In the grand theatre of finance, where fortunes rise and fall with the predictability of a poorly rehearsed opera, 2022 and 2023 saw blue-chip dividend stocks take their bow under a rather unflattering spotlight. The culprit? Rising interest rates, which tempted investors away from equities and into the arms of safer, if less thrilling, Treasury bonds and CDs. Yet here we are in 2024, watching the Federal Reserve perform its own act of contrition, cutting rates thrice already this year. With inflation cooling like a tepid cup of tea, whispers abound that one or two more cuts may follow.
As the 10-Year Treasury yield, now languishing at 4.3%, prepares to descend further, income investors will likely return to the embrace of higher-yielding dividend stocks. Among these, two names stand out: Energy Transfer (ET) and Verizon (VZ). Both offer generous yields, trade at valuations so modest they border on self-deprecation, and possess an almost aristocratic resilience to market turbulence. One might even call them the dowagers of dividends.
1. Energy Transfer
Energy Transfer, a titan of America’s midstream sector, stretches its pipelines across 135,000 miles and 44 states-a network so vast it could rival the Roman aqueducts in sheer audacity. This master limited partnership (MLP) specializes in moving natural gas, crude oil, and refined products through its veins of steel, charging tolls to upstream and downstream companies alike. It is, perhaps, the only business model where volatility is treated as something of an inconvenience rather than a catastrophe.
Over the past five years, Energy Transfer has gobbled up competitors with all the subtlety of a lioness at a watering hole, while dabbling in liquefied natural gas exports to satisfy overseas appetites. Such industriousness has allowed it to dispense distributions totaling $4.39 billion in 2024 alone, comfortably covered by its distributable cash flow (DCF) of $8.36 billion. Its forward yield of 7.6% gleams like a gold tooth in a room full of dentures.
From 2019 to 2024, adjusted EBITDA grew at a compound annual growth rate (CAGR) of 7%, weathering pandemics, inflationary storms, and geopolitical squabbles with the grace of a drunken sailor. Analysts foresee a slightly more sedate CAGR of 5% from 2024 to 2027, but for a stock trading at just eight times this year’s adjusted EBITDA, such stability borders on the miraculous.
2. Verizon
Ah, Verizon-the beleaguered colossus of American telecommunications. Serving 146.1 million wireless customers, it finds itself mired in a battle against rivals armed with aggressive promotions and bundling schemes. Meanwhile, its business wireline segment decays quietly in the background, much like an old family estate left untended. No wonder its stock price fell 25% over the past five years.
Yet there is a peculiar charm to Verizon’s current state of disarray. At 6.5 times this year’s adjusted EBITDA, it trades at a valuation so low it seems almost apologetic. Its forward yield of 6%, coupled with a payout ratio of 63%, suggests room for future increases-a rare glimmer of hope in an otherwise gloomy tableau.
Verizon, however, is not without ambition. It plans to expand its broadband offerings through Home Internet and FiOS fiber plans, aiming to add over 2.2 million new subscribers post-acquisition of Frontier Communications. It also intends to weave artificial intelligence into its 5G networks, presumably to charm enterprise clients who value efficiency over sentimentality. If these efforts succeed, analysts expect adjusted EBITDA to grow at a CAGR of 3% from 2024 to 2027. For income investors seeking refuge, Verizon may yet prove a sturdy lifeboat amidst turbulent seas.
And so, dear reader, as you ponder your next move in this ceaseless dance of capital, consider these two stalwarts-not because they promise excitement, but precisely because they do not. In a world increasingly defined by chaos, there remains something comforting about the dull thud of reliability 💼.
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2025-08-26 15:23