Growth equities are in turmoil at the moment. For many years, these have been stock market darlings, but this is a tough period for them. Instead of focusing on growth stocks, investors should look to high-yield securities, which provide some protection against rising prices. Investing $5,000 each in Medical Properties Trust (MPW -2.48%) and Sunoco LP (SUN 0.15%) over the next five years will result in a total dividend income of $3,300 for retail investors (MPW -2.48%, SUN 0.15%).
Here’s why April 2022 may be a good time to buy these two high-yield stocks.
1. Medical Properties Trust
Medical Properties Trust is a real estate investment trust (REIT) with approximately 440 healthcare facilities in nine countries throughout the world. The business earns the majority of its income by leasing these properties to healthcare running organizations on a long-term basis. Medical Properties also gets a proportion of its revenue by providing secured real estate loans to these businesses.
The company’s dividend yield is 5.75 percent. In 2021, the corporation paid an annual dividend of $1.12 per share, which was fully covered by its free cash flow (a measure of a REIT’s profitability) of $1.80 in that year.
Medical Properties, as one of the world’s largest private hospital operators, may be an attractive defensive stock in today’s inflationary climate since over 99% of its leases include yearly rent increases linked to CPI. The vast majority of these lease contracts are also net leases, implying that tenants will pay all future operational and maintenance expenditures associated with the facility.
2. Sunoco LP
Sunoco LP, the country’s largest independent fuel distributor, sold 7.5 billion gallons of product in its fiscal 2021 (ended Dec. 31, 2021), up 6.4 percent from the previous year. This Master Limited Partnership currently serves over 7,300 dealers, fuel distributors, and commission agent customers as well as about 2,500 commercial customers.
With terminals and storage facilities strategically positioned near its fuel supply operations, Sunoco has created a strong midstream infrastructure portfolio. This ensures excellent wholesale distribution. Its large wholesale distribution network and brand strength have helped it to achieve this goal.
Sunoco presently pays out a dividend of 7.69 percent. Despite the fact that Sunoco hasn’t increased its dividend for the past five years, its payout ratio is still at 62.50 percent, which is admirable. For fiscal 2021, the firm reported an equity coverage ratio of 1.6 times, which is greater than the minimum required coverage ratio of 1.4 times. At the end of fiscal 2021, Sunoco’s leverage ratio was 4.17, close to its long-term target of 4.0 times. These statistics suggest that Sunoco’s distributions are reasonably secure in the immediate future.