In the current economy, high-yield dividend stocks are beneficial as they offer reliable income and stability, especially during downturns. They are often in defensive sectors that handle economic volatility well and typically have strong financials, making them a solid choice for steady returns and long-term growth.
Hence, income investors could consider investing in high-yield dividend stocks such as MPLX LP (MPLX), Western Midstream Partners, LP (WES), and Qifu Technology, Inc. (QFIN), as they offer stability and consistent dividend payouts.
Inflation is currently rising at 2.6% annually, which is slightly higher than expected but still steady. If inflation continues to slow, the Fed might suggest a rate cut in September. Meanwhile, global growth is steady but slow, projected at 3.2% this year and 3.3% next year. Advanced economies are stabilizing, but inflation and fiscal challenges remain.
The U.S. labor market has cooled from its previous highs, with increased unemployment and reduced hiring. The unemployment rate has risen to 4.1%. However, potential Federal Reserve rate cuts could improve borrowing conditions and boost confidence. While the market remains strong, further cooling could still be a concern.
Amid uncertain growth prospects and ongoing policy changes, high-yield dividend stocks provide stability and reliable income, making them a smart investment choice in this unpredictable environment. Furthermore, investor’s interest in high-yield dividend stock is evident from the Vanguard High Dividend Yield Index Fund ETF’s (VYM) 23.2% returns over the past nine months.
Considering these conducive trends, let’s analyze the fundamental aspects of the three high-yield dividend picks.
MPLX LP (MPLX)
MPLX primarily owns and operates midstream energy infrastructure and logistics assets. It operates in two segments: Logistics and Storage, and Gathering and Processing.
In terms of the trailing-12-month gross profit margin, MPLX’s 56.53% is 27.5% higher than the 44.34% industry average. Likewise, its 7.90% trailing-12-month Return on Total Capital is 4.9% higher than the 7.53% industry average. Furthermore, the stock’s 36.98% trailing-12-month net income margin is 221.7% higher than the 11.50% industry average.
MPLX has paid dividends for 10 consecutive years. Its annual dividend is $3.40, which translates to a yield of 7.89% at the current share price. Its four-year average dividend yield is 10.15%. Moreover, the company’s dividend payouts have increased at a CAGR of 6.5% over the past three years.
MPLX’s total revenue and other income in the first quarter that ended March 31, 2024, increased 4.9% year-over-year to $2.85 billion. Its income from operations grew 4.6% from the previous year’s quarter to $1.25 billion.
For the same quarter, its net income attributable to MPLX came in at $1.01 billion and $0.98 per limited partner unit, up 6.6% and 7.7% year-over-year, respectively. Also, the company’s adjusted EBITDA rose 7.6% from the year-ago value to $1.63 billion.
Street expects MPLX’s EPS for the quarter ended June 30, 2024, to increase 8.9% year-over-year to $0.99. Its revenue for the same quarter is expected to grow 10% year-over-year to $2.96 billion. It surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 21.3% to close the last trading session at $43.09. Its 24-month beta is 0.42.
MPLX’s POWR Ratings reflect strong prospects. It has an overall rating of A, which translates to a Strong Buy in our proprietary system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It is ranked #6 out of 24 stocks in the A-rated MLPs - Oil & Gas industry. It has an A grade for Momentum and a B for Stability and Quality. Click here to see MPLX’s ratings for Growth, Value, and Sentiment.
Western Midstream Partners, LP (WES)
WES and its subsidiaries operate as a midstream energy company primarily in the United States. The company is involved in gathering, compressing, treating, processing, and transporting natural gas; gathering, stabilizing, and transporting condensate, natural gas liquids (NGLs), and crude oil; and gathering and disposing of produced water.
In terms of the trailing-12-month EBITDA margin, WES’ 61.96% is 83.4% higher than the 33.78% industry average. Likewise, its 42.66% trailing-12-month EBIT margin is 123% higher than the industry average of 19.13%. Furthermore, the stock’s 23.18% trailing-12-month Capex / Sales is 55.1% higher than the industry average of 14.94%.
WES pays an annual dividend of $3.50, which translates to a yield of 8.79% at the current share price. Its four-year average dividend yield is 8.30%. In addition, the company’s dividend payouts have increased at a CAGR of 27.5% over the past three years. WES has paid dividends for the past 10 years.
During the fiscal first quarter, which ended on March 31, 2024, WES’ total revenues and other income grew 20.9% year-over-year to $887.73 million. Its operating income increased 134.1% compared to the prior-year quarter, reaching $679.37 million. Also, the company’s net income attributable to WES and net income per share were $572.83 million and $1.47, up 181.3% and 182.7% from the year-ago values, respectively.
For the quarter ended June 30, 2024, WES’s EPS and revenue are expected to increase 40.3% and 23.1% year-over-year to $0.90 and $908.74 million, respectively. Over the past nine months, the stock has gained 45.7% to close the last trading session at $39.81. Its 24-month beta is 0.84.
WES’ robust outlook is reflected in its POWR Ratings. It has an overall rating of A, equating to a Strong Buy in our proprietary rating system.
WES has an A grade for Momentum and Quality and a B for Growth and Stability. Within the MLPs - Oil & Gas industry, it is ranked #5. To see WES’ ratings for Value and Sentiment, click here.
Qifu Technology, Inc. (QFIN)
Headquartered in Shanghai, the People’s Republic of China, QFIN and its subsidiaries operate a credit-tech platform under the 360 Jietiao brand in the People’s Republic of China. It provides credit-driven services and platform services.
In terms of the trailing-12-month EBIT margin, QFIN’s 46.93% is 99.2% higher than the 23.55% industry average. Its 26.81% trailing-12-month net income margin is 18.1% higher than the 22.70% industry average. Additionally, its 0.38x trailing-12-month asset turnover ratio is 76.5% higher than the 0.22x industry average.
QFIN’s annualized dividend of $1.08 per share translates to a dividend yield of 5.45% on the current share price. Its four-year average yield is 2.81%.
QFIN’s total net revenue for the first quarter which ended March 31, 2024, increased 15.4% year-over-year to RMB4.15 billion ($572.38 million). Its non-GAAP income from operations rose 33.7% over the prior-year quarter to RMB1.41 billion ($194.47 million).
During the same period, the company’s non-GAAP net income attributable to shareholders of QFIN and non-GAAP net income per ADS attributable to ordinary shareholders of QFIN came in at RMB1.20 ($166.89 million) and RMB7.58, respectively, up 23.3% and 28% year-over-year.
Analysts expect QFIN’s EPS for the fiscal 2024 to increase 10.9% year-over-year to $4.20. Its revenue for fiscal 2025 is expected to increase 4.8% year-over-year to $2.36 billion. QFIN’s stock has gained 33.6% over the past nine months to close the last trading session at $19.81. Its 60-month beta is 0.66.
QFIN’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of B, equating to a Buy in our proprietary rating system.
It is ranked #3 out of 46 stocks in the Consumer Financial Services industry. It has a B grade for Value and Quality. To access QFIN’s grades for Growth, Momentum, Stability, and Sentiment, click here.
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MPLX shares were trading at $43.01 per share on Monday afternoon, down $0.08 (-0.19%). Year-to-date, MPLX has gained 22.25%, versus a 15.57% rise in the benchmark S&P 500 index during the same period.
About the Author: Abhishek Bhuyan
Abhishek embarked on his professional journey as a financial journalist due to his keen interest in discerning the fundamental factors that influence the future performance of financial instruments.
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