3 High-Dividend Stocks Paying Up to 15.6%
Who Else Would Like to Earn More Retirement Income?
I know from talking with my readers that retirement income is a frequent topic of concern.
Low interest rates have crushed savers. Rock-bottom yields have meant that even a six-figure nest egg won’t generate enough interest to pay the bills.
And things have only gotten worse. Thanks to the COVID-19 pandemic, the Federal Reserve has slashed interest down to zero. And unless the economy reopens soon, this may represent the new normal for savers.
The good news is, investors can still find decent payouts in the universe of high-dividend stocks.
While interest rates have plunged, some equities still sport respectable payouts. And for those willing to do a bit of digging, it’s not uncommon to find safe dividend yields as high as 10%.
And the best part? The recent COVID-19 crash has turned some traditional dividend payers into veritable cash cows.
To help get you started, I’ve highlighted three of my favorite high-dividend stocks for retirement income below.
Shell Midstream Partners LP
Oil and gas drillers generated approximately $3.3 trillion in revenue during 2019, more than the annual economic output of India. (Source: “Global Oil & Gas Exploration & Industry Trends (2015-2020),” IBISWorld, last accessed July 2, 2020.)
Those straightforward sales are representative of a seriously big business. But you can make far better returns by investing in the “behind the scenes” industries that support it.
Shell Midstream Partners LP (NYSE:SHLX) makes a living moving oil and natural gas rather than pulling those commodities out of the ground. The partnership owns thousands of miles of energy pipelines across the United States, which collect fees on each barrel shipped. That means the business generates steady income regardless of whether a barrel of crude goes for $10.00 or $100.00.
Better still, pipelines don’t cost a lot to maintain. Once you have one in the ground, ongoing costs come in at just a fraction of sales. That allows management to pass on most of these profits to unitholders.
In the case of Shell Midstream Partners, this has created quite the income stream. In May, executives bumped the quarterly payout to $0.46 per unit. That brings the yield on this master limited partnership up to 15.6%.
It’s another quarter on the books, and it’s another quarter of record profits for this high-dividend stock: AT&T Inc. (NYSE:T).
In April, the telecom giant reported that its operating income and net income jumped 4.2% and 12.2% respectively. Those numbers beat Wall Street’s expectations, keeping a firm bid underneath AT&T shares amid the coronavirus sell-off. (Source: “AT&T Reports First-Quarter Results,” AT&T Inc., April 22, 2020.)
The secret to the company’s success? Recurring revenue.
Admittedly, AT&T did see some impact from the COVID-19 pandemic. But because customers sign long-term contracts, cash flows have continued to roll in. And given our need to stay connected, few customers want to skip their Internet or phone bill.
For investors, this market position has made AT&T a perfect source of retirement income. Even through the current downturn, executives have managed to boost the distribution to shareholders. Today, AT&T pays a rock-solid dividend of $0.52 per share, which comes out to an annual yield of seven percent.
Iron Mountain Inc
If you ever peek into my office closet, you’ll find stacks of corporate filings, insurance documents, and brokerage statements. Now imagine the copious amount of paperwork generated by a business like a law practice or a doctor’s office. Needless to say, people need to stash these records somewhere. And this problem has created a booming concern for Iron Mountain Inc (NYSE:IRM).
Iron Mountain owns over 1,450 facilities across about 50 countries, storing everything from critical business documents and sensitive data to cultural and historical artifacts. (Source: “Corporate Overview,” Iron Mountain Inc., last accessed July 3, 2020.)
It’s a cash cow business. Each month, clients pay storage fees to lease space. Customers also pay for extra services like document scanning and retrieval.
Altogether, these businesses generate $4.2 billion in revenues each year. And because warehouses cost little to maintain, most of this income gets paid out to investors.
That explains why Iron Mountain comes with one of the highest yields around. Last year, the partnership boosted its quarterly distribution to $0.62 per share. That brings the annual yield on IRM units to almost 10%.