3 Top Dividend Stocks to Buy in March

If you are looking for reliable dividend payers with high yields as March gets underway, then you’ll want to get to know Enterprise Products Partners (EPD -1.03%), Chevron (CVX 1.42%), and Enbridge (ENB -2.10%). With yields of up to 6.4% backed by decades of annual increases, all three of these investment opportunities are highly compelling. In fact, you might end up wanting to buy all of them once you dig into the numbers. Here’s why.

1. Enterprise Products Partners has a 6.4% yield

Enterprise Products Partners is a North American midstream giant. It basically owns the pipeline, storage, processing, and transportation assets that help to move oil and natural gas around the world. The key is that it charges fees for the use of its assets, so the volatile prices of the commodities it transports are less important than the demand for those commodities to Enterprise’s top and bottom lines. Demand for energy tends to remain high in both good markets and bad.

This is how Enterprise has managed to increase its distribution annually for 26 consecutive years. The distribution, meanwhile, is covered 1.7 times over by the master limited partnership’s (MLP’s) distributable cash flow. And it has an investment grade-rated balance sheet. In other words, a lot would have to go wrong before the distribution would be at risk of a cut. That’s the story that backs this 6.4% yield.

Enterprise won’t excite you, but that’s the point. You can buy this midstream giant and rest easy while you collect its large distribution. If you are trying to maximize the income your portfolio generates, that should sound pretty enticing.

2. Chevron has a 4.3% dividend yield

It might seem like a notable step down to go from that 6.4% yield to Chevron’s 4.3% dividend yield. The key is that they are very different companies, with Chevron falling into the integrated energy category. This means that it owns production assets (upstream), transportation assets (midstream), and chemical and refining assets (downstream). The upstream and downstream businesses are far more commodity-driven than the midstream, so Chevron is a way to get more direct exposure to energy prices. If that’s what you are looking for, it is a great option.

The dividend numbers are impressive, with annual dividend increases in each of the last 37 years. Chevron’s yield, meanwhile, is well above the average energy stock’s yield of 3.3%. Notably, like Enterprise, Chevron has a strong financial foundation, with one of the lowest debt-to-equity ratios in its peer group. That’s actually the key to the story because this low leverage allows Chevron to lean on its balance sheet during energy downturns so it can continue to support its business and dividend. When the energy market recovers, as it always has historically, Chevron pays down debt to prepare for the next downturn.

If you are looking for energy exposure, Chevron is a great high-yield option.

3. Enbridge has a 6.2% yield

With Enbridge, the dividend yield being examined jumps back up to 6.2%. That’s clearly very attractive and it is backed by an investment-grade rated balance sheet and a 30-year history of annual dividend increases (in Canadian dollars). The distributable-cash-flow payout ratio, meanwhile, is right in the middle of the company’s 60% to 70% target range. Basically, this North American midstream giant is just as attractive as Enterprise.

But don’t just go for higher-yielding Enterprise, because they are very different companies. Notably, Enbridge has a stated goal of changing with the world’s energy needs. That has meant a slow shift from oil-related assets to natural gas-related assets, including regulated natural gas utilities. That’s interesting, but the real sleeper here is the roughly 3% of earnings before interest, taxes, depreciation, and amortization (EBITDA) that comes from renewable power. Where Enterprise is pretty much sticking to its carbon-related businesses, Enbridge is very clearly doing something different. If you want a reliable energy stock with a clean energy hedge, Enbridge is probably one of the best high-yield choices you have today.

All three of these high-yielders are attractive

From afar it would be easy to lump Enterprise, Chevron, and Enbridge into the bucket of energy stocks. But they all have important nuances to their businesses that make them attractive in unique ways. In fact, once you understand the backstories, you might even decide that you want to own them all.