1 Ultra-High-Yield Dividend Stock (I Just Bought) That You Can Buy and Hold for a Decade
Mr. Market, a construct of the famous value investor Benjamin Graham, is a fickle individual. Sometimes he offers up opportunities that look attractively priced, only to change his mind far more quickly than you’d expect, running the price right back up again.
When shopping for potential investments, I occasionally get access to the attractive price, which is what happened with my investment in WEC Energy (NYSE: WEC). But after the subsequent share price rally over just a few months, I decided to sell the utility and use those funds to invest in a higher yield that remains out of favor.
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I bought WEC Energy in July 2024, when the dividend yield was north of 4%. The yield, the history of dividend growth, and the opportunity presented by the utility’s ongoing shift toward cleaner energy was more than enough to get me in the door.
And then, shortly after I bought WEC Energy, utility stocks rallied. The yield from WEC Energy is now around 3.4%.
That’s not high enough for me to add to my position. Add in the roughly 20% stock advance in just a few months, and I’m worried that WEC Energy has gone too far, too fast. At the very least, I see it as fairly valued and no longer cheap. In fact, I was kind of expecting that 20% stock advance would be spread over three years, not four months or so. I decided to lock in the profits and shift into a different utility-related investment.
What I bought to replace WEC Energy was a unique clean energy-focused business with a 5.6% yield. That’s 4.5 times larger than the yield on the S&P 500. It is twice as high as the average utility, using Utilities Select Sector SPDR ETF (NYSEMKT: XLU) as an industry proxy. And it is 1.6 times that of WEC Energy. That’s a worthwhile increase compared to WEC, and definitely attractive relative to the broader utility space and the market.
But the real reason I bought Brookfield Renewable Partners (NYSE: BEP) is the opportunistic nature of its investment approach. To start, I believe there’s a long runway for growth ahead as the world continues to shift toward cleaner energy alternatives. Brookfield Renewable has its fingers in just about every pie, with exposure to solar, wind, hydroelectric, storage, and nuclear. And its portfolio is globally diversified, so it can put money to work just about anywhere there’s an opportunity.
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