Energy
Merrill Lynch Has 3 Top Energy Stocks Rated Buy Yielding 4.5% or More
Published:
Last Updated:
It almost seems funny now when talking heads on the financial networks talk about interest rates shooting higher on the 10-year and 30-year U.S. Treasury debt. Oh sure they are higher than say a month ago, but they are both still trading at historical lows and make absolutely no sense for investors. What does make sense is solid stocks in a value-priced sector like energy that yield twice as much as the 10-year Treasury bond.
With oil surging higher, many of the former bears are now becoming positive, and the fact of the matter is, while it has maybe run a little too far, it ultimately is going higher. In addition, most of the companies that needed to slash their dividends already have.
We screened the Merrill Lynch research database for high-yielding quality companies and found three rated Buy that fit the bill.
Enterprise Products Partners
This is one of the largest publicly traded partnerships and a leading North American provider of midstream energy services to producers and consumers. Despite the energy slump, Enterprise Products Partners L.P. (NYSE: EPD) recently raised its distribution 1%. The company maintains a very good long-term position in the market. It provides many of its services on the basis of long-term, fixed-fee contracts, insulating against some of the wilder swings of the commodities that it trades in.
One reasons many analysts may like the stock might be its distribution coverage ratio. That ratio is well above one times, making it relatively less risky among the master limited partnerships (MLPs). The company’s distributions have grown for several quarters, and recently Enterprise Products increased the quarterly cash distribution paid to partners to $0.395 per common unit, or $1.58 per unit on an annualized basis. This is the 56th distribution hike since Enterprise’s initial public offering in 1998. Also, this is the 47th time that the company has increased its quarterly payout. The distribution signifies a 5.3% increase over the distribution in the first quarter of 2015.
Investors receive a 5.8% distribution. The Merrill Lynch price target for the stock is $28, and the Thomson/First Call consensus price target is $31.24. Shares closed Tuesday at $27.24.
24/7 Wall St.Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Editors' Picks
