Holding a stake in great businesses that regularly pay dividends and then reinvesting those payouts is one of the most dependable paths to long-term wealth creation. The challenge, then, is finding companies that are positioned to sustain a high level of performance and keep that returned income flowing while also shoring up the future of the business.
With that in mind, we asked three Motley Fool investors to identify a top high-yield stock that’s worth holding forever. Read on to see why they picked these stocks.
Top Warren Buffett Stocks To Invest In Right Now: Moelis & Company(MC)
In the wake of the financial crisis, with so many investment banks tarnished (or in some cases gone), there was an opportunity for an independent company to step up. That’s exactly what Moelis & Co (NYSE:MC) has done — and so far it’s been a raging success.
A company founded in 2007 now is worth over $3 billion. MC stock has risen 132% from its 2014 IPO price of $25. Moelis even was named an adviser to the Saudi Aramco IPO, potentially the largest ever.
Fundamentally, Moelis just keeps chugging along. Adjusted EPS rose 56% in Q1 on the back of a 27% jump in revenue. The company continues to add new directors and partners, while expanding its geographic reach. Without the other divisions — and potential conflicts of interest — seen at larger rivals like Goldman Sachs Group Inc (NYSE:GS) and Morgan Stanley(NYSE:MS), Moelis continues to win more than its fair share of deals.
Meanwhile, a recently raised dividend yields 3.2%, and the company holds no debt. A 19x forward P/E multiple might be considered a bit pricey — particularly because Moelis has a good deal of cyclical risk. Any slowdown in M&A, in particular, could send its revenue and earnings falling.
Still, from a qualitative standpoint, Moelis seems to be in the right place at the right time. And it seems to have a path to grow into a behemoth in corporate finance while rewarding shareholders along the way.
Top Warren Buffett Stocks To Invest In Right Now: Sportsman's Warehouse Holdings, Inc.(SPWH)
Guns-and-camo outfitter Sportsman’s Warehouse Holdings Inc (NASDAQ:SPWH) has seen shares languish since dropping off a cliff in early 2017 as President Trump’s election lessened the impetus for many firearm enthusiasts to make purchases out of fear of pending legislation outlawing things like AR-15s or expanded capacity magazines.
After basing for the last two years, shares look ready to run higher thanks to the action in retail stocks in general lately.
The company will next report results on Aug. 16 before the bell. Analysts are looking for earnings of 16 cents per share on revenues of $204.2 million. When the company last reported on May 24, a loss of eight cents per share beat estimates by two cents on a 14.8% rise in revenues.
Top Warren Buffett Stocks To Invest In Right Now: NVIDIA Corporation(NVDA)
Nvidia (NASDAQ:NVDA) is a leading computer graphics company, making graphic processing units (GPUs) for consumers and businesses.
These GPUs enhance the processing capability of its users’ computers.
The company has been in the computer graphics business for more than two decades — it invented the GPU in 1999 — so it is a well-established player.
In a recent earnings report, company management noted that NVDA “achieved another record quarter, capping an excellent year.” The fact is, this could be almost any quarter since 2016.
If you look at NVDA’s historic price chart, you can see that the stock goes parabolic in 2016. That’s when the mobility trend took off and enabled all the sectors that NVDA has come to dominate: cloud, augmented reality, virtual reality, Internet of Things, Big Data, smart devices, etc.
NVDA is to the future of computing what Amazon (NASDAQ:AMZN)has become to ecommerce.
Top Warren Buffett Stocks To Invest In Right Now: Enterprise Products Partners L.P.(EPD)
If you think a yield of 3% or 4% sounds good for a retirement account, I’ll bet a 6.3% yield sounds fantastic. Better yet, this stock’s payout is driven by a stable, fee-based business that’s one of the largest of its kind, which makes it an excellent choice for conservative investors. The company is energy infrastructure master limited partnership (MLP) Enterprise Products Partners.
Before you rush out to buy it, though, be aware that MLP ownership isn’t for everyone — some extra tax hurdles come with those fat yields. But if you do the research and decide you can handle it, Enterprise can be an attractive investment for retirees.
The company has upped its quarterly distribution — the MLP equivalent of a dividend — for an impressive 53 consecutive quarters, with an average annual increase of about 5% over the last decade. That track record of growth is especially important to investors on fixed incomes, as it helps to ensure that the power of a company’s payout won’t get gradually eaten away by inflation. However, Enterprise Products Partners has signaled that it may ease back on that growth rate in 2018.
That’s actually a good thing for investors, because a temporary distribution-growth slowdown will help the company strengthen its already-steady financial situation. It will have more cash available to finance growth projects, maintain its high credit rating, and give itself added flexibility to reaccelerate its distribution growth later, or possibly even buy back units.
For retirees looking for an excellent yield, a conservative investment, and a bright future, it doesn’t get much better than Enterprise Products Partners.