4 Outstanding High-Yielding Dividend Stocks to Jump Into Now

Investing in growth stocks can be beneficial in the long term, but it also comes with significant risk. Growth stocks are stocks of companies that are still growing. The underlying business may or may not succeed in the long term. Dividend stocks, on the other hand, offer security and predictability in a volatile market by paying regular dividends, usually monthly or quarterly.

These regular payments can be especially beneficial for investors looking for passive income. In addition, this income stream is usually more predictable than capital gains from stock price appreciation. Here are four high-yielding dividend stocks that investors might be interested in right now.

Enbridge: Dividend yield 6.7%

Enbridge (ENB), headquartered in Canada, is an energy infrastructure company that plays a key role in the transportation and distribution of energy. It operates an extensive network of pipelines that transport crude oil (CLV24), natural gas (NGV24), and natural gas liquids (NGL) throughout the United States and Canada. The company is also involved in renewable energy projects such as wind and solar power, positioning itself as a key player in the transition to cleaner energy sources.

Enbridge shares, valued at $86.1 billion, have risen 12.2% this year, outpacing the S&P 500 ($SPX)’s 19.6% gain.

One of the most attractive aspects of Enbridge stock is its dividend. Enbridge has a forward dividend yield of 6.6%, which is significantly higher than the energy sector average yield of 4.2%.

In the latest second quarter, adjusted earnings of C$1.2 billion were down from C$1.4 billion in the previous quarter. However, distributable cash flow (DCF), which the company uses to pay dividends, rose 3% to C$2.9 billion.

Management expects DCF to be approximately CAD$11 billion to CAD$11.8 billion, compared to CAD$11.2 billion in 2023. However, Enbridge intends to maintain a DCF payout ratio of 65% in 2024.

Enbridge has a history of expansion through acquisition, acquiring valuable infrastructure and assets for its portfolio. This acquisition strategy has helped the company increase market share, diversify its business and strengthen its presence in key markets. During the quarter, the company completed the acquisition of Questar Gas Company and Wexpro from Dominion Energy (D) for $4.3 billion.

On the other hand, these strategic acquisitions are putting pressure on the company’s balance sheet. Its debt-to-equity ratio is high at 1.31, indicating a high reliance on debt. However, given its diverse business segments and strategic acquisitions, which it expects will impact cash flow and earnings, the company may eventually pay down the debt.

Overall, Wall Street rates Enbridge stock a “Moderate Buy.” Of the 15 analysts covering the stock, six recommend a “Strong Buy,” two recommend a “Moderate Buy,” five rate it a “Hold,” and two suggest a “Strong Sell.” The stock has surpassed analysts’ average price target of $40.07. Its high target price of $44.85 implies potential upside of about 11% over the next 12 months.

Kinder Morgan: dividend yield 5.3%

Kinder Morgan (KMI) is one of the largest energy infrastructure companies in North America, operating an extensive network of pipelines and storage facilities that transport and store natural gas, refined petroleum products, crude oil, carbon dioxide and other products.

Kinder Morgan shares, valued at $47.9 billion, are up 23.2% year to date compared with the overall market.

The majority of Kinder Morgan’s revenue comes from long-term, fee-based contracts that provide predictable cash flows that are largely insulated from commodity price fluctuations. This makes it a reliable passive income stock.

Kinder Morgan’s dividend yield of 5.3% is higher than the energy sector average of 4.2%. The company is committed to returning capital to shareholders and has raised dividends for the past eight years. Kinder Morgan’s 91% payout ratio, which indicates how much of the company’s profits it intends to distribute as dividends to shareholders, raises concerns about the long-term sustainability of its dividend.

Still, the company is well-positioned to benefit from the ongoing transition to cleaner energy, as natural gas is more effective than coal and oil at reducing carbon emissions. Analysts are forecasting earnings growth of 12.4% to $1.19 per share in 2024.

Overall, Wall Street rates KMI stock a “Moderate Buy.” Of the 19 analysts covering the stock, six recommend a “Strong Buy,” one recommends a “Moderate Buy,” and 12 rate it a “Hold.” KMI analysts’ average price target of $22.44 suggests the stock could rise 2.9% from current levels. Its high price target of $25 implies a potential upside of 14.7% over the next 12 months.

AT&T: Dividend yield 5.2%

AT&T (T) is one of the world’s largest telecommunications companies, offering a wide range of services, including wireless, broadband, and pay television. With the acquisition of Time Warner, the company gradually expanded into digital entertainment.

AT&T shares, valued at $153.1 billion, rose 28.3% year over year, while the overall market gained.

Communications remains AT&T’s core business, generating the majority of the company’s revenues and profits from providing wireline and wireless services to both residential and business customers.

AT&T pays an attractive dividend yield of 5.2%, which is significantly higher than the telecom industry average of 2.6%. A dividend payout ratio of 48.7% indicates that the dividend is sustainable and has growth potential.

AT&T generated $4.6 billion in free cash flow (FCF) during the quarter. It also expects to generate FCF of $17 billion to $18 billion for the full year. AT&T’s ability to maintain dividend payments over the long term will depend on the successful execution of its strategic plans and continued free cash flow generation.

Analysts are forecasting AT&T’s earnings will decline 9.3% to $2.19 in 2024 and then rise 3.5% to $2.26 in 2025. By comparison, management expects 2024 adjusted earnings to be between $2.15 and $2.25.

Overall, Wall Street rates AT&T stock a “Moderate Buy.” Of the 25 analysts covering the stock, 11 recommend a “Strong Buy,” one recommends a “Moderate Buy,” 12 rate it a “Hold,” and one suggests a “Strong Sell.” At the time of writing, the stock is trading near analysts’ average price target of $21.76. Its high price target of $29 implies a potential upside of 34.9% over the next 12 months.

Oneok: Dividend yield 4.2%

Oneok (OKE) is a leading midstream energy company that gathers, processes, stores and transports natural gas and NGL.

ONEOK shares, valued at $54.7 billion, rose 34.5% year over year, outperforming the broader market.

Second-quarter net income was $780 million and earnings per share (EPS) was $1.33, up from $1.04 in the same quarter a year earlier. Oneok’s forward dividend yield of 4.2% is in line with the energy sector average.

Oneok’s payout ratio of 67.1% seems sustainable if the company can grow earnings and generate positive free cash flow. The company generated $1.03 billion in FCF in the second quarter.

For the rest of the year, management is predicting “favorable market fundamentals, strong performance across our operations, and additional opportunities ahead.” Analysts are predicting an 8% decline in earnings in 2024, followed by 13.4% growth in 2025.

Overall, Wall Street rates OKE stock a “Moderate Buy.” Of the 17 analysts covering the stock, 10 recommend a “Strong Buy,” one recommends a “Moderate Buy,” and six rate it a “Hold.” The stock has surpassed analysts’ average price target of $93.19. Its high price target of $111 implies an upside potential of 18.1% over the next 12 months.

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On the date of publication, Sushree Mohanty did not hold (directly or indirectly) a position in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. For more information, please refer to Barchart’s Disclosure Policy here.