ENB

Enbridge Inc

37.10
USD
-1.59%
37.10
USD
-1.59%
36.20 47.67
52 weeks
52 weeks

Mkt Cap 75.16B

Shares Out 2.03B

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These Ultra-High-Yield Dividend Stocks Can Bring Major Compounding to Your Portfolio

According to research from Hartford Funds, over the long haul, dividends have generally provided around 40% of the market's total returns. While that's a substantial number on its own, where dividends can really add value to your portfolio is if you let them compound within your investments to really build your wealth. Say you're investing $500 per month, and the total return you expect is around 10% annualized. If 60% of that comes from growth and 40% of it comes from dividends, then there's a huge difference in what you end up with over time depending on whether you spend or reinvest those dividends. Using that split and that expected return, over 20 years, that $500 per month could turn into about $231,000 if you spend your dividends or a bit over $379,000 if you reinvest them. That's an impressive gap, driven simply by letting your dividends provide compounding for you. More dividends = more compounding, right? So if reinvesting a modest dividend can drive that much difference in your returns, then seeking out and reinvesting an ultra-high-yield dividend must make things even better, right? Well, it's not quite that easy. A very high yield is often a sign of a dividend in distress and about to get cut, and a cut dividend does you no good when it comes to compounding. If you're interested in maximizing your compounding with ultra-high-yield stocks, the first thing you need to do is figure out why you think those dividends can be sustained. If you don't have a clear reason to believe that, then you're probably better off avoiding the shares, no matter how tempting the dividend might seem. With that in mind, these three ultra-high-yield dividend stocks can potentially bring some major compounding to your portfolio. 1. A major energy infrastructure player Enbridge (NYSE: ENB) is the largest energy pipeline company in North America. It ships oil and natural gas around the continent, getting paid based largely on the volume of the energy it transports rather than the price of that energy. Although there's a push toward greener energy, the U.S. Energy Information Administration projects strong oil and natural gas demand for decades to come. That bodes well for Enbridge's ability to continue to deliver dividends to its shareholders for a long time to come. Enbridge currently offers investors a yield of around 6.1%, and if held in an IRA, it won't be subject to the Canadian withholding taxes that American investors would otherwise face. Enbridge has increased its dividend for 27 consecutive years, and the structure of its business provides good reason to believe that it can continue the trend. 2. A hard-money lender with a very strong balance sheet Broadmark Realty Capital (NYSE: BRMK) is a real estate investment trust (REIT) that is in the business of hard-money lending: essentially financing real estate projects that can't quickly be funded by more-traditional loans. In today's era of rising interest rates, its services are likely to be in high demand. Many lenders are trapped by their own high debt loads, and those debt loads require them to be more cautious and slow when they make their lending decisions. By contrast, Broadmark has a very solid balance sheet, with a debt-to-equity ratio below 0.1 and over $35 million in cash available to it. Add to that a completely untapped $135 million line of credit, and Broadmark has great access to its own cash and ready access to additional cash if needed. In a world of rising rates, that's a great place to be. Broadmark pays its shareholders a monthly dividend, which right now clocks in at a whopping 12.4% annual yield. High lending standards mean it's not growing all that fast at the moment, but it's precisely those high standards that provide reason to believe it has a chance of maintaining that dividend. 3. A telecom titan at the forefront of 5G Verizon Communications (NYSE: VZ) claims to have the fastest 5G cellular telephone service in the world when consumers can access their millimeter wave network. That speed gives it a great marketing point in order to attract and retain customers to its network. The beauty of cellular service is that it's a subscription model that people are very willing to pay monthly for long time periods. Verizon often makes that subscription even stickier by offering its customers "free" upgrades on their phones -- as long as they remain subscribers to their network. Sticky revenue translates to fairly predictable earnings, and thus the ability to continue to support its dividend over time. Speaking of that dividend, it currently offers its investors a juicy 5.6% yield, and that dividend only consumes just over half of the company's earnings. That solid dividend coverage also bodes well for Verizon's ability to continue to pay that dividend. A juicy dividend can go a long way If you're looking for compounding returns, reinvesting generous dividends can provide a substantial boost to your portfolio. Just be sure that the companies you're buying look like they can maintain -- and ideally, boost -- their dividends over time, and those seemingly small payments can certainly add up over time. The thing about compounding, though, is that the longer you give it to work its magic, the bigger the potential benefits you get. So make today the day you start getting the foundation in place for some major compounding. 