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What are the best dividend stocks for investors these days?
We asked Seeking Alpha analysts Long Player and Daniel Jones for their picks.
Long Player: The best dividend stocks are really partnerships that issue K-1s. That would be Enterprise Products Partners (NYSE:EPD) and Western Midstream Partners (NYSE:WES). For those that do not mind some risk, Meren Energy (OTCPK:AOIFF) has a decent dividend. The midstream distributions are very recession-resistant and are investment grade. But make sure you understand what the K-1s are all about before you get in.
Daniel Jones: When it comes to dividends, I believe that one of the best companies for investors to consider right now is midstream/pipeline firm Energy Transfer (NYSE:ET). The firm currently offers a yield of about 7.5%. Even though it’s an MLP and taxed differently than investors who only have bought into C-Corps would be familiar with, I think that the size of the yield, as well as how cheap shares are, justifies that trade off.
As I mentioned in an article published in June of this year, the company boasts over 130,000 miles of pipeline, as well as various other midstream assets. This year, it’s on track to generate EBITDA of about $16.3 billion, and with a growth capital expenditure budget of $5 billion, it’s only going to grow from here. It’s also cheaper than other players in the industry while simultaneously having a net leverage ratio that is in line with some of the higher quality players in the space.
Another attractive prospect for investors would be homebuilder Hovnanian Enterprises (NYSE:HOV). But I’m not talking about the common stock, I’m talking about its preferred stock under the ticker (HOVNP). It’s currently trading at $17.12 per share and has a par value of $25, with a yield of 11.1%.
Earlier this month, I reaffirmed the company as a “strong buy”, even though there’s been considerable weakness in the homebuilding market due to high interest rates, inflationary pressures, and worries about the broader economy. The stock is incredibly cheap, and leverage has come down massively over the last several years.
Hovnanian has transitioned over the years to building up a lot control strategy that involves 84.8% of all the lots that it has for future development controlled through options. With a massive housing shortage in the U.S., I fully expect an eventual recovery in this space, though it could take a while.