1. AGNC Investment
AGNC Investment’s (AGNC -0.09%) 13.5% yield is nearly three times that of the 10-Year Treasury, and the stock pays a monthly dividend. For those unfamiliar with AGNC, it is a mortgage real estate investment trust (REIT) that owns a leveraged portfolio of agency-backed mortgage-backed securities (MBS). Since its MBS investments are backed by government agencies, they carry little default risk. However, interest rates and narrowing and widening spreads between mortgage rates and 10-year Treasury yields can impact the underlying value of its portfolio.
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NASDAQ: AGNC
AGNC Investment Corp.
Premium Feature
Moneyball Superscore
47/100
Today’s Change
(-0.09%) $-0.01
Current Price
$10.65
Key Data Points
Market Cap
$13BMarket cap calculated using publicly traded s outstanding only. Does not include unlisted, private, or dual-class non-traded s. Implied market cap may vary.
Day’s Range
$10.57 – $10.73
52wk Range
$9.63 – $12.19
Volume
16.6M
Avg Vol
17M
Gross Margin
100.00%
Dividend Yield
13.52%
Spreads tend to be the biggest driver of MBS performance and are currently sitting around 2 percentage points. That is below the 3 percentage points they shot to a few years ago, but it is still historically on the high side. With the Fed earlier this year starting to buy back $200 billion in agency MBS and net new MBS supply projected to drop this year, there are the elements in place for spreads to narrow, which would be bullish for AGNC. Overall, this makes it a relatively good environment to own the stock and to collect its juicy yield.
2. Energy Transfer
With a 6.3% yield, Energy Transfer (ET +0.28%) gives investors a higher payout than the 10-year Treasury. More importantly, though, the stock also offers strong upside price appreciation potential. The company is both one of the cheapest in the master limited partnership (MLP) space and has some of the best growth prospects. That’s a great combination.
The company has one of the most extensive midstream systems in the U.S., led by its natural gas pipeline system. Its position in the Permian gives it access to cheap natural gas, and the company is seeing many growth opportunities tied to AI data center build-outs, rising electricity demand, and NGL (natural gas liquids) export demand. As a result, it plans to spend up to $5.9 billion on high-return growth projects this year.
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NYSE: ET
Energy Transfer
Today’s Change
(0.28%) $0.06
Current Price
$21.50
Key Data Points
Market Cap
$74BMarket cap calculated using publicly traded s outstanding only. Does not include unlisted, private, or dual-class non-traded s. Implied market cap may vary.
Day’s Range
$21.25 – $21.55
52wk Range
$16.18 – $21.77
Volume
6M
Avg Vol
8.8M
Gross Margin
10.94%
Dividend Yield
6.26%
Energy Transfer’s distribution is well covered by its distributable cash flow (operating cash flow minus maintenance capital expenditures), coming in at a 2.2 time coverage ratio last quarter, and its balance sheet is in good shape. About 90% of its adjusted EBITDA comes from fee-based businesses, but it also has a strong track record of capturing bonus opportunities during energy market dislocations. Meanwhile, it plans to increase its distribution at a 3% to 5% annual pace moving forward.
This all makes Energy Transfer a great high-yield stock to own.
Verizon Communications
Verizon Communications’ (VZ -0.89%) 5.6% yield is higher than the 10-year Treasury, and it is another stock that has some nice upside potential. The wireless carrier’s strategic shift from being technology-centric to a more customer-focused model has been paying off with lower churn and more subscriber additions. This could be seen last quarter when it added 184,000 postpaid phone subscriptions, its best quarter number in five years.
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NYSE: VZ
Verizon Communications
Premium Feature
Moneyball Superscore
70/100
Today’s Change
(-0.89%) $-0.45
Current Price
$50.14
Key Data Points
Market Cap
$208BMarket cap calculated using publicly traded s outstanding only. Does not include unlisted, private, or dual-class non-traded s. Implied market cap may vary.
Day’s Range
$50.08 – $50.70
52wk Range
$38.39 – $51.68
Volume
13.4M
Avg Vol
26.3M
Gross Margin
45.71%
Dividend Yield
5.57%
Meanwhile, Verizon has tailwinds that could help drive its stock higher. The biggest is that it has now closed its acquisition of Frontier, which gives it a huge fiber network and a big bundling opportunity. In addition, the company should benefit from the wireless industry starting to move away from large subsidies, which should help improve margins, and from AI data center operators looking for fiber-optic cable networks to connect their data centers.
Verizon’s dividend is well covered by its massive free cash flow, and its balance sheet is in great shape. With a growing dividend and a forward price-to-earnings (P/E) ratio of just 9.5 based on 2027 earnings estimates, this is a great dividend stock to buy.
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About the Author
Geoffrey Seiler is a contributing Motley Fool stock market analyst covering technology, consumer goods, healthcare, energy, and materials stocks. Prior to The Motley Fool, Geoffrey was a senior equity analyst at Raging Capital Management, a $600 million long-short hedge fund. He holds a bachelor’s degree in history from Haverford College.
Stocks Mentioned
AGNC Investment Corp.
NASDAQ: AGNC
$10.65
(-0.09%)-$0.01
Motley Fool Stock Advisor’s Latest Pick
—% Avg Return
Verizon Communications
NYSE: VZ
$50.14
(-0.89%)-$0.45
Energy Transfer
NYSE: ET
$21.50
(+0.28%)+$0.06
*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.
Sumber Artikel:
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