Analysts think these high-yield dividend stocks could be big winners in the new year.
Humans only use 10% of their brains. George Washington's dentures were made of wood. The color red makes bulls angry. You might have heard all of those statements before. But they aren't true. They're commonly believed myths.
Here's another myth that some investors believe: Dividend stocks don't deliver huge gains. On the surface, there might seem to be some truth to this. The reasoning is that companies that have especially promising growth prospects would rather invest in themselves than return money to shareholders.
However, some stocks can be big winners and pay attractive dividends. Here are three such dividend stocks that could soar 34% to 45% in 2023, according to Wall Street.
1. Enterprise Products Partners
Enterprise Products Partners (EPD 1.08%) offers a great dividend yield of nearly 8%. Even better, the midstream energy company has increased its dividend payout for 24 consecutive years with a compound annual growth rate of 7%.
For part of 2022, Enterprise Products Partners stock was up well over 20% year to date. Although much of those gains have evaporated, the stock is still handily beating the overall market and remains up by a high-single-digit percentage.
Wall Street analysts think Enterprise has plenty of room to run next year. The consensus price target for the stock reflects a 34% upside potential. Twenty-two of the 24 analysts surveyed by Refinitiv rate Enterprise as either a buy or strong buy. None of the analysts recommend selling the stock.
Enterprise Products Partners arguably ranks as one of the safest ultra-high-yield dividend stocks on the planet. The company's revenue and profits don't fluctuate based on volatile fuel prices. Enterprise has one of the highest credit ratings among midstream energy companies. Even with the increased adoption of renewable energy sources, the International Energy Agency projects demand for oil and gas will rise over the next two decades.
2. Brookfield Infrastructure Partners
There are two ways to invest in the next company on this list. Brookfield Infrastructure Partners (BIP 0.81%) is a limited partnership (LP), while Brookfield Infrastructure Corporation (BIPC -0.01%) is organized as a corporation. The former comes with some tax complications. However, the LP's distribution yield of 4.6% is higher than its corporate sibling's yield of 3.5%.
The two stocks share the same underlying business and tend to move in lockstep. But the magnitude of their movements can differ. For example, Brookfield Infrastructure Partners stock has fallen more than 20% year to date while Brookfield Infrastructure Corporation's shares have declined by a little over 10%.
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Analysts primarily focus their attention on Brookfield Infrastructure Partners (the original stock of the two). The consensus price target for the stock is 39% higher than the current share price. All but two of the nine analysts surveyed by Refinitiv have a buy or strong buy rating for Brookfield Infrastructure Partners. Those two outliers recommend holding the stock.
As its name implies, Brookfield Infrastructure Partners owns infrastructure assets. These assets are spread across four continents and include cellphone towers, data centers, electricity transmission lines, natural gas pipelines, railroads, and toll roads. The continual recycling of assets — selling low performers to reinvest in higher-growth opportunities — should enable Brookfield Infrastructure to deliver solid returns for investors over the long term.
3. Medical Properties Trust
Medical Properties Trust (MPW -5.59%) (MPT) offers the juiciest dividend of these three stocks. Its dividend yield currently stands at nearly 10.2%. The healthcare real estate investment trust (REIT) has increased its dividend for eight consecutive years.
But MPT's super-high dividend yield is in part a result of the stock's dismal performance. The REIT's share price has plunged more than 50% in 2022, primarily due to concerns about the financial health of its tenants.
There isn't much of a consensus on Wall Street about MPT's near-term prospects. Of the 14 analysts surveyed by Refinitiv, six of them rate the stock as either a buy or strong buy. Five recommend holding the REIT stock, while three rate it as an “underperform” or recommend selling. Still, though, the average analysts' price target for MPT reflects an upside potential of over 45%.
The hospital operators that lease MPT's properties should have good news on the way with increased reimbursements. This improved outlook could give investors more confidence in MPT's prospects. In the meantime, the company remains in a solid position to keep the dividends flowing.
Should you invest $1,000 in Medical Properties Trust right now?
Before you consider Medical Properties Trust, you'll want to hear this.
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