There’s a huge difference between accumulating wealth for retirement and living off of your nest egg once you have finally retired. One tried and true method of funding retirement is to invest in income-producing securities, so you can live off of the money your portfolio generates rather than simply spending down your hard-earned savings. Here are two high-yield options for doing just that…
1. An energy giant of sorts
With a market cap of $57 billion, midstream-focused Enterprise Products Partners (NYSE:EPD) hardly ranks among the world’s largest energy companies. However, it is easily one of the largest pipeline, storage, and energy-processing facility owners in North America. The key here is that Enterprise does not drill for oil, so often-volatile energy prices aren’t all that important to the limited partnership’s top and bottom lines. Instead, it charges fees for the use of its assets. That means that demand for these vital fuels is the important factor — and it appears that demand is likely to remain strong for many years to come. Fees make up around 85% of Enterprise’s gross operating margin.
That’s the solid foundation from which Enterprise pays its hefty 6.8% yield. That distribution, meanwhile, has been increased annually for over two decades, with increases averaging in the low-to-mid-single-digit space. So not only does it offer a large yield, but it has, over time, allowed unit holders to keep up with or beat inflation.
A key point differentiating Enterprise from its peers is its mixture of scale (it would be difficult if not impossible to replicate its portfolio of assets) and financial strength. That last point is incredibly important for a retiree seeking out investments that will allow them to sleep at night. To put some numbers on that, Enterprise’s financial debt to EBITDA ratio is roughly 3 times, at the low end of its peer group, and it covers its interest expenses a solid 5 times over.
Looking to the future, meanwhile, the partnership has roughly $8 billion worth of capital projects in the works that will last through 2023. Not only are you getting a big yield backed by a fiscally conservative midstream player, but you are also getting a partnership with well-articulated plans to keep increasing its fee-based income stream over time.
2. Doing what its peers can’t
The next opportunity might seem a bit controversial, but step back and look at the big picture before you decide here…
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