3 High-Yield Dividend Stocks That Are Screaming to Buy in September

High-yield dividend stocks have underperformed in recent years, with higher interest rates weighing on many of them.

However, that could change given expectations that the Federal Reserve will soon begin cutting interest rates. There are a few high-quality, high yield dividend stocks September looks like it will be a buying opportunity for those looking for income and growth potential. Three best to buy this month is Kinder Morgan (KMI 0.70%), Brookfield Renewables (BEPC 0.76%) (BEP -0.35%)AND Enbridge (ENB 1.57%).

Plenty of gas to continue growing

Kinder Morgan currently generates over 5% profit. This is several times more than S&P500‘S dividend yield lower than 1.5%. The main reason is the very low valuation of Kinder Morgan.

The gas pipeline giant expects to generate about $2.26 per share of distributable free cash flow this year. With the stock recently trading at around $21.50 per share, the company is trading at a lower price than 10 times earnings. That’s significantly cheaper than the S&P 500’s 24 times.

Kinder Morgan can NO stay so cheap long if the Fed starts raising interest rates. But that’s not the only catalyst for Kinder Morgan’s growth. The pipeline company retains about half of its cash flow after dividends, which it uses to increase shareholder value by investing in high-yielding capital projects, buying back shares and increasing its financial flexibility. The company currently has about $5.2 billion in high-yielding capital projects under construction, with half of those projects coming online by the end of next year. The growing cash flow from those capital projects will give it more fuel to increase its dividend, which it has been doing for the past seven years. simple years.

Powerful potential

Brookfield Renewable currently generates about 5% profit. The world’s leading renewable energy producer generates plenty stable cash flow to pay dividends. Generated $0.96 per share of funds from operations (FFO) in the first half of this year, about 75% of which was paid out as dividends. Annualized FFO and Brookfield trade at 15 times earnings based on the recent share price of about $28.50.

The company is very cheap compared to the wider market and his growth potential. Brookfield Renewable expects several catalysts to boost its FFO per share by more than 10% annually through 2028. That should give it room to grow its dividend by 5% to 9% annually. The company has increased its payout at a rate of 6% annually over the past two decades.

Brookfield Renewable has significant long-term growth potential given the accelerating demand for energy, especially renewable energy. The world must implement an unprecedented amount of electricity generation capacity over the next 20 years to power electric vehicles, homes, businesses and new technologies such as artificial intelligence. Market is seriously underrated this opportunity that could provide Brookfield Renewable with solid growth for decades come.

The fuel that keeps the streak going

Enbridge currently yields more than 6.5%. The Canadian pipeline and utilities company generates plenty stable cash flow to pay dividends. This year, at the midpoint of the outlook, it is expected to generate about $5.60 Canadian, or $4.15, of distributable cash flow per share. At a share price of Normal around $40, it trades at a lower price than 10 times greater than free cash flow.

The company pays outside 60% to 70% of its stable cash flow in dividends. It retains the remainder to fund expansion projects and maintain financial flexibility. The company currently has a massive C$24 billion ($17.8 billion) of capital projects under construction that should be operational by 2028. These projects include additional crude oil storage and export capacity, natural gas pipelines, expansion of gas networks and renewable energy projects.

Enbridge expects the combination of expansion projects, cost savings and optimizations, and acquisitions to drive 3% annual cash flow per share growth through 2026 and 5% annually thereafter. This should fuel the company to continue to increase its dividend by up to 5% annually. It has managed to increase its payout for 29 years in a row.

Opportunity buys it September

Because Kinder Morgan, Brookfield Renewable and Enbridge trade at very low valuations, they offer high dividend yields and growth potential. They could easy generate double-digit total annual returns from here. This compelling combination makes them look like flashy buys this September.

Matt DiLallo holds positions in Brookfield Renewable, Brookfield Renewable Partners, Enbridge, and Kinder Morgan. The Motley Fool holds positions in and recommends Brookfield Renewable, Enbridge, and Kinder Morgan. The Motley Fool recommends Brookfield Renewable Partners. The Motley Fool has a disclosure policy.