3 Incredibly Cheap Dividend Stocks With Yields Up to 7%!

The S&P 500 the index today offers a small dividend yield of just 1.2%. Compared to this, Portland General Electrichis (POR 2.23%) The yield of 4.1% seems enormous. Brookfield Renewable Partners‘ (BEP -0.27%) 5.8% is even more impressive. And Enterprise Product Partners (EPD 0.75%) 7.2% is really massive!

All of these returns are also above average compared to the industries in which they operate, suggesting that stocks are cheaply priced today. Here’s a look at each.

1. Enterprise Products Partners is built to be boring

Enterprise Products Partners is a master limited partnership (MLP). It owns energy infrastructure assets such as pipelines and processing and transmission facilities.

Unlike many other energy companies, whose revenues and earnings are largely driven by commodity prices, Enterprise receives fees for the use of its assets. Thus, the demand for energy is more important than the price of products flowing through its midstream system. It’s actually a boring business, which conservative income investors will likely appreciate.

As mentioned, the yield is 7.2%, supported by a distribution that has been raised annually for just over a quarter of a century. The average return in the energy sector is 3.2%, and the average return of Enterprise over the last decade is about 6.8%.

MLP looks attractively priced against both today. But what supports this return? Well, you don’t have to worry. Enterprise has an investment-grade balance sheet and distributable cash flow covers the payout at 1.7 times. A lot would have to go wrong before a distribution cut is on the table. Keep in mind, however, that as a master limited partnership, there are some complications at tax time, and not all MLPs can be held in a retirement account.

2. Brookfield Renewable is focusing on a growing niche

Brookfield Renewable comes in two variants, a partnership with a yield of 5.8% and a corporate version, Brookfield Renewables (BEPC -0.23%)with a dividend yield of 5.1%. They represent exactly the same entity, with the difference between the two returns tied to demand (some investors avoid partnerships, including many institutional investors such as pension funds).

Brookfield Renewable, as the name suggests, invests in renewable energy, a niche of the utility industry that is expected to see growth in the coming years as the world moves away from carbon fuels and towards cleaner alternatives. Its portfolio of assets spans North America, South America, Europe and Asia and covers hydro, wind, solar and battery storage.

In other words, it is a one-stop shop for renewable energy. And the best part is that the vast majority of its income comes from contracts, so the business is very reliable.

Brookfield Renewable has been growing its distribution for over a decade. It has an investment grade credit rating and a solid 70% payout ratio of funds from operations in the second quarter of 2024.

The best part is the growth track as utilities around the world continue to go green. For reference, the average utility (not a perfect comparison, but the best available) is around 2.9%.

3. Portland General Electric is regulated and increasing its spending

Portland General Electric is a fully regulated electric and natural gas utility. It’s about as boring as they come, and the company’s size (it has a market cap of about $5 billion) is modest in the utilities sector.

But the state of Oregon, where it operates, has an interesting little feature: the transpacific communications cables land on Portland General Electric territory. This means the utility is an important hub for the technology sector, particularly as a location for data centers. The company expects industrial demand to grow by 7.5% per year.

The utility’s dividend yield is 4.1%, which compares very favorably to the average utility yield of 2.9%. Dividends were increased annually for 18 years. And the balance sheet is investment grade.

Best of all, Portland General Electric is investing heavily in the transition to clean energy, which should spur revenue growth as regulators approve rate hikes needed to cover costs. This probably won’t be an exciting company to own, but it certainly looks like a reliable high-yielding dividend stock.

Three high yields to choose from

Enterprise, Brookfield Renewable and Portland General Electric all have high returns in absolute terms and relative to the industries in which they operate. That suggests they are incredibly cheap passive income stocks you could plug into your dividend portfolio. Get to know them a little better and it’s likely that one, if not more, will be on your shopping list.