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And that’s where you’ll find the last bit of Enbridge’s EBITDA, with renewable power, like offshore wind and solar, accounting for roughly 3% of EBITDA. That’s a pretty small contribution, and you might be tempted to overlook it. However, it is significant in that it highlights the long-term approach Enbridge is taking.

To be fair, Enbridge is a slow and steady tortoise. It isn’t jumping into anything with both feet; that’s just not the company’s way. It is, basically, slowly shifting so that it can provide the world the energy it needs as it needs it. Note that clean energy is growing quickly, but it is still a small part of the global energy pie. However, when you add Enbridge’s large and reliable dividend to the energy transition story, you get a company that looks like it is ready and willing to pay investors well for years into the future. That is exactly the type of stock a dividend investor will want in their portfolio if they think in decades and not days.

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Amazon: if you invested $1,000 when we doubled down in 2010, you’d have $20,991!*

• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $43,618!*

• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $406,922!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of October 21, 2024

Reuben Gregg Brewer has positions in Dominion Energy and Enbridge. The Motley Fool has positions in and recommends Enbridge. The Motley Fool recommends Dominion Energy. The Motley Fool has a disclosure policy.

Could Buying Enbridge Stock Today Set You Up for Life? was originally published by The Motley Fool

The past year has been one for the record books for Supermicro. For fiscal 2024 (ended June 30), revenue surged 109% year over year to a record $14.9 billion. At the same time, its earnings per share (EPS) soared 76% to $20.09. Management said it continues to see “record demand,” as sales have increased five times faster than the industry average during the past 12 months, which helps illustrate that Supermicro is taking market share from its rivals. CEO Charles Liang suggested that the company controls an estimated 80% of the direct liquid cooling (DLC) server market for AI.

The company is experiencing growing pains, as evidenced by sinking margins, though management attributes those to product mix and a bottleneck related to certain components. On the plus side, the $800 million in affected sales weren’t lost, but rather pushed into the current quarter.

CFO David Weigand said that “We have a path to improve gross margins to the target range of 14% to 17%,” citing improving manufacturing efficiencies. The company also expects to boost profit margins when new manufacturing facilities come online later this year, which should also increase production capability to support $50 billion annually in sales.

That’s not to say there aren’t risks. Supermicro was the target of a short attack by Hindenburg Research, which alleged accounting irregularities without providing much in the way of proof. Supermicro then fanned the flames when it announced its annual report would be filed late. If that weren’t enough, reports emerged that the Department of Justice (DOJ) had opened an investigation in the wake of the short report.

If the company can work through these challenges, chances are the stock will continue its relentless climb higher.

In the light of these dark clouds, you might think that Wall Street would be abandoning Supermicro en masse — but that’s simply not the case. Of the 17 analysts who covered the stock in September, seven rate the stock a buy or strong buy, and none recommend selling. Furthermore, an average price target of roughly $77 suggests there’s still upside potential of 62% compared to Supermicro’s closing price on Friday.

Loop Capital analyst Ananda Baruah remains the biggest Supermicro bull on Wall Street, with a buy rating and a Street-high, split-adjusted price target of $100. That suggests potential gains for investors of 111% compared to Monday’s closing price. The analyst believes Supermicro’s leadership was likely already aware of the DOJ probe and is cooperating with regulators. Baruah went on to say the company could more than double its revenue run rate to $40 billion over the next couple of years, which should fuel an increase in its stock price.

For those willing to take on some additional risk, Supermicro offers a persuasive value proposition. It’s currently selling for 23 times earnings and less than 2 times sales — the very definition of an underpriced stock.

Supermicro’s industry-leading position, secular tailwinds, and attractive price combine to represent a compelling opportunity for savvy investors.

Before you buy stock in Super Micro Computer, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Super Micro Computer wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

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*Stock Advisor returns as of October 21, 2024

Danny Vena has positions in Super Micro Computer. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Meet the Newest Stock-Split Stock to Join the S&P 500. It Soared 1,780% Over the Past Decade, and It’s Still a Buy Right Now, According to 1 Wall Street Analyst was originally published by The Motley Fool

The company provided Q3 revenue guidance of $697 million to $701 million, with Wall Street favoring the high end. All 16 analysts covering the stock have revised their estimates upward, resulting in a consensus of $703.4 million, which would represent a 26% annual growth rate.

