Reuben Gregg Brewer, The Motley Fool
5 min read
Wall Street is focused on the geopolitical conflict unfolding in the Middle East and its impact on energy prices. Before that, there was the war in Ukraine. In the future, there will be some other newsworthy event, perhaps the bursting of what some believe is an artificial intelligence bubble, that will unnerve investors and lead to stock market volatility.
The big picture is that the market is volatile and it always will be. If you are an investor, one way to deal with market uncertainty is to focus on reliable dividend-paying stocks. Three to consider today are Enterprise Products Partners (NYSE: EPD), Federal Realty (NYSE: FRT), and International Business Machines (NYSE: IBM).
Will AI create the world’s first trillionaire? Our team just released a report on the one little-known company, called an “Indispensable Monopoly” providing the critical technology Nvidia and Intel both need. Continue »
Enterprise avoids commodity risk
Master limited partnership (MLP) Enterprise Products Partners operates one of the largest midstream businesses in North America. It generates reliable cash flows by charging customers fees for the use of its energy infrastructure assets. The volume of oil and natural gas moving through its system is more important to the MLP’s results than the prices of the products it moves. Energy is vital to the modern world, so volumes tend to remain robust even during energy industry downturns.
Enterprise has a lofty 5.7% distribution yield. The distribution has been increased annually for 27 consecutive years, which is basically as long as the MLP has been publicly traded. The MLP’s yield will likely make up the lion’s share of your return over time, but this resilient energy business is a way to add energy exposure to your portfolio without the commodity risk that is so prevalent in the energy sector today.
Federal Realty is a Dividend King landlord
Federal Realty is a real estate investment trust (REIT) that owns strip malls and mixed-use assets. It only owns around 100 properties, so it is kind of small. And yet it has done something that no other REIT has: Federal Realty’s dividend has been increased annually for 58 consecutive years. That’s the longest streak in the REIT sector, which has enabled the REIT to become a Dividend King. Federal Realty is the only Dividend King REIT. The dividend yield is well above the market at 4%.
Federal Realty’s success is attributable to two factors. First, it focuses on quality over quantity. Its properties have higher average incomes and population densities around them than its peers, which means it owns properties in which retailers want to be located. Second, Federal Realty is an active portfolio manager, always buying, selling, and investing to upgrade its portfolio. In this way, it ensures that its portfolio of properties remains industry-leading. The proof of the REIT’s success is its incredible dividend streak.
