10 Retirement Income Streams Yielding Up to 13.9%
July 17, 2018
Who Else Wants More Income?
When it comes to retirement savings, the United States is on the verge of a crisis.
The Harvard Business Review says the median retirement account balance sits at just $14,500, while MarketWatch says one in three retiring Americans will find themselves in poverty in the next 10 years.
GOBankingRates says more than half of Americans have less than $10,000 saved for retirement. Even worse, one in three have saved nothing. (Source: “1 in 3 Americans Has $0 Saved for Retirement,” GOBankingRates, March 14, 2016.)
But what about those of us who managed to acquire a small nest egg? Record low interest rates pose a challenge for retirees. Even a six-figure bank account won’t generate enough income at today’s low yields.
Thankfully, there are answers.
As regular readers know, I’m a big fan of investing in higher-yielding dividend stocks to plug retirees’ income gap. If you’re willing to do some legwork, you can often uncover safe, sizable yields from high-quality businesses.
The trick is to just know where to look.
At our recent analyst meeting, my colleague Jing Pan suggested a review of the highest-yielding stocks in a list of “dividend challengers.”
For those who haven’t heard the term before, this list of companies must have raised their payouts for at least five consecutive years—in other words, a collection of some of the best dividend stocks in the world. By sticking to the names inside this group, you can screen out a lot of low-quality stocks right away.
10 Dividend Challengers to Look At
Let’s review some of the results.
|
Company |
Market Cap |
Yield |
|
Buckeye Partners LP |
$5.2 Billion |
13.9% |
|
Sunoco LP |
$2.5 Billion |
13.0% |
|
Energy Transfer Partners LP |
$22.2 Billion |
11.7% |
|
New Residential Investment Corp. |
$6.2 Billion |
10.9% |
|
Delek Logistics Partners LP |
$686.7 Million |
10.9% |
|
Sprague Resources LP |
$578.5 Million |
10.4% |
|
GameStop Corp. |
$1.5 Billion |
9.9% |
|
Hoegh LNG Partners LP |
$593.9 Million |
9.8% |
|
Arbor Realty Trust Inc. |
$748.0 Million |
9.6% |
|
Andeavor Logistics LP |
$9.3 Billion |
9.5% |
(Source: DRiP Investing Resource Center, last accessed July 16, 2018.)
To be clear, you shouldn’t look at this table as a list of “buy” recommendations. High yields sometimes serve as an early warning sign that the business is in trouble. Investors need to do their homework.
Potential High-Yield Sources of Retirement Income
Take one of the higher payouts on this list, GameStop Corp. (NYSE:GME), for example. E-commerce has taken a bite into the gaming retailer’s profits. Unless the company can find a new niche, this dividend could be on borrowed time.
But you do have a few really good names here. For instance, take Buckeye Partners, L.P. (NYSE:BPL). New drilling methods have unlocked vast amounts of energy across the country. And with more barrels of crude moving through its network, the partnership has seen profits surge over the past few years. For shareholders, this has created a growing stream of income.
New Residential Investment Corp (NYSE:NRZ) is pretty easy to wrap your head around. This real estate investment trust buys mortgages backed up by the U.S. government and pays out the interest income to shareholders. These businesses don’t get a lot of time in the press, but, with a distribution yield approaching 11.3%, this partnership pays out one of the safest large yields around.
Finally, take a look at the turnaround story at Sunoco LP (NYSE:SUN). The wholesale gasoline distribution got in a little over its head with debt after a series of acquisitions. But by cutting costs, paying down debt, and selling off non-core assets, management has put the firm on a much firming financial footing. If executives can right this company, investors have a rare chance to lock in a 13% yield on the cheap.
I love doing screens like these. Every so often, you’ll uncover a name or investment idea you might have skipped over. Just be sure to do your homework before pulling the trigger on any high-yield stock.
