Traditionally, the utilities sector — especially equities that pay highest dividend yields — has been considered a relatively safe bet in uncertain and volatile markets; and with a 3.16% average yield, the gas utilities segment offers the highest dividend yields within the utilities sector, asserts Ned Piplovic, editor of DividendInvestor.
The five securities with the highest dividend yields in this segment offer payouts in excess of 8% and a simple average yield of nearly 11%. The list below presents the top five equities with the highest dividend yields in descending order by their current yield regardless of other factors, such as share price trend or total returns.
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Western Gas Equity Partners L.P. (WGP) has hiked its dividend payout amount every quarter since it started paying dividends in February 2013. Over the past 23 consecutive quarters the dividend payout increased more than 16-fold, which is equivalent to an average growth rate of 13% per quarter — or nearly 31% per year annualized over the past five years.
The current $0.595 quarterly payout converts to a $2.38 annualized amount and yields 8.1%, which is more than 76% above the 4.6% five-year average yield.
Targa Resources (TRGP) distributes its annual $3.64 dividend in quarterly distributions of $0.91 per period. The annualized payout corresponds to an 8.5% dividend yield, which is 16% higher than the company’s own 7.9% five-year average yield.
After initiating dividend payouts in 2011, the company hiked its payout for the 18 subsequent quarters. Despite no dividend hikes over the past two years, the company still managed to enhance its total annual dividend nearly four times since 2011, which corresponds to a 21.5% average annual growth rate. Even with the share price at its 52-week low, the company delivered a total return of nearly 68% over the past three years.
American Midstream Partners L.P. (AMID) is currently down nearly 70% from the onset of the trailing 12 months. However, the company divested its marine products terminal business in August 2018 and plans to use the $210 million in cash proceeds from the transaction to reduce debt and enhance liquidity.
These transactions will contribute significantly to strengthening the partnership’s balance sheet and execution of the company’s new capital allocation strategy. The current quarterly dividend payout of $0.103 converts to a $0.412 annualized amount and an 8.9% forward yield.
Suburban Propane L.P. (SPH) — a gas distribution company in Northern New Jersey and Southern New York State — recently closed at a 52-week low. Its current $0.60 quarterly payout corresponds to a $2.40 annualized distribution and yields 11.3%, which is just slightly below the company’s own 11.6% five-year average.
Just a minor share price uptrend would move the total returns back into positive territory and towards double-digit percentage return levels, like the 20% total return over the past five years.
Summit Midstream Partners L.P. (SMLP) experienced two significant pullbacks over the past 12 months and declined more than 37% over the past year. The price recovered some of those losses by October but declined again with overall market trends.
The company’s current $0.575 quarterly payout converts to a $2.30 annualized payout and yields 17.9%. The firm has raised its annual dividend for the first three years since initiating dividend distributions in 2013.
Despite missing dividend hikes in the last two years, the company still enhanced its annual dividend 33% over the past five years which corresponds to an average dividend growth rate of nearly 6% per year since 2013.
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