Its no secret that high-yield stocks, on average, outperform the rest of the market. Not only that, but theyre also usually less volatile. And with stock market volatility on the rise, adding some ballast to your portfolio may not be a bad idea. With that in mind, we asked three of our Motley Fool contributors what high-yielding stocks theyd recommend.
They came back with Enterprise Products Partners (NYSE:EPD), Medical Properties Trust (NYSE:MPW), and AT&T (NYSE:T). Each of these investments is structured differently, but all currently yield more than 5%. Heres why our contributors think these top yielders will help your portfolio outperform, even in the current market environment.
Top yielders pay you to own them, and tend to outperform the market. Image source: Getty Images.A consistent dividend growerJohn Bromels (Enterprise Products Partners): For investors looking for high yields, master limited partnerships (MLPs) are a logical place to start. In exchange for preferential tax treatment, these investments are required to pay out almost all of their operating cash flow as distributions to unitholders.
These distributions are essentially the same as dividends paid by stocks. Because of this requirement, those payouts are usually quite high. Oil and gas pipeline and terminal operator Enterprise Products Partners is no exception, with a current distribution yield of 6.2%.And that is steadily increasing: Enterprise has upped its payout for the last 59 consecutive quarters (i.
e., almost 15 straight years). This trend looks set to continue, as numerous expansion projects totaling about $5 billion come on line, mostly within the next couple of years. These include improvements to the companys existing Gulf Coast export terminals and an expansion of an ethylene pipeline system in South Texas.
MLPs do have some additional requirements come tax time, so they may not be right for every portfolio. But for those interested in a reliable high-yielding investment, Enterprise is worth putting on your radar screen.A great dividend and great long-term prospectsKeith Speights (Medical Properties Trust): Medical Properties Trust has a pretty simple business model.
It acquires hospital real estate, then leases the properties back to the hospital operators. The hospital wins by getting an influx of capital, while Medical Properties Trust wins by getting a steady revenue stream over a long period of time.Shareholders win, too. Because Medical Properties Trust is a real estate investment trust (REIT), it must distribute at least 90% of its taxable income back to shareholders in the form of dividends.
The companys dividend yield currently stands at 5.61%. There are two key problems that can hurt a REIT like Medical Properties Trust. First, it could take on too much debt and be at risk if interest rates soar. Second, its tenants could run into financial difficulties and fail to make their lease payments.
.Medical Properties Trust appears to be relatively insulated.....