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2 Incredibly Cheap and Reliable Dividend Stocks With Yields Up to 5.5% to Buy Now
There are two very big trends going on in the world when it comes to energy, but they might not be what you are expecting: The first is that the global population is growing. The second is that lower-income countries are moving up the socioeconomic ladder.
These two trends are what you really need to understand when looking at the clean energy transition that’s also happening right now. And when you do, you’ll understand why Brookfield Renewable Partners (NYSE: BEP) and Chevron (NYSE: CVX) are both cheap and reliable dividend stocks you’ll find attractive today.
Oil and gas are being replaced by cleaner alternatives, but slowly
The world has gone through energy transitions before, shifting from biomass (wood) to coal, and from coal to oil. What’s interesting is that, when you examine the world’s biggest sources of energy, biomass and coal are still material producers of power, despite having been dethroned as the main source by other options.
Oil and natural gas are No. 1 today, but that seems likely to change as clean energy demand and production grow.
But just like previous energy transitions, it is highly unlikely that solar and wind suddenly replace oil and gas. In fact, energy industry watchers largely agree that oil and natural gas will remain important for decades to come even as clean energy grows in importance.
The reason? A more populous world and higher incomes will require an all-of-the-above approach because the demand for energy grows along with the population and incomes. Demand for oil and natural gas might even increase!
So investors have two energy plays to consider. The first is to buy a company like Brookfield Renewable Partners that benefits from clean energy’s growth. The second is to buy an oil and natural gas company, like Chevron, that can continue to benefit from the still-strong underlying demand for carbon fuels. The best part? Both of these high-yield stocks look cheap right now.
Chevron has been marked down by 20%
Chevron’s stock price has fallen roughly 20% from its recent peak in late 2022. That has a lot to do with the price of oil, which has also declined over that same span. That makes complete sense because Chevron is an integrated energy company, with top and bottom lines that are heavily influenced by energy prices.
But as an integrated energy company, it also has operations in the midstream (pipelines) and downstream (chemicals and refining) sectors. Having exposure to all three helps to even out financial performance over time. It is a relatively conservative way to invest in the energy space.
It also has a rock-solid balance sheet, with a debt-to-equity ratio of just 0.15. That would be low for any company, but for Chevron, it gives management the leeway to increase leverage when oil prices are weak to help support the business and dividend.
Highlighting Chevron’s consistency is its 37-year streak of annual dividend increases, which is pretty impressive given the inherent volatility of the energy sector.
Chevron’s stock is often most attractive when oil prices are plunging, but for conservative dividend investors, the roughly 20% drop in the stock makes it worth looking into today. Indeed, the yield is an attractive 4.3%, which is notably above the 1.2% from the S&P 500 Index and above the 3.4% of the average energy stock, using the Energy Select Sector SPDR ETF as an industry proxy. Those dividend comparisons make Chevron look attractively cheap right now.
Brookfield Renewable Partners has been cut nearly in half
Brookfield Renewable Partners might be even more interesting than Chevron, given that its units have declined a huge 47% since hitting a high-water mark in early 2021. That might seem odd given the long runway for growth in the clean energy sector, but you have to remember that Wall Street is a fickle place. Before 2021, renewable power was a hot story. And then investors got bored and moved on, despite the ongoing transition taking shape.
To be fair, competition has increased in the sector, which makes profitability harder to achieve. But Brookfield Renewable Partners is a financially strong business with a proven history of success.
The prime example of this is the distribution, which has increased by roughly 6% annually over the past 20 years. That will be music to the ears of most income investors.
Also, Brookfield Renewable’s parent company is Brookfield Asset Management (NYSE: BAM), one of Canada’s largest and most respected asset management companies. It has a long history of investing globally in the infrastructure sector. Brookfield Renewable is, really, a way for small investors to partner up with an established industry leader in infrastructure and collect big distributions from it.
The one caveat here is that, given the asset management approach, Brookfield Renewable Partners has a history of actively buying and selling clean energy assets. This business is not operated like a typical regulated utility, which means you’ll probably want to track it fairly closely.
But with Brookfield’s lofty 5.5% distribution yield, that extra work will be well worth the effort. Note that the average utility, using the Utilities Select Sector SPDR ETF as a proxy, is only yielding 2.7% today. That makes Brookfield Renewable Partners look incredibly cheap.
Cheap and reliable
If you are thinking about adding some out-of-favor dividend payers to your portfolio, look no further than Chevron and Brookfield Renewable Partners. Both look cheap today when you compare their yields to other alternatives. And, despite being at opposite ends of the clean energy revolution, both have long-term income appeal.
Should you invest $1,000 in Chevron right now?
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Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Brookfield Asset Management and Chevron. The Motley Fool recommends Brookfield Renewable Partners. The Motley Fool has a disclosure policy.
2 Incredibly Cheap and Reliable Dividend Stocks With Yields Up to 5.5% to Buy Now was originally published by The Motley Fool
The habits of millionaires are a topic of interest when it comes to financial advice. After all, unless they received a large chunk of money as an inheritance or gift, most millionaires had to be smart with their money to get where they are.
Learning how millionaires accumulate wealth — and where they keep it — can provide valuable insights for anyone focused on growing their money. One common question is whether or not millionaires keep money in checking accounts.
Studies show that in recent years, millionaires are keeping a significant portion of their wealth in cash. According to CNBC’s , that portion was about 24% in 2023. While this doesn’t necessarily mean a quarter of a millionaire’s wealth is sitting in a checking account, it does indicate the importance of maintaining liquid assets. And a checking account can be a helpful tool for doing so — whether or not you’re a millionaire.
