The prospects of upcoming interest rate hikes and a possible economic recession have rocked financial markets in recent months. For instance, the S&P 500 index has plunged 19% year to date.
But growing passive income can take an investor’s focus off of their unrealized losses in a market downturn like the current one. Here are three stocks that can provide income investors with safeer, market-beating, and rising passive income.
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1. Enterprise Products Partners
With a system of over 50,000 miles of natural gas, natural gas liquids, crude oil, petrochemicals, and refined products pipelines, master limited partnershipEnterprise Products Partners(EPD -0.43%) is one of the biggest midstream companies in the world.
With the raw materials Enterprise Products Partners’ infrastructure transports and stores being used in anything that uses petrochemicals (that’s a lot of stuff), the demand for its infrastructure isn’t going anywhere anytime soon. In fact, global economic growth and population growth will result in increased total demand for Enterprise Products Partners’ pipelines through 2040 compared to 2019, according to the International Energy Agency’s forecast.
This makes it likely that Enterprise Products Partners’ quarterly distribution will build on its 23-year growth streak in the years ahead with low-single-digit raises each year. And with a distribution coverage ratio — the degree to which a partnership’s distributable cash flow covers its distribution payments — of 1.7 in 2021, investors can rest assured that Enterprise Products Partners’ market-crushing 7.3% distribution yield is very secure.
Best of all, investors can scoop up units of the partnership at a trailing-12-month distributable cash flow ratio of 8.4. For a world-class business such as Enterprise Products Partners that’s set to steadily grow at a low-single-digit clip annually, this is a bargain-bin valuation.
2. A.O. Smith
Because individuals and businesses desire access to hot water for bathing, washing, and industrial uses, the demand for hot water heaters is positioned to grow in the years ahead. This is the underlying thesis that makes residential and commercial water heater and boiler manufacturer A.O. Smith(AOS 2.95%) so attractive.
Market research firm Allied Market Research anticipates the global water heater market will compound at 5.1% annually from $32.6 billion in 2017 to $48.5 billion by 2025.
Due to A.O. Smith’s leading market share in an industry with a promising growth outlook, analysts believe the company will deliver 8% annual earnings growth through the next five years.
And with a dividend payout ratio of 35.1% in 2021, the Dividend Aristocrat looks poised to extend its track record of 29 consecutive years of dividend growth moving forward. This manageable payout ratio should translate into high-single-digit annual dividend growth for the foreseeable future. On top of this solid growth potential, A.O. Smith’s dividend yield is a market-topping 1.9%.
The cherry on top is that all of this can be had by investors at a forward price-to-earnings (P/E) ratio of just 16.3. For context, this is below the S&P 500 index’s forward P/E ratio of 16.7. Simply put, A.O. Smith is an above-average stock trading at a below-average valuation.
With nearly 2,200 home improvement stores in the U.S. and Canada, Lowe’s(LOW 2.09%) is the second largest home improvement retailer behind Home Depot. The investment thesis is that Lowe’s can leverage its brand power in a fragmented, but massive $900 billion home improvement sector.
Regardless of what the economy has done over the past 59 years, Lowe’s has raised the payout to its shareholders, making it a Dividend King. And with the stock’s payout ratio of only 23.3% in 2021, Lowe’s should have room for a double-digit hike in the dividend later this month to extend its dividend growth streak to 60 years straight.
Thanks to consistently growing home improvement spending, analysts expect Lowe’s will produce 14.5% annual earnings growth over the next five years. Investors can snatch up Lowe’s market-besting 1.7% yield at a forward P/E ratio of merely 14.3.
Another example of plans changing all the time in WWE was shown in the decision process of what Sheamus’ faction with Ridge Holland and Butch was going to be called.
WWE originally filed the trademark ‘Bloody Brutes’ back on May 12. However, on May 19th, WWE filed a trademark for ‘Brutal Brutes’. Fast forward to last Friday’s SmackDown, the name of the faction was revealed as ‘Brawling Brutes.’
It appears WWE originally planned to call them the Bloody Brutes, then changed their minds to the Brutal Brutes and finally settled on the Brawling Brutes. WWE has yet to file a trademark for the new name but will do so shortly. Here is the description for Brutal Brutes:
“Mark For: BRUTAL BRUTES trademark registration is intended to cover the categories of entertainment services, namely, wrestling exhibitions and performances by a professional wrestler and entertainer rendered live and through broadcast media including television and radio, and via the internet or commercial online service; providing wrestling news and information via a global computer network; providing information in the fields of sports and entertainment via an online community portal; providing a website in the field of sports entertainment information; fan club services, namely, organizing sporting events in the field of wrestling for wrestling fan club members; organizing social entertainment events for entertainment purposes for wrestling fan club members; providing online newsletters in the fields of sports entertainment; online journals, namely blogs, in the field of sports entertainment.”
Sheamus, Holland, & Butch have been feuding with Xavier Woods & Kofi Kingston since before WrestleMania 38. Big E had been part of the storyline but was sidelined when he broke his neck while taking a belly-to-belly suplex from Holland during an episode of SmackDown.
On this week’s “Hall of Fame” podcast, Booker T discussed a recent Joey Janela spot in his match where he was going to give a flaming super kick. Janela lit his boot on fire and had issues extinguishing the flame after kicking his opponent. Booker T was asked to give his opinion on this spot.
“I’m always willing to say in somebody’s face what I’m willing to say on this show. Joey Janela, that was the stupidest thing I’ve ever seen in my career,” Booker said.
“I’m serious because the thing is, he didn’t have a boot where it could actually fend off the flames for a minute. He had a kick pad on and a tennis shoe. He put so much damn lighter fluid on his foot, it probably soaked all the way through to his foot.”
“That right there just embodies what I talk to my young students about. If that’s the route you want to go, that’s on you, but plan on working that scene forever, because this is not stuff they do in the major leagues.”
“It’s the light bulbs, you know, just doing something just for the hell of it. I don’t know if that’s something in a video game. It has to be something you know, a fire punch or a fire kick. It has to be something from some video game for someone to even think about trying to do it. It just makes zero sense, and that’s what I try to teach my wrestlers to stay away from. Don’t go that route, because at the end of the day, you’re not going to make a whole lot of money doing it and you could screw something up permanently doing something like that.”
“I don’t know if you noticed the thumbtacks in the ring. I don’t know if you saw the spot they did where the barbed wire was on the table and then the swanton off the top of the ladder on to the table with the guy up under the barbed wire. Where are we trying to go? I know there’s a market out there for it, but there were probably 150 people, maybe 200, in that hall where they were doing this and it couldn’t have been that much money in that little hall.”
You can view Booker’s thoughts on the entire Joey Janela spot below.
This week on “The Hall of Fame” podcast, Booker T gave his thoughts on WWE suspending Sasha Banks and Naomi.
“If someone was to walk out on a Reality of Wrestling show, I would fire them,” he said.
“One of my wrestlers went out there and totally went against the grain one night after I set him up to win. I told him to pack his bags and I never want to see him again because that’s not the way this works. I give you a script and you want to go out there and go off script, this is what happens, you get fired. It’s just that simple.”
“If I had someone who was on the card that night and said, ‘Man, I ain’t doing this because I don’t want to do a job tonight.’ then get out of here.”
“I don’t think anything personal towards Naomi or Sasha. You know, this is business. A lot of people are commenting on it like it’s personal, like WWE has an ax to grind against Sasha and Naomi. I really don’t think that’s it.”
You can view Booker T’s entire thoughts on the Sasha Banks/Naomi situation below.