When the stock market sold off to start the year, it took a number of high-paying dividend stocks down with it. Many have since recovered, but there are a handful that are still pretty cheap, enabling investors to lock in some very generous yields. Three have caught my attention: Weyerhaeuser (WY 3.12%), Brookfield Property Partners (BPY), and Enterprise Products Partners (EPD 1.65%).
Money really does grow on trees
International forest-product company Weyerhaeuser has been hit by a double whammy over the past year. First, investors sold off the stock after it announced its intention to acquire rival Plum Creek, and then it sold off even more steeply amid the stock-market meltdown to start the year:
While the company has recovered the bulk of those losses, it's still down about 10% during the past year. That's despite the fact that the company is much stronger today having completed its merger with Plum Creek. That merger is expected to deliver $100 million in annual cost synergies by the end of this year, as well as significant operational synergies that are already being identified. Not only that, but the company continues to benefit from the slow recovery of the housing market, which could drive much-stronger earnings in the future.
Given that backdrop, the company's management team truly believes that the stock is cheap, which is why they were quick to repurchase $500 million in stock after just receiving authorization to buy back up to $2.5 billion of the company's shares. The buyback, however, is only part of its return to shareholders, with Weyerhaeuser also paying a very generous dividend that's currently yielding 4.25%. In some ways, owning Weyerhaeuser for that high yield is a bit of a rebuttal to that old adage that says money doesn't grow on trees.
The one-stop shop for real estate
Brookfield Property Partners is a diversified global real estate company that offers investors broad exposure to the sector. The company owns an array of top-notch real estate, including 155 premier office properties in key gateway cities like New York, London, and Toronto, as well as 173 best-in-market malls and urban retail properties in the U.S. On top of that, it owns a stake in a variety of other real estate assets such as multi-family units, hospitality assets, industrial properties, and even automotive dealerships.
Despite the fact that Brookfield Property Partners owns premier real estate around the globe, the company's unit price is pretty cheap right now. The equity value of the company is currently $30 per unit based on the value of the equity it owns in its various properties. That implies Brookfield Property Partners' current unit price is selling for a roughly 30% discount based on its asset value. Investors not only get the company's generous income stream, with units currently yielding more than 5.25%, but they get that income stream at a significant discount to the underlying value of the company's assets.
A pipeline of profits
Thanks to the downturn in the energy market, as well as concerns about industry credit, units of Enterprise Products Partners (EPD 1.65%) are down sharply during the past year:
That's despite the fact that Enterprise Products Partners is not only stronger than most of its peers, but it's a better company now than it was a year ago because it recently completed a number of key acquisitions and growth projects. What sets the company apart from most other MLPs is that Enterprise Products Partners is very conservative when funding its growth.
The company usually retains about a quarter of its distributable cash flow each year as opposed to the typical industry practice of paying out every penny that comes in. That has enabled the company to internally fund a lot of its growth, allowing it to maintain a solid balance sheet, with it boasting one of the best credit ratings among MLPs.
More growth is on the way. Enterprise Products Partners is currently constructing $6 billion in growth projects, with a portion of the cash flow from these projects being used to grow its distribution in the future. It's a payout that has already increased 46 straight quarters and is expected to increase by 5.2% this year. Those future increases will only further boost a payout that's yielding a very generous 6.5%.
The market is offering income investors a gift by giving them the opportunity to buy several high-yield stocks on the cheap. They're not all in one sector either, with investors having opportunities to pick up great yields in the forest products, real estate, and energy infrastructure sectors.
These sales might not last all that much longer, given that all three companies are off their recent lows. Investors might need to act quickly to scoop up these deals before the market realizes that these three high-yield stocks shouldn't be in the discount bin.