CWEN - 2 Ultra-High-Yield Dividend Stocks to Buy Hand Over Fist and 1 to Avoid
2024-03-20 06:44:00 ET
The S&P 500 currently has a 1.4% dividend yield. That's not very attractive for most income-seeking investors. The good news is that they have a lot of higher-yielding options. Many companies offer dividends yielding more than four times the S&P 500.
However, investors must tread carefully when investing in stocks with ultra-high dividend yields since not all those payouts are sustainable. One that's more questionable is the monster yield offered by industrial giant 3M (NYSE: MMM) . On the other hand, the big-time payouts of Enbridge (NYSE: ENB) and Clearway Energy (NYSE: CWEN.A) (NYSE: CWEN) seem very sustainable. Here's why income-focused investors should buy those two hand over fist while avoiding 3M for now.
3M currently yields 5.8%, one of the highest yields in the S&P 500. On the one hand, the industrial company can easily afford that payout. Last year, it generated $6.3 billion in adjusted free cash flow (up 30% from 2022), easily covering its $3.3 billion in dividends. The company used the excess free cash flow to strengthen its already solid balance sheet. Net debt declined by 17% to $10 billion.
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2 Ultra-High-Yield Dividend Stocks to Buy Hand Over Fist and 1 to Avoid