You can buy some smart high-yield investments with as little as $100 if you take your time and act selectively. Right now, United Parcel Service (UPS -0.55%), Brookfield Renewable Partners (BEP 0.73%), and Enterprise Products Partners (EPD -1.12%) all have 6% yields or higher, and share prices that are below $100. Here’s a look at why each one might be a good fit for your portfolio right now.
1. United Parcel Service is a turnaround story
United Parcel Service (or UPS) is one of the largest package delivery services in the world. During the coronavirus pandemic, investors bid up its shares because they extrapolated demand from people staying at home too far into the future.
When the world opened back up, UPS fell short of Wall Street’s lofty expectations. At that point, the company started to revamp its business, focusing on cost-cutting and increasing margins.
Image source: Getty Images.
When it finally looked like UPS had hit an inflection point, the company announced it was voluntarily reducing the business it was doing with Amazon, its largest customer. And shortly thereafter, the tariff upheaval started.
The stock remains in Wall Street’s doghouse even though it is making progress on its turnaround. In fact, the move away from Amazon is really a sign of strength, not weakness. UPS is basically trying to move away from a high-volume, low-margin customer.
The 6.7% dividend yield is a sign that investors are worried about the future. But if you don’t mind owning a turnaround stock, UPS looks like it has its business trending in the right direction again, even if the rebound is still a few years away. The lofty yield is good compensation for waiting.
2. Brookfield Renewable Partners has a growth runway
Brookfield Renewable Partners owns a portfolio of renewable energy assets, including in the hydroelectric, solar, wind, battery, and nuclear categories. Its portfolio is spread across the globe, with operations in North America, South America, Europe, and Asia.
It is as close to a one-stop shop in the renewable power sector as you can find on Wall Street. And it has a lofty 6.5% distribution yield. Part of the reason Brookfield’s yield is so high is that investors have lost interest in clean energy stocks. That’s an opportunity for those who think long term.
In the U.S. market, wind, solar, and storage generation are expected to increase by 300% between 2020 and 2050, according to the National Electrical Manufacturers Association. That’s all part of a massive increase in the demand for electricity that is taking place, with demand growth over the next 20 years expected to be six times larger than over the last 20 years.
This is a global phenomenon, and Brookfield Renewable Partners is well-positioned to benefit all along the way. Meanwhile, you can collect a huge yield while the slow and steady shift from dirtier carbon energy sources toward cleaner alternatives plays out.
3. Enterprise Products Partners is an income tortoise
Two things beyond the lofty 6.8% yield make this master limited partnership (MLP) stand out. The first is the more important one because it is the business behind the yield. Enterprise Products Partners owns midstream energy assets, like pipelines, that help to move oil and natural gas around the world. It charges fees for the use of these assets so it generates reliable cash flows through the entire energy business cycle.
Add in an investment-grade balance sheet and distribution coverage by a 1.7 multiple in 2024, and this is a rock-solid income stock. A lot would have to go wrong for a distribution cut to be on the table. In fact, given the $7.6 billion capital investment plan in the works, it is far more likely that investors will see more distribution increases in the future.
And that brings up the second reason to like Enterprise: It has increased its distribution annually for 26 consecutive years and counting. This midstream business is boring and reliable, and that’s exactly why you’ll likely find it to be a smart high-yield investment to add to your portfolio right now.
Three high-yield options for your portfolio
There is more than one way to add a high yield to your dividend portfolio. UPS is a turnaround story. Brookfield Renewable Partners is an option with a strong growth story behind it. And Enterprise is a boring high-yield business that even the most conservative of income investors could easily love.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Reuben Gregg Brewer has positions in Brookfield Renewable Partners. The Motley Fool has positions in and recommends Amazon. The Motley Fool recommends Brookfield Renewable Partners, Enterprise Products Partners, and United Parcel Service. The Motley Fool has a disclosure policy.