Additionally, with adjusted net income guidance of $233 million to $237 million for Q3—suggesting a potential annual increase of 46% at the upper end—Wall Street is forecasting an EPS consensus of $0.09, reflecting a 29.8% annual increase. All analysts have also raised their EPS estimates in the past three months.

As Palantir’s growth story is centered around the massive demand for AI, which is still in its early stages, there is a strong belief that the company will continue to revise its annual guidance upward to better reflect its growth prospects. I think whether this quarter is a hit or a miss will largely hinge on any updates to that full-year guidance. This is because the current projections do not seem sufficient to fully justify Palantir’s lofty valuations, a topic I will explore further.

One of the primary reasons for my skepticism regarding Palantir’s ability to sustain its bullish momentum after the Q3 results is the extremely high valuation multiples at which the company trades.

Currently, Palantir is valued at metrics such as 35 times its forward sales, 120 times its forward earnings, and 135 times its cash flows. This valuation makes Nvidia—arguably the biggest leader in AI—appear relatively discounted by comparison despite being considered an expensive stock and despite Nvidia’s higher growth projections for both revenue and earnings.

The situation is exacerbated by growth estimates that do not seem robust enough to justify such stretched multiples. Palantir’s revenue is projected to grow at a forward rate of 20.4%, surpassing the sector median of 6%. For 2025, revenue is expected to grow by approximately 21.2%, followed by 20% through 2026. EPS growth is forecasted at 42.3% in 2024 with an expected EPS of $0.36, and a more moderate 21.4% in 2025, reaching an estimated $0.43. By 2026, EPS could reach $0.52, indicating growth rates of 42%, 21%, and approximately 19% over the three-year period.

A key bullish argument for Palantir’s valuation is its improved free cash flow, which rose from a negative $308.9 million in 2020 to a projected range of $800 million to $1 billion, according to the company’s guidance. At the midpoint of this guidance, free cash flow is roughly three times higher than Wall Street’s net income consensus of $297 million, based on EPS projections. This indicates that Palantir is becoming more profitable and generating enough cash to sustain and expand its operations.

Sometimes, a business can actually be a better investment at a higher price when there’s more clarity regarding management and the path to profitability, especially for those in the early stages of growth. In Palantir’s case, each quarter has provided more insight, with expectations consistently being revised upward. This is why, despite the stock’s stretched valuation metrics, an upward revision of the annual guidance could still lead to a significant increase in the share price.

A troubling sign is that even Palantir’s management—who know the company best—are selling shares rather than buying at these prices.

CEO Alex Karp sold approximately 8.7 million Palantir shares worth over $300 million under a trading plan, while co-founder Peter Thiel also initiated a trading plan to sell shares valued at $28.5 million, totaling nearly $1 billion. Of course, there are various reasons insiders sell their shares, but it’s hard to believe they would be selling now if they anticipated continued rapid stock growth in the short to medium term.

Using the TipRanks Insider Transactions tool, we can see that insiders are selling a larger quantity of PLTR stock compared to what is being bought.

At TipRanks, analysts rate PTLR stock as a Hold, with six out of 16 analysts issuing neutral recommendations, another six providing bearish ratings, and only four offering bullish outlooks. The average PLTR price target is $27.67, indicating a downside potential of 36.21%.

See more PLTR analyst ratings

I rate Palantir as a Hold ahead of its Q3 earnings report. While the company has made solid progress this year, I’m concerned that its triple-digit growth and high valuation multiples could hinder its performance in the upcoming quarter, potentially dampening the bullish momentum.

Given the significant hype surrounding the stock, simply meeting the upper end of estimates won’t suffice. An upward revision of guidance is necessary to convincingly show how its growth story justifies the staggering triple-digit earnings and cash flow valuation multiples.

Disclosure

Another benefit to owning Realty Income is that its 15,400+ portfolio of properties is spread across North America and Europe. It owns both retail assets (73% of rents) and industrial assets (17%), with a fairly large “other” category (which includes things like casinos and vineyards) rounding things out. Basically, it has multiple levers to pull when it comes to growing its business over time. Given its size, it’s a slow and steady tortoise, but a very reliable one, too.

NNN REIT is a bit more focused, only owning around 3,500 retail properties in the U.S. However, it has increased its dividend every year for an even more impressive 35 consecutive years. The dividend yield today is around 4.8%, which is comfortably above the REIT average, too, though slightly lower than Realty Income’s yield. What sets NNN REIT apart from the pack is its relationship-driven model.

Since 2007, roughly 72% of its acquisitions were from sellers with which it already had a relationship. Perhaps more surprisingly, the returns on these investments were higher than the returns on assets NNN REIT bought on the open market. This is because its existing partners know that they can go to NNN REIT and get a deal done quickly. They’re willing to pay a higher price for the certainty that NNN REIT offers, and shareholders get to benefit from the solid and growing income stream these relationships create over time.

The problem child here is W.P. Carey, which has the highest yield at 5.9%. This is at least partly because the net lease REIT cut its dividend at the start of 2024, just shy of reaching 25 years of consecutive annual dividend increases. But don’t throw W.P. Carey off your list. The dividend cut was really a dividend reset as the second largest net lease REIT (its market cap is around $13 billion) exited the troubled office sector.

Its exposure to office was roughly 16% of rents, so it couldn’t leave the sector without a dividend reset. The important fact here is that the dividend got right back onto the quarterly increase cadence that existed before the cut. The much larger dividend yield means you’re getting well paid for the added risk, which seems quite modest.

If you can look past the dividend reset, W.P. Carey’s business is kind of a mirror image of Realty Income’s portfolio. W.P. Carey operates in North America and Europe, but its nearly 1,300-property portfolio is tilted toward industrial assets at around 64% of rents, with retail at 21% and other at 15%. While it’s not quite as large as Realty Income, W.P. Carey’s office exit has left it with capital to invest. So growth prospects will likely be attractive in the near term and potentially better than what you’d get at Realty Income or NNN REIT.

Realty Income, W.P. Carey, and NNN REIT are the types of landlords that you can own and reliably collect dividends from year in and year out. Yes, W.P. Carey’s dividend history requires a bit of understanding. However, once you recognize that the REIT’s move has strengthened its future prospects, the view of that dividend reset changes (and the relatively high yield becomes much more attractive). Buy one of these REITs, or all of them, if you want to collect decades’ worth of income while you sleep soundly through the night.

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Amazon: if you invested $1,000 when we doubled down in 2010, you’d have $21,154!*

• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $43,777!*

• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $406,992!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of October 21, 2024

Reuben Gregg Brewer has positions in Realty Income and W.P. Carey. The Motley Fool has positions in and recommends Realty Income and Vanguard Real Estate ETF. The Motley Fool has a disclosure policy.

Buy These 3 High-Yield Dividend Stocks Today and Sleep Soundly for a Decade was originally published by The Motley Fool

Most stocks offer high yields or growth, but the Schwab U.S. Dividend Equity ETF offers surprisingly strong growth, considering its high starting yield. As shown below, the ETF has raised its dividend by 174% over the past decade.

You won’t find many individual stocks with that combination of yield and sustained dividend growth!

The Schwab U.S. Dividend Equity ETF isn’t perfect. It has lagged behind the S&P 500 in total returns over the past decade, primarily because it doesn’t have the exposure to big technology companies that the S&P 500 does. These multitrillion-dollar technology companies have grown on cloud and artificial intelligence opportunities and have helped lift the broader market. I would argue that the Schwab U.S. Dividend Equity ETF has competed very well, given the lack of technology exposure, and you’re probably buying the ETF for the higher dividends, not purely for total returns.

It’s not the perfect ETF for every investor, but it’s hard to find a more well-rounded ETF than the Schwab U.S. Dividend Equity ETF. Any long-term dividend investor should consider adding and holding shares over time, building a snowball of dividends that pays you more and more as it grows larger.

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Amazon: if you invested $1,000 when we doubled down in 2010, you’d have $20,991!*

• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $43,618!*

• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $406,922!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of October 21, 2024

Justin Pope has positions in Chevron. The Motley Fool has positions in and recommends Bristol Myers Squibb, Chevron, Cisco Systems, and Home Depot. The Motley Fool recommends Lockheed Martin, United Parcel Service, and Verizon Communications. The Motley Fool has a disclosure policy.

1 High-Yield Dividend Growth ETF to Buy With $30 and Hold Forever was originally published by The Motley Fool