If you want to earn safe, high yields, then you want to start assembling a portfolio of “cash cow” businesses. As long-time readers know, cash cows represent mature operations. Because these firms have few growth prospects, owners don’t need to invest in a lot of new properties, plants, or equipment. As a result, you can milk these firms for ongoing dividends. Think of industries like cigarettes, breakfast cereals, or vending machines. These firms won’t get a lot of coverage in the media, but shareholders often earn yields as high as 12%, 15%, and even 21%.
I have long ranked Buckeye Partners, L.P. (NYSE:BPL) as one of my favorite cash cow businesses. The partnership owns over 6,000 miles of energy pipelines, in addition to dozens of terminals, storage plants, and processing facilities. For investors looking for higher dividend yields, this name deserves a further look. Buckeye gushes cash flow, to begin with. Pipelines earn a small fee on each barrel of crude oil that flows through. And while commodity prices can swing from year to year, the total volume of oil produced each year stays fairly consistent.
Source: Income Investors
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