Anyone, regardless of net worth, can find value in a checking account. Checking accounts allow unlimited deposits and withdrawals, check writing, bill pay, and other features to help you manage your money day-to-day.
While millionaires may keep large portions of their wealth in other deposit accounts and investments, some may use a checking account to manage daily spending. Millionaires also recognize the importance of having liquid assets, like funds in checking and savings accounts. Accessible cash lets you cover unexpected expenses without needing to sell off investments, borrow money, or pay a penalty for tapping your retirement savings early.
The amount of money a millionaire keeps in their checking account is highly personal and depends on preference. However, because checking accounts rarely earn competitive — if any — interest, some millionaires intentionally limit their checking account balance. Some may choose to keep the bare minimum, such as a couple of months’ worth of essential expenses, in their checking accounts, keeping the rest of their wealth in more lucrative assets.
Regardless of preference, it would be surprising for a millionaire to keep more than $250,000 in a single checking account. That’s because the Federal Deposit Insurance Corp. (FDIC) only insures up to $250,000 in deposits per institution, per account holder.
While millionaires may use checking accounts for day-to-day financial transactions, they may also use some of the following accounts in addition to, or in place of, a checking account:
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Savings accounts: Like checking accounts, savings accounts provide a high degree of liquidity, allowing you to access your money as needed for regular or unexpected expenses. High-yield savings accounts, in particular, give millionaires an extra bang for their buck. Some of the best accounts currently offer rates upwards of 4% versus the national average savings account rate of 0.46%.
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Cash management accounts: Cash management accounts (CMAs) pay competitive interest rates while maintaining more accessibility than a savings account. Some CMAs come with a debit card and ATM access, and many provide extended FDIC coverage limits by “sweeping” additional deposits into partner banks. CMAs are available at brokerages, not banks, facilitating easy transfers between investment and cash accounts.
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Money market accounts: Similar to CMAs, money market accounts combine features of checking and savings accounts, often paying competitive interest rates and providing check writing and ATM access. Banks and credit unions offer these accounts, which are federally insured. Minimum opening deposit and minimum balance requirements are often higher than those for standard savings accounts.
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Retirement and tax-advantaged accounts: Millionaires understand the importance of investing for their later years, and retirement accounts such as 401(k)s and IRAs allow them to do so in a tax-advantaged way. Some retirement accounts, like 401(k)s, are offered by certain employers. Others, such as traditional and Roth IRAs, are available to anyone.
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Brokerage accounts: The IRS limits contributions to tax-advantaged accounts, and millionaires typically invest beyond these limits. They do so with taxable brokerage accounts, which can hold investments such as stocks, bonds, and mutual funds without contribution limits.
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Other investments, like real estate, commodities, and art: Some millionaires may decide to diversify their portfolio with other investment types. These could include real estate investments, such as investment properties or real estate investment trusts (REITs); commodities, such as metals or energy products; art; and more.
The amount of money millionaires keep in their checking accounts depends on personal preference. While some millionaires may keep six figures in their checking account to maintain a comfortable cash cushion, others may choose to keep the bare minimum in checking. You wouldn’t expect millionaires to keep more than $250,000 in a checking account, however, because balances over this threshold aren’t typically insured.
There’s no single bank that’s a favorite among millionaires; it’s another matter of preference. However, millionaires are likely to bank with institutions that offer private banking to those who meet specific financial requirements. Private banking may include wealth planning services, waived fees, dedicated bankers, and additional perks. J.P. Morgan Private Bank, Citi Private Bank, and Bank of America Private Bank are among some of the most popular banks for millionaires.
Billionaires may have checking accounts, but they likely use accounts that cater to ultra-high-net-worth individuals. These accounts may come with perks such as a dedicated banker, waived fees, and competitive interest rates. Alternatively, billionaires may opt for a cash management account with higher FDIC insurance coverage limits and checking account features.
No rule says you can’t have a million dollars in a checking account, but FDIC insurance typically only covers up to $250,000. Plus, you can get a bigger return on your investment by keeping $1 million elsewhere. One alternative is a cash management account, which acts like a checking account but generally earns higher interest. Plus, many cash management accounts insure more than the standard $250,000 by sweeping funds into multiple partner banks.
Lumen Technologies, Inc. (NYSE:LUMN) shares are trading higher on Monday after the company announced it is partnering with Meta Platforms, Inc. (NASDAQ:META) to significantly increase Meta’s network capacity and help drive its AI ambitions.
Lumen’s partnership offers Meta enhanced flexibility with secure, on-demand bandwidth, supporting its complex computing requirements and enabling it to serve billions daily.
Ashley Haynes-Gaspar, Lumen’s EVP and chief revenue officer, said, “We’ve transformed our company to meet this demand. As Meta’s customers use more AI services across its platforms, we’re helping provide Meta with a seamless, effortless, and flexible network that will meet its growing needs.”
Lumen Technologies said its Private Connectivity Fabric enables long-term network capacity for Meta’s AI.
Alex-Handrah Aimé, director of Meta’s Network Investments stated, “Our AI tools are performing increasingly more complex tasks including enabling conversations in a variety of languages and translating text to images in real time, while helping people interact with the world around them in new, immersive ways.”
Lumen will report third quarter 2024 results on November 5, 2024.
Investors can gain exposure to the stock via Invesco S&P SmallCap Utilities & Communication Services ETF (NASDAQ:PSCU) and First Trust Cloud Computing ETF (NASDAQ:SKYY).
Price Action: LUMN shares are up 9.50% at $7.38 at the last check Monday.
Image via Shutterstock
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CoinShares said the United States and Bitcoin led crypto investment product dynamics last week amid growing optimism over a potential Republican election win in the US.
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