks are risky. Some could be concerned that the dividends might be unsustainable. These can sometimes be legitimate worries, but not always.
Income investors seeking dependable income can find great companies that pay juicy dividends. Here are three ultrahigh-yield dividend stocks you can buy right now with no hesitation.
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1. Enbridge
Enbridge (ENB 0.51%) offers an attractive forward dividend yield of 6.06%. The company also has an impressive track record of increasing its dividend for 30 consecutive years. I don't think it's in danger of ending that streak anytime soon.
The main reason for my confidence in Enbridge is its underlying businesses. Roughly 30% of the crude oil produced in North America and 40% of U.S. crude oil imports are transported through the company's pipelines. Enbridge's pipelines transport around one-fifth of the natural gas used in the United States. The company is also the largest natural gas utility by volume in North America.
I like Enbridge's stability. More than 98% of the company's earnings before interest, taxes, depreciation, and amortization (EBITDA) are either regulated or part of take-or-pay contracts where buyers either take delivery or pay a penalty. Around 80% of Enbridge's EBITDA is protected against inflation.
This energy infrastructure company's cash flows are steady and predictable. Its balance sheet is strong. Enbridge expects to grow its business by around 5% per year on average through the end of the decade. I believe that goal will be achieved, making this ultrahigh-yield dividend stock a no-brainer pick for income investors.
2. Enterprise Products Partners
Enterprise Products Partners (EPD 0.30%) gives income investors many of the same positives that Enbridge does. Even better, its forward distribution yield of 7% is higher. While Enterprise hasn't increased its distribution for 30 consecutive years like Enbridge has, it's not too far behind with a 26-year streak of distribution hikes.
Granted, Enterprise Products Partners' business isn't quite as diversified as Enbridge's. The company operates over 50,000 miles of pipeline and other midstream assets with a heavy focus on natural gas liquids (NGLs). But I think its business is one you can count on.
History is on my side in this view, by the way. Enterprise Products Partners has generated dependable cash flow since it's been in business, a period that included the Great Recession, the oil price collapse of 2015 through 2017, and the COVID-19 pandemic.
The demand for U.S. natural gas, NGLs, and oil should grow over the next several years. Enterprise Products Partners is well-positioned to take advantage of this growth with its current pipelines and $7.6 billion in major capital projects under construction.
3. Prudential Financial
Moving outside of the energy sector, I think Prudential Financial (PRU 0.93%) is also a great ultrahigh-yield dividend stock to buy right now. The financial services giant offers a forward dividend yield of 5.29%. Prudential has increased its dividend for 17 consecutive years.
This company is probably best known for its insurance operations. Prudential is also a big player in the retirement business. Its PGIM unit is a lucrative global investment management business. These different revenue sources provide a level of diversification for Prudential. In addition, the company's reduction in exposure to traditional variable annuities and guaranteed universal life insurance products makes its business less risky than in the past.
Granted, Prudential's stock performance has been dismal lately. However, that's made its valuation even more attractive. Shares currently trade at a forward price-to-earnings ratio of 7.94.
The slogan for Prudential for years has been, "Get a piece of the rock." I think that's good advice for income investors seeking ultrahigh dividends.
