Dividends4Life: 3 Energy “Toll Roads” Yielding Up to 7.3%

3 Energy “Toll Roads” Yielding Up to 7.3%

Posted by D4L | Saturday, October 22, 2016 | | 0 comments »

These dividend stocks gush income. Longtime shareholders have earned triple-digit gains. Some of these names pay out yields of 4.1%, 5.8%, even 7.3%. And this could be just the beginning. Over the past few months, Warren Buffett has been quietly investing in this industry. Other Wall Street titans have poured millions into these dividend stocks. Let me explain. These firm act like the “toll roads” of the energy industry. Drillers are always searching for the big score, hoping to hit it big on the next well. Pipelines, in contrast, are less glamorous. They make money moving oil to customers, content to just earn a fee on each barrel shipped.

For this reason, pipeline profits are steady, like bond coupons. Owners have contracts of up to 10 years or more. Because most of their revenue comes from fixed fees, most have little exposure to energy prices. And while pipelines are costly to build, they’re cheap to maintain. Operating costs are just a fraction of sales; the rest of the money can be paid out to unitholders. As a result, these are some of the best dividend stocks around: Enbridge Inc (NYSE:ENB), Magellan Midstream Partners, L.P. (NYSE:MMP) and Plains All American Pipeline, L.P. (NYSE:PAA).

Source: Income Investors

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