With recession fears mounting and inflationary pressures falling, prices for energy commodities have started to fall in a big way. And yet, demand is still steady. For much of the energy sector, lower prices will result in lower profits and revenues, but not for our latest Best High-Yield Dividend Stocks Model Portfolio pick. Its latest earnings underscore its importance and stability in the energy value chain and support its hefty high yield.
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The secret to our pick’s success remains its focus on moving energy commodities. Our pick owns one of the largest midstream systems in the nation, moving crude oil and natural gas in key regions of the country. The system collects fees for volumes not commodity prices. As such, our pick has continued to see steady cash flow from its operations. Lately, lower oil and natural gas prices have worked in its favor. With many of its end-users being refineries, chemicals and utilities, demand has grown for lower price energy resources. This has boosted its throughput volumes and cash flow.
The best part is our pick has continued to find new ways to grow. Expansion projects, drop-downs from its partner and bolt-on transactions have continued to strengthen volumes and our pick’s long-term potential.
All of this has continued to support its high yield. As an MLP, our pick funnels much of its cash flow back into investors’ hands. With just under a decade’s worth of dividend growth, our pick has plenty of strength to grow that streak.
All in all, our pick makes for a wonderful high-yield play.