10 stocks we like better than Enbridge When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.* They just revealed what they believe are the ten best stocks for investors to buy right now... and Enbridge wasn't one of them! That's right -- they think these 10 stocks are even better buys. *Stock Advisor returns as of August 11, 2022 Chuck Saletta has positions in Broadmark Realty Capital Inc. and Enbridge and has the following options: long January 2024 $40 calls on Enbridge, short January 2023 $47.50 calls on Enbridge, short January 2024 $35 puts on Enbridge, and short January 2024 $40 puts on Enbridge. The Motley Fool has positions in and recommends Enbridge. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off. Today’s Big Picture Asia-Pacific equity indexes ended today’s session down across the board. India’s Sensex ended the day essentially flat, down 0.06%, China’s Shanghai Composite and Australia’s ASX All Ordinaries declined 0.54% and 0.55%, respectively while Japan’s Nikkei fell 0.65%, Taiwan’s TAIEX dropped 0.74% and South Korea’s KOSPI declined 0.90%. Hong Kong’s Hang Seng led the way, down 1.96% on a broad selloff led by Health Technology and Health Services names while Transportation and Communications sectors provided the only relief. By mid-day trading, major European equity indices are down across the board and U.S. futures point to a positive open later this morning. At 8:30 AM ET, the much anticipated July Consumer Price Index (CPI) report was released: The headline figure for the month was expected to fall to 8.7% from June’s blistering 9.1% reading with core CPI that excludes food and energy ticking higher to 6.1% in July vs. 6.0% the prior month. The actual numbers show that inflation hit 8.5%, and core inflation was 5.9%. With the national average retail price for a gallon of gas falling through late June and July from its June 14 high of $5.016 per gallon per data from AAA, forecasters had expected the month over month decline in the headline CPI for July. The July Employment Report also showed wage inflation ran hotter than expected during the month. Let’s also keep in mind that we will be facing a “wash, rinse, repeat” cycle when it comes to inflation data and expectations for the Fed given tomorrow’s July Producer Price Index report. Data Download International Economy Producer prices in Japan rose by 8.6% YoY in July, compared with market forecasts of 8.4% and following an upwardly revised 9.4% the prior month. While marking the 17th straight month of producer inflation, the latest reading was the softest since last December. China's annual inflation rate rose to 2.7% in July from 2.5% in June and compared with market forecasts of 2.9% but even so the July figure marked the highest reading in the last year. The country’s Producer Price Inflation figure for July eased to a 17-month low of 4.2% YoY from 6.1% the prior month and less than the market consensus of 4.8%. Annual inflation rate in Germany was confirmed at 7.5% YoY for the month of July, down slightly from June’s 7.6% reading but still above the March and April figures of 7.3%-7.4%. The annual inflation rate in Italy slowed to 7.9% YoY in July from June’s 8% reading matching expectations for the month. While energy prices declined, prices for food and transportation rose at a faster pace. Domestic Economy This morning we have the usual Wednesday weekly reports for MBA Mortgage Applications and Crude Oil Inventories from the U.S. Energy Information Administration. At 10 AM ET, Wholesale Inventories for June will be published, and the figure is expected to rise 1.9%. While investors and economists will keep more than a passing interest in those reports and data, as we discussed above, it will be the July Consumer Price Index report at 8:30 AM ET that will shape not only how the US stock market opens today, but also expectations for the Fed’s next course of monetary policy action. The U.S. Energy Information Administration (EIA) expects domestic production of crude oil, natural gas and coal will all increase next year compared with this year. It forecast US crude production rising 6.7% to an all-time annual high 12.7M bbl/day in 2023 from 11.9M bbl/day in 2022, US natural gas output climbing to 100B cubic feet (cf)/day from 97B cf/day, and US coal production inching up to 601M short tons in 2023 from an expected 599M this year. The EIA also modestly increased its 2022 average nationwide gasoline price forecast to $4.07/GALLON