2 Ultra-High-Yield Energy Stocks to Buy Hand Over Fist and 1 to Avoid
If you are searching out big dividend yields in the energy patch, then you'll want to examine Sunoco LP's (NYSE: SUN) 7.6% yield and Magellan Midstream's (NYSE: MMP) even higher 8.6%. But be leery of Devon Energy's (NYSE: DVN) 9% yield. There are very big differences between the business model of Sunoco and Magellan and that of Devon Energy that make the former two reliable payers and turn Devon into a high-risk dividend play.
Magellan Midstream is a master limited partnership (MLP) focused on the midstream space, as its name implies. It is keenly centered on collecting fees for moving oil and refined products, like gasoline and diesel. In this way, it is a play on the old gasoline-powered engine, which is being replaced by electric vehicles (EVs). This is one of the reasons the MLP's distribution yield is so high.
That said, gasoline remains a vital energy source in the world despite the headline-grabbing shift toward electric vehicles. In fact, EVs only make up a mid-single-digit percentage of the U.S. vehicle fleet.
Source Fool.com
