I'll be the first to admit that I have a thing for high-yield stocks. There's just something about getting a huge cash deposit in my brokerage account every quarter for work I did not do. It's why I'm always on the lookout for more high-yield stocks to buy. However, more often than not I find that the best ones to buy are those I already own, which is why I'd have no problem buying another portion of three of my favorite high-yielders: Weyerhaeuser (NYSE:WY), Medical Properties Trust (NYSE:MPW), and Enterprise Products Partners (NYSE:EPD). Here's why.
Making money on trees
Whoever said money doesn't grow on trees must not have heard about Weyerhaeuser. The timberland real estate investment trust has been making money harvesting trees since 1900. Today, it manages 13.2 million acres of timberlands, which throw off a lot of green, enabling Weyerhaeuser to pay a very compelling 4% dividend.
It's a dividend that the company has more than doubled since 2011, and is one that it's committed to keep growing in the future through a combination of operational excellence and market improvement. As the slide below shows, the company has ample running room to grow its dividend over the next couple of years as it integrates its recent acquisition of Plum Creek while also benefiting from the continued recovery of the timber and wood markets after the fallout of the housing bubble bursting:
Medical Properties Trust, like Weyerhaeuser, is also structured as a REIT, which means it is required to pay out virtually all of its income leading to a very healthy dividend. In fact, the hospital owner is currently yielding 6.7%. That said, unlike Weyerhaeuser, Medical Properties Trust's payout hasn't grown quite so fast in the recent past because it has had to grow into its dividend:
However, as that slide shows, the dividend is currently well covered, which suggests that the payout has the potential to keep growing even if its earnings do not. Earnings, however, are expected to continue to grow because the company has a number of organic growth projects in the pipeline as well as countless acquisition opportunities to continue buying up hospitals. Suffice it to say, Medical Properties Trust has the potential to provide a healthy income stream for years to come.
A pipeline of future income growth
Enterprise Products Partners uses a slightly different corporate structure, but the result is the same, with the master limited partnership paying a very strong 6.4% distribution to investors. It's a payout that it has consistently grown, with Enterprise Products Partners recently declaring its 47 consecutive quarterly distribution increase.
More quarterly distribution increases are on the way with the company having a clear line of sight to keep its distribution moving higher because it currently has $8 billion in primarily fee-based capital projects under construction. In fact, the company has already said that it intends to grow its distribution by 5.2% this year as it finishes construction on some of the projects in its backlog. However, with ample projects going into service later this year and into 2017, along with a robust coverage ratio and strong balance sheet, Enterprise Products Partners has plenty of capacity to grow the payout beyond this year.
All three of these companies not only pay pretty compelling current yields, but each has the potential to pay an even higher rate in the future. That's why I'd have no problem buying more of all three of these high-yielding companies right now.