Price prices are very unstable, which is the main problem of conservative dividend investors.
Stocks like Chevron can help you deal with that volatility, taking into account its very diverse business model.
Another option is to focus on the most boring sector segment: energy transfer.
10 shares we like more than Enterprise Products Partners ›
Oil, natural gas and many of them have turned into products are goods. The cost of these goods can rise dramatically and quickly, making the overall energy sector very unstable. One reasonable way to deal with that volatility is to buy a high -yield diversified giant like Chevron(NYSE: CVX); However, there is another opportunity to land, which offers even more revenue.
Image Source: Getty Images.
Chevron is a large and world -wide integrated energy company. This means that it has energy generation (above), energy transfer (mid -flow) and chemicals and refining companies (downstream). This creates an important diversification and essentially provides investors in the entire energy industry in one investment.
Most importantly, each industry segment works slightly differently. For example, when oil prices are low, the actions above will work badly. However, downstream oil uses oil as an input, so low oil prices can increase downstream. The end result is that the action as an integrated energy giant helps to relieve peaks and valleys characteristic of the activity in the energy sector.
Given a series of 38 -year -old Chevron annual dividends, it is a strong choice for dividend amateurs in the energy sector. Add about 4.4% of the dividend yields, and it offers a relatively noble income flow. Link S&P 500 The index today results in only 1.2%and the average energy stock is 3.2%.
Chevron is indeed a good choice if you want to directly affect oil and natural gas. However, it is worth noting that the very volatile essence of the Chevron makes a dividend payment ratio with a less useful tool for evaluating dividend sustainability. The true story is the commitment of the Directors’ Board for dividends, which can change at any time.
That is why it is now worth discussing one segment of the energy industry that has not yet been mentioned in detail. This industrial segment usually operates with a toll model, so the cost of oil and natural gas is not as important as the need for energy. That’s why the best investments in the energy you can buy today could be Enterprise Products Partners(NYSE: EPD);
Compared to Chevron, Enterprise, which is Master Limited Partnership (MLP) is completely boring. It owns one of the largest portfolios of energy infrastructure in North America. Like most of its peers, he usually takes taxes on other companies for the transfer of oil, natural gas and products, and the products turn through their piping, storage and transport property. Because demand for energy usually remains high even when the price of goods is low, the company’s business is a relatively consistent cash flow generator.
This is Enterprise 27 consecutive annual distribution history. Based on that rhythm and maintaining distribution, there is a balance of investment assessment. Adding even more security for distribution is that the distribution cash flows include 1.7x distribution. Many people should go wrong before the company’s distribution was in danger.
So Enterprise distribution was basically as reliable as Chevron’s Dividend. The Enterprise business model is more stable than the Chevron business model. And in the main story of the story, about 7% of the Enterprise distribution yield is much higher than the Chevron 4.4% yield. Basically more yields than the less common business risks. This is likely to sound like a win for most revenue investors.
The $ 10,000 investment in Enterprise Products Partners will get you about 315 units of about MLP. Still, what you don’t get is a fast -growing business. Feeling will make up the lion’s share of your overall return over time. However, this should not be a big deal of investors who focus on maximizing their portfolio income.
Before buying Enterprise Products Partners shares, consider this:
Motley Fool Stock Advisor A team of analysts just found what they think is 10 best stocks Investors to buy now … and Enterprise Products Partners was not one of them. 10 stocks that reduced the incision can return the monster in the coming years.
Consider when Netflix This list consisted of 2004. December 17th … If you have invested $ 1,000 during our recommendation, at our recommendation, You would have $ 651,593!* Or when Nvidia Made this list in 2005. April 15 … If you have invested $ 1,000 during our recommendation, at our recommendation, You should have $ 1,089 215!*
Now it is worth mentioning Share advisor The average return is 1 058% is the reduction of the selection compared to the 188% S&P 500. Don’t miss the latest top 10 list that can be purchased when you log in to login Share advisor;
See. 10 stocks »
*The stock advisor returns by 2025. September 22
Reuben Gregg Brewer has no position in any of the above shares. Motley fool is a position and recommends Chevron. Motley Fool recommends Enterprise Products Partners. The Motley fool has a disclosure policy.
Best High Income Energy Stock in which you currently invest $ 10,000