vs. $4.05 if called for last month. It now also sees 2023 prices at $3.59/GAL vs. its previous forecast of $3.57. Markets Stocks continued in their holding pattern waiting for the latest CPI print save for some fundamental stories pushing Technology names and small caps around. The Dow and the S&P 500 were down slightly at 0.18% and 0.42%, respectively while the Nasdaq Composite dropped 1.19% and the Russell 2000 closed down 1.46% on the day. Energy names led the way yesterday but were overpowered by Technology and Consumer Discretionary sectors. Here’s how the major market indicators stack up year-to-date: Dow Jones Industrial Average: -9.81% S&P 500: -13.51% Nasdaq Composite: -20.14% Russell 2000: -15.83% Bitcoin (BTC-USD): -52.08% Ether (ETH-USD): -55.38% Stocks to Watch Before trading kicks off, CyberArk (CYBR), Fox Corp. (FOXA), Jack in the Box (JACK), Nomad Foods (NOMD), Vita Coco (COCO), Tufin Software (TUFN), and Wendy’s (WEN) will be among the companies issuing their latest quarterly results and guidance. At 9 AM ET, Samsung (SSNLF) will hold its Galaxy Unpacked 2022 at which it is expected to introduce new Galaxy foldable smartphone models, a new Galaxy Watch, and Galaxy Buds. Shares of advertising technology platform company The Trade Desk (TTD) jumped after the company reported quarterly results that topped expectations and guided current quarter revenue above the consensus forecast. The RealReal (REAL) reported a smaller than expected bottom line loss for its June quarter as revenue for the period rose 47.2% YoY to %154.44 million, topping the $153.99 million consensus. However, the company issued downside guidance for both the current quarter and 2022. Revenue for the September quarter is now expected to be $145-$155 million vs. the $164.3 million consensus; for the full year of 2022, revenue is forecasted to be $615-$635 million vs. the $653.7 million consensus. Shares of Coinbase Global (COIN) moved lower after it reported June quarter results that missed top and bottom line expectations. Revenue for the quarter fell 63.7% YoY as Total trading volume fell 53.0% YoY and 29.8% sequentially to $217 billion. Monthly Transacting Users (MTUs) grew 2.3% YoY but fell 2.2% sequentially to 9.0 million. For the current quarter, Coinbase sees the number of MTUs trending lower sequentially and total trading volume to be lower compared to the June quarter. Shares of Sweetgreen (SG) tumbled in aftermarket trading last night after the company missed quarterly revenue expectations, lowered its 2022 forecast, announced it will lay off 5% of its workforce, and downsize to smaller offices. ChipMOS TECHNOLOGIES (IMOS) reported its July revenue was $65.1 million, a decrease of 19.4% YoY and down 7.7% MoM. Taiwan Semiconductor (TSM) reported its July revenue increased 49.9% YoY to NT$186.76 billion, which equates to a 6.2% MoM improvement. Electric vehicle subscription startup Autonomy placed a $1.2 billion order for 23K electric vehicles with 17 global automakers, including BMW (BMWYY), Canoo (GOEV), Fisker (FSR), Ford (F), General Motors (GM), Hyundai (HYMTF), Lucid Group (LCID), Mercedes-Benz (DDAIF), Polestar (PSNY), Rivian (RIVN), Stellantis (STLA), Subaru (FUJHY), Tesla (TSLA), Toyota Motor (TM), VinFast, Volvo Car (VLVOF) and Volkswagen (VLKAF). IPOs As of now, no IPOs are slated to be priced this week. Readers looking to dig more into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page. After Today’s Market Close Bumble (BMBL), CACI International (CACI), Coherent (COHR), Dutch Bros. (BROS), Red Robin Gourmet (RRGB), and Walt Disney (DIS) are expected to report their quarterly results after equities stop trading today. Those looking for more on which companies are reporting when, head on over to Nasdaq’s Earnings Calendar. On the Horizon Thursday, August 11 Germany: Thomson Reuters Ipsos Monthly Global Primary Consumer Sentiment Index - August US: Weekly Initial & Continuing Jobless Claims US: Producer Price Index – July US: Weekly EIA Natural Gas Inventories Friday, August 12 Japan: Thomson Reuters Ipsos Monthly Global Primary Consumer Sentiment Index - August China: China Thomson Reuters Ipsos Monthly Global Primary Consumer Sentiment Index - August Eurozone: Industrial Production - June US: Import/Export Prices – July US: University of Michigan Consumer Sentiment Index (Preliminary) – August Thought for the Day “The release date is just one day, but the record is forever.” ~ Bruce Springsteen Disclosures Tufin Software (TUFN), CyberArk (CYBR) are constituents of the Foxberry Tematica Research Cybersecurity & Data Privacy Index Canoo (GOEV), Fisker (FSR), Lucid Group (LCID), Rivian (RIVN), Tesla (TSLA), Vita Coco (COCO) are constituents of the Tematica BITA Cleaner Living Index Canoo (GOEV), Fisker (FSR), Lucid Group (LCID), Rivian (RIVN), Tesla (TSLA), Vita Coco (COCO) are constituents of the Tematica BITA Cleaner Living Sustainability Screened Index The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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