Why This 10%-Yielding Pipeline Stock Is a Dividend Investor's Dream

Crestwood Equity Partners (NYSE: CEQP) currently yields a dreamy 10.3%. While a yield in the double digits is typically a sign of trouble, that's not the case with Crestwood. If anything, the pipeline and processing company's payout and growth prospects have only grown stronger this year, thanks to its ability to complete several strategic initiatives. As a result, the company is a dream stock for income seekers since it offers an ultra-high yield that's becoming increasingly safe and probably heading higher.

During the third quarter, Crestwood Equity Partners generated $50.3 million in distributable cash flow (DCF), which is money it could pay out to investors during the quarter. However, despite sporting an ultra-high yield, the company didn't come close to exhausting its available resources in paying its current distribution to investors, since it covered the payout with cash flow by a comfortable 1.2 times. The company subsequently had some money left over to help finance growth projects. Those results kept it on pace to generate between $210 million to $230 million in DCF for the full year, which should cover its lucrative distribution by 1.2 to 1.4 times.

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Source: Fool.com