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5 High-Yield Stocks for 5%-Plus Dividend Payouts

It’s a difficult time to be an income investor. The S&P 500 index has rallied off of its 2020 lows and has returned to near-record highs, pushing the average dividend yield in the index below 2%. In addition, with interest rates near zero, fixed income yields are suppressed as well. The end result is that investors have to look deeper for high-yield stocks.
Fortunately, there are still many dividend stocks with yields of 5% or more. And even better, investors do not have to sacrifice quality.

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Multiple high-yield stocks have sustainable dividends with room for dividend growth in the future. The following five stocks have yields above 5%, with durable competitive advantages and long-term growth potential that provide safety to their dividends.InvestorPlace – Stock Market News, Stock Advice & Trading Tips
Philip Morris International (NYSE:PM)
Enbridge Inc. (NYSE:ENB)
Unum Group (NYSE:UNM)
AbbVie Inc. (NYSE:ABBV)
International Business Machines (NYSE:IBM)

High-Yield Stocks: Philip Morris International (PM)
Source: defotoberg /

Philip Morris International is one of the world’s largest tobacco companies, with a market cap of $123 billion. PM sells its products outside the United States. The cigarette maker’s product portfolio includes its flagship Marlboro brand.
On July 21, Philip Morris reported second-quarter operating results. For the quarter, the company generated net revenue of $6.65 billion, which was down 14% as reported and down 9.5% excluding currency fluctuations. Shipment volume was down 14.5%, with cigarette shipment volume down 17.6% year-over-year.
The company has been hurt by a strong dollar, which has negatively affected the conversion of international sales into dollars. It has also dealt with the global economic downturn as a result of the coronavirus pandemic. To add to its struggles, it has to combat declining smoking rates across multiple countries.
In response, PM has invested heavily in its new product line called IQOS. This is a revolutionary product which heats tobacco instead of burning it. According to the company, this produces fewer harmful effects than traditional cigarettes. IQOS has seen early success through rapid adoption and high market share in multiple international markets such as Japan and Korea. Heated tobacco product sales increased 24% last quarter, and represent PM’s biggest future growth catalyst.
In the meantime, PM stock yields 6.1%. The company is likely to distribute virtually all of its earnings-per-share in dividends this year, but future earnings growth from new products and share repurchases should provide for modest dividend increases each year.

Enbridge (ENB)
Source: Shutterstock

Enbridge is an integrated oil and gas company based in Canada. It operates a variety of businesses including Liquids Pipelines, Gas Distributions, Energy Services, Gas Transmission & Midstream, and Green Power & Transmission. The company has a market capitalization of $60 billion.
ENB stock has declined 26% year-to-date, as the oil and gas producer has struggled under the weight of low oil and gas prices, as well as the coronavirus pandemic which has sent the global economy into recession. In Q2 2020, Enbridge saw its revenue decline approximately 40%. However, Enbridge’s adjusted EBITDA increased 3% from the previous year’s quarter, as revenue declines were more than offset by lower costs.
Despite the coronavirus crisis, Enbridge maintained its guidance for distributable cash flow-per-share of $4.50 CAD-$4.80 CAD ($3.41-$3.63) for 2020. At the midpoint of guidance, Enbridge expects to increase DCF-per-share by approximately 2% in 2020. The company expects to maintain a dividend payout ratio of 70%, based on DCF-per-share guidance. This indicates the current dividend payout is secure.

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Another important factor helping to secure Enbridge’s dividend is its quality balance sheet. With more than 40 diverse sources of cash flow and a BBB+ credit rating, Enbridge has a manageable level of debt. The company has $14 billion of available liquidity and its debt-to-EBITDA ratio remains within its target range of 4.5x to 5.0x.
Management has a target forecast of 5-7% average annual DCF growth through 2022. This growth will be achieved partly through rate increases, cost cuts, and new projects coming online. If the company reaches this forecast, it will have little trouble maintaining its dividend, and continuing to increase the dividend on a regular basis.
Enbridge has increased its dividend for 25 consecutive years. With a high dividend yield above 8%, Enbridge is an especially…

Read More: Gulf Currency Pegs Offer Silver Lining in Era of Weaker Dollar

